Financial Management Practice of Church: The Case of the Ethiopian Evangelical Church Mekane Yesus
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Date
2018-01
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Addis Ababa University
Abstract
Financial management practices in the faith based areas at large and in the churches
specifically is not the recent development. Despite its age, the financial management practice
has been challenged in the church because of two main reasons; the first is the source of income
arise from volunteers, there is a thought not to monitor the resources with adequate
professionals since it is seemed to be holy and the second is the sacred and secular divide the
church in which separates the financial management to the secular one and seen as it is a
profane. The existence of the aforementioned challenges on one hand and the ever growing
resources of the Ethiopian Evangelical Church Mekane Yesus (EECMY) on the other hand are
the two paradoxes. The study assessed the financial management practice of the EECMY for
administering its financial resources within its structure. Population of the study consists of the
28 church units (synods) and 7 joint programs of the church, total of 35. The study was
conducted based on purposively selected 15 church units and 5 joint programs. Non-probability
sampling of purposive sampling method was used to draw samples from the population.
Questionnaire was distributed to 25 leaders and 25 finance heads and chief accountants of the
sampled units; interview was conducted with two higher officials of the church; secondary data
such as consolidated financial statements, financial manual, and constitution of the church were
used for analysis. The elements of financial management such as accounting records, financial
planning, financial policy and organizational philosophy, financial reporting and monitoring
and internal control activities were assessed in order to study financial management practice of
the EECMY. The data was analyzed by using SPSS through descriptive statistics and the finding
of the study indicated that the major challenges of the financial management practice of the
EECMY are absence of cash flow statement for reporting, financial policy weakness in using
modified cash base instead of following international and nationally accepted financial policies,
insufficient number of professional accountants, unclear revenue source and fund uses in the
lower level structure, lack of periodical comparison of plan versus actual budget, risk of not
audited financial statements, inconsistency with ethical values in few areas, lower risk
assessment duties, absence of internal audit activities, and absence of account reconciliations.
The study recommends adoption of new financial standards, introduction of cash flow statement,
addressing of risk assessment elements of the church, introduction & strengthening of internal
audits, and concerned body of religious organizations and financial policy and standard setting
bodies in Ethiopia to establish institution that confirms churches are operating with integrity,
accountability and transparency
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The Case of the ethiopian evangelical church mekane yesus