FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE STUDY OF CATHOLIC CHURCH ...€¦ · · 2015-09-16FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE STUDY OF

OZOTAMBGO CHRISTOPHER O. PG/MBA/06/45965

PG/M. Sc/09/51723

FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE

STUDY OF CATHOLIC CHURCH IN ENUGU DIOCESE

ACCOUNTANCY

A THESIS SUBMITTED TO THE DEPARTMENT OF ACCOUNTANCY, FACULTY OF

BUSINESS ADMINISTRATION, UNIVERSITY OF NIGERIA ENUGU CAMPUS

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MARCH, 2009

FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE STUDY OF CATHOLIC

CHURCH IN ENUGU DIOCESE

A

PROJECT REPORT

BY


IN PARTIAL FULFILMENT FOR THE AWARD OF MASTERS DEGREE IN BUSINESS ADMINISTRATION

(MBA) IN ACCOUNTANCY

DEPARTMENT OF ACCOUNTANCY FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA ENUGU CAMPUS.

MARCH, 2009

TITLE PAGE

FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE STUDY OF CATHOLIC

CHURCH IN ENUGU DIOCESE

A

PROJECT REPORT

BY


DEPARTMENT OF ACCOUNTANCY FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA ENUGU CAMPUS.

MARCH, 2009

CERTIFICATION The work embodied in this project report is original and has not

been submitted in part or in full for any other diploma of this any other

university.

……………………………………….. OZOTAMGBO, CHRISTOPHER O.

PG/MBA/06/45065

This is to certify that OZOTAMGBO, CHRISTOPHER O. a post

graduate student in the Department of Accountancy and with

registration number PG/MBA/06/45065 has satisfactorily completed

the requirements for project research in partial fulfillment of the

requirements for the Award of Masters of Business Administration

(MBA) in Accountancy.

……………………………. …………………………. DR. [MRS.] R.G. OKAFOR DR. [MRS.] R.G. OKAFOR SUPERVISOR HEAD OF DEPARTMENT

DATE……………………… DATE:………………………

DEDICATION

This project is dedicated to all men and women of goodwill.

ACKNOWLEDGEMENTS

To accomplish an academic research of this nature, many

people must have contributed in one way or the other towards the

success. To start with, this project would not have been made

possible without the research and writings of many authors,

researchers and academicians and clerics. Attempts have been

made to recognize them by citing where appropriate the authors

whose work have been helpful to the successful accomplishment of

this project. I feel indebted.

I am particularly grateful to my supervior and HOD of

Accountancy, Dr. Mrs. R.G. Okafor for the able way she has

supervised this write up to its conclusion. I cherish her knack for

thoroughness and objectivity. In fact I enjoyed every bit of my

tutelage under her.

My thanks goes to other lecturers and staff of the Department

of Accountancy, University of Nigeria Enugu Campus for their

contributions collectively and individually in making me who I am.

Thanks to Rev. Fr. Louis S.C. Ndulue, the Parish Priest of St.

Jude’s Parish 9th Mile Corner Ngwo, Enugu, Bro. Chivu Joe

Catechist, Our Lady of Lourdes Imezi Owa and Sir Pius Onyia,

Secretary C.M.O Enugu Diocese Holy Ghost Cathedral Ogui Enugu

and the Vicar General Rev. Fr. Msgr. Onaga, the director (CIDJAP);

Catholic Institute for Development, Justice, Charity and Peace, Rev.

Fr. Msgr. Obiora Ike for their immense contributions.

My thanks also go to my employers – State Universal Basic

Education Board, Enugu and Ezeagu Central LGEA Aguobu Owa for

having tolerated me while combing this programme with my work. I

extend much grace to my colleagues in the Department of

Accountancy – Ogbonna Ogbu, Esom Stanley, Agu Betty, Angela,

Ngozi Obeta and especially Innocent Okonkwo of Department of

Banking and Finance who was also the General class rep for is

enviable contributions. Thanks go to other innumerable friends for

their personal material contributions which I found quiet useful for my

research.

My appreciation goes to the members of my family and

relations for their love and understanding of my position during this

time of work.

Finally, my thanks and supplications go to the Almighty god for

His infinite mercy and kindness.

Ozotamgbo Christopher

March, 2009

ABSTRACT

This research project concerned a study of the financial record

keeping of religious organizations: A Case Study of Catholic

Churches in Enugu Diocese. A sample of sixty-three parishes was

made from the diocese. Investigations were carried on their financial

control used both internally and externally, the accounting system

and financial decisions/reporting adopted. This showed whether there

was an efficient and effective financial record keeping in the church.

Since rth research aimed at investigating existing financial record

keeping or practice the employment of descriptive method of

research was found adequate. The main instruments used for the

collection of primary data were the structured libraries and other

research units served as secondary data. The researcher ensured

that the questionnaire possessed to a large extent the characteristics

necessary and adequate for the purpose of validity and reliability.

Data collected were analyzed and presented with percentages and

tables and hypothesis were tested with the chi-square (X2) statistics

and the following results emerged.

The study revealed that the church keeps proper record of its

accounts and that there is accountability and responsibility, every

member of the finance council has to give account of the money

entrusted to him. It also showed that the church makes yearly budget

before expenses are incurred and that authorization and control of

church expenditure is vested on the management team.

Based on the finds, both short and long term measures were

recommended as ways of enhancing financial record keeping in

religious organizations.

TABLE OF CONTENTS

Title page ……………………………………………………….. i

Certification……………………………………………………… ii

Dedication ………………………………………………………. Iii

Acknowledgement………………………………………………. iv - v

Abstract…………………………………………………………… vi

Table of Contents……………………………………………….. vii

List of Tables……………………………………………………… viii

CHAPTER ONE: INTRODUCTION

1.1 Background of the Problem………………………………. 1-4

1.2 Statement of the Problem…………………………………. 4-5

1.3 Objectives of the Study……………………………………. 5

1.4 Research Questions………………………………………… 5-6

1.5 Statement of the Hypothesis ……………………………… 6

1.6 Scope of the Study ………………………………………… 7

1.7 Limitations of the Study …………………………………… 7-8

1.8 Significance of the Study …………………………………. 8-9

1.9 Definition of Terms …………………………………………. 9-12

References

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 (A) Origin of Catholic Church in Nigeria………………….14-15

(B) The History of Catholic Church in Igbo Land………..15-17

2.2 The Growth of Catholic Church in Enugu Diocese………...17-21

2.3 The Administrative Set Up of the Diocese………………….21-23

2.4 The Diocesan Financial Management Procedures……..…24-28

2.5 The Concepts of Financial Record Keeping/Evolution

of Record Keeping…………………………………………….29-31

2.6 The Nature and Characteristics of Financial System

of Non-Profit Organizations…………………………………..31-36

2.7 The Church Accounting Manaual……………………………37-41

2.8 Financial Decision Making Procedures in

Religious Organizations……………………………..………..42-51

2.9 Financial Control: Internal and External…………………….48-51

2.10 Financial Reporting and Accounting Records in Catholic

Organizations………………………………………………….52-59

References…………………………………………………….60-61

CHAPTER THREE : RESEARCH METHODOLOGY AND DESIGN

3.0 Introduction……………………………………………………..62

3.1 Sources of Data………………………………………………..62-63

3.2 Data Collection Method………………………………….……63-64

3.3 Population and Sample Size………………………………....64-65

3.4 Method of Data Analysis………………………………………..66

3.5 Re-statement of Hypotheses…………………………..…….66-67

3.6 Statistical Method of Data Analysis………………………….67-68

References……………………………………………………..69

CHAPTER FOUR: ANALYSIS OF RESEARCH RESULTS

4.1 Presentation and Analysis of Data………………………………70

4.2 Analysis of Questionnaire……………………………………...…71

4.2.1 Parishes Returns to the Dioceses……………………………….71

4.2.2 How the Church Keeps its Money……………………………….72

LISTS OF TABLES

2.0.1.1 Diagram of Financial Function……………………………...46

4.2.1.1 Parishes Returns to the Diocese……………………………71

4.2.1.2 How the Church Keeps Its Money…………………………...72

4.2.1.3 People that forms Signatory to Church’s Account………….74

4.2.1.4 Authorization of Church’s Expenditure…………………..….75

4.2.1.5 Method Used as Good Financial Management………….....76

4.2.1.6 How the Church’s Fund are Accounted for……………...….77

4.2.1.7 Maintenance of Proper Books of Accounts……………...….78

4.2.1.8 Types of Accounting System in Use………………………...79

4.2.1.9 Preparation of Budget…………...…………………………….79

4.2.10 Audited Account……………………………………………….80

4.2.11 Observing Church Accounting Manual……………...………81

4.3.1 Contingency Table on Proper Record Keeping as

Financial Control………………………………………………82

4.3.2 Contingency Table on Budgetary System as a Financial

Management Strategy………………………………………..83

4.3.3 Contingency Table for Testing Hypothesis 3 ………….......89

4.3.4 Contingency Table for Testing Hypothesis 4……………….91

4.2.3 People that Form Signatory to Church’s Bank

Account…………………………………………………….73-74

4.2.4 Authorization of Church’s Expenditure………………….74-75

4.2.5 Method Used as Good Financial Management……...…75-76

4.2.6 How The Church’s Funds are Accounted for…………...76-77

4.2.7 Maintenance of Proper Books of Accounts…………..…77-78

4.2.8 Types of Accounting System in Use……………………..78-79

4.2.9 Preparation of Budget………………………………………..79

4.2.10 Audited Accounts………………………………………………80

4.2.11 Observing Church Accounting Manual………………….80-81

4.3 Testing of Hypothesis……………………………………….81

4.3.1 Hypothesis I ………………………………………………81-83

4.3.2 Hypothesis II………………………………………………83-88

4.3.3 Hypothesis III……………………………………………...89-90

4.3.4 Hypothesis IV……………………………………………...90-92

CHAPTER FIVE: SUMMARY, RECOMMENDATIONS AND

CONCLUSION

5.1 Summary of Major Findings……………………………...93-98

5.2 Other Findings……………………………………………98-100

5.3 Recommendations….………………………………….100-101

5.4 Conclusion…………..………………………………….101-102

Bibliography…………………………………………….103-104

Appendix C…………………………………………………105

Questionnaire………………………………………..…106-110

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Every organization both business and non-business requires

and uses finance for its various activities. The business organizations

are set up primarily for profit making like banks, companies and other

related ventures while the religious organizations are not meant for

profit making but for rendering services and winning souls to God.

Religious organizations can come from inform of Christianity, Islam,

Buddhism, Hinduism and other religious sectors of organizations. The

religious organization of interest is Christian religion and indeed

Catholic Church.

Since finance is very vital for the welfare and growth of these

organizations, its administration has to be well accorded financial

records keeping. Finance at the macro level is the study of financial

planning, assets management and fundraising for business, while

macro is te study of finance institution and finance market and how

they operate within financial system (Anyafo, 2000:3). In view of

Emekekwue (1993:1), finance is primarily concerned with money and

momentary matters. In general, finance can be taken as a body of

principles and theories dealing with raiding, investing, managing and

employing funds by individual and organizations in private and public

sectors (Oye: 2002:7).

According to Osisioma (1996:63), a system is a complete array

of an ordered arrangement of interdependent elements, with a

common goal, related by a network of relationships. Such a system

has input process-output component, and it is in itself an information

system.

Financial systems are subsystems in a business organization

whose responsibility is to ensure that business transactions are

recorded in proper books of account on the basis of recognized

accounting practice, analyzed, interpreted and presented to the users

of accounting information (Ubesie, 1998:97). He further stressed that

financial system consists of financial intermediaries, financial market,

financial instruments, rules and norms that facilitate and regulate the

flow of funds through the macro economy.

In essence, Catholic Church as one of the religious

organizations is not meant for profit making but for bringing souls to

Christ. The church requires fund to administer its affairs and to carry

out its daily religious obligations. The funds are not necessarily

adequate to meet up to its numerous demands, though there are

various sources of generating income. It is then necessary to

determine the financial income being used by the churches whether

there are proper record keeping, the financial decisions and reporting

made and the accounting system or procedure adopted. There arises

the need for the church to keep track of its financial operations, this

helps form an adage for it to control its income against its

expenditure. Thus, a house built on a solid foundation remains a

strong house but that whose foundation is shaky can crumble at any

time. In the same way, a good financial background of a church can

be said to be the foundation on which the church is built.

Therefore, the importance of finance, its adequacy to the

church and how these are managed and controlled has led to the

topic of the study financial record-keeping of religious organizations,

a case study of Catholic Church in Enugu Diocese.

1.2 STATEMENT OF THE PROBLEM

Many religious organizations are now being faced with the

problem of finance, the inadequacy of funds to carry outs their

religious rites. Catholic churches are not an exception as most of the

churches are incapacitated in terms of fund, yet there are several

sources of finance but the church seems not to meet up its financial

demand. For good financial records, there must be a well developed

financial decision and reporting procedures and financial control

being used or operated.

It is based on this, that the researcher topic is chosen to asses

the financial record keeping of religious organizations taken into

consideration, Catholic Church in Enugu Diocese so as to know how

the church manages and controls its fund and to suggest ways they

can be improved for a better result.

1.3 OBJECTIVES OF THE STUDY

The main purpose of this research work is to determine the

financial record keeping in use for Catholic Churches in Enugu

Diocese and appropriateness of the financial management and

control. The research work will attempt to provide an in-depth

information on the financial record-keeping of religious organizations

of the Catholic Churches in Enugu Diocese. Specifically, the study is

intended to find the followings:

1. Whether there is effective financial control or not.

2. To know the financial decision making procedure and who

takes the responsibility.

3. To find the financial reporting and accounting records being

used by the Catholic Churches in Enugu Diocese.

1.4 RESEARCH QUESTIONS

In the course of solving the problem of insufficient fund for the

churches, the following questions arose:

1. How are the accounting procedures being used?

2. Are proper accounting records being kept?

3. Is the church observing any accounting manual?

4. Who are responsible for taking financial decisions and plans?

1.5 STATEMENT OF HYPOTHESES

The researcher formulated the following hypotheses:

Hi: There is a significant relationship between the proper financial

records and accounting records of the catholic churches as a

means of controlling expenditure.

H2: Budgetary accounting records are effective management

strategy.

H3: The Catholic Church accounting records keeping is in

conformity with the Diocesan Accounting Manual.

H4: Authorization and control of Catholic Church expenditure are

vested on the church management team.

1.6 SCOPE OF THE STUDY

Any analysis of the appropriateness of financial management

and control and how the funds are being administered and its

adequacy to the individual churches form the basis for research work.

However, the scope of inquiry for this study is based on the

Catholic Diocese of Enugu and some selected parishes like St. Jude

Jude’s Catholic Church Parish 9th Mile Corner, Ngwo and Our Lady of

Lourdes, Imezi Owa for the analysis. The reason being that Catholic

Churches are the same everywhere and indeed in all the parishes

and they also follow the same doctrine and system of operation,

therefore covering all the parishes will be a waste of time and will

make no difference.

1.7 LIMITATIONS OF THE STUDY

One of the limitations of this study is the transportation cost

incurred in visiting the Dioceses, as most times, the priest or the

financial administrators of the dioceses were met absent, therefore,

the researcher has to repeat the visit so as to get the information

required.

Also, much time were wasted in the process of collecting the

necessary data for the study as those responsible to divulge the

information were so reluctant, therefore the researcher/writer waited

for some information that could be gotten concerning the study.

Those times wasted in waiting for the collection of data would have

been used by the researcher to meet up or acquire knowledge on the

study in view or related study.

Besides, the greatest limitation to the study has been the

inability to collect data for the study. Apart from having no related

work done on the topic, the researcher could not easily get the

information for the study. Though, some of the data were gotten later,

the researcher did not find it easy, but managed to get small data for

the analysis.

1.8 SIGNIFICANCE OF THE STUDY

The study is set out to determine the ”financial records keeping

of religious organizations”: A Case Study of Catholic Churches in

Enugu Diocese. It shows at a glance and most importantly, the

overview of the financial records, the financial control, the accounting

system and procedure and indeed financial decision and reporting of

the catholic churches. There is no doubt that the study will benefit not

only the Catholics but also other Christians and other religious

organizations to borrow a leaf from the church so as to maintain a

sound financial system in their various religious groups. Also, the

study will help to remove the misconception from the minds of some

people that church leaders spend church’s fund anyhow. Also, the

analysis and recommendations on this study will go a long way to

alleviate this.

In essences, the study will be beneficial to students of finance

and accounting so as to enlighten them more on finance and

accounting system of religious organizations. It will also serve as a

reference point for further studies.

1.9 DEFINITION OF TERMS

1. FINANCE: A body of principles and theories dealing with

raising, investing, managing and employing funds by individuals

and organizations in the private and public sectors. Financial

managers can take three main decisions; finance, investing and

dividend decisions.

2. FUNDS: This is regarded as cash or its equivalent, example

cheques, drafts, money orders, etc. The term may be used to

include securities which have a ready market and can be

quickly liquated.

3. FINANCE COMMITTEE: This is an association where those

involved or are specialized in finance shall have power to

supervise the financial affairs of the corporation or organization

and shall report to the board from time to time whenever it shall

be called upon to do so.

4. APOSTOLIC SEE: This sometimes was a see ruled by one

of the apostles but now it refers for Rome, the city of the Pope,

which her rules as Bishop of the Diocese of Rome. This term

also applies to governing bodies of the church with official

governing bodies in the Vatican, the branch of the Roman Curia

which cut only under the authority of the Pope.

5. ECCLESTICAL: This adjective simply means ”of pertaining to

the church” thus, there are ecclestical courts, calendars,

honours, laws (of Canon Law) jurisdiction, studies and others. It

is derived from the Greek word “ecclesia”

6. TEMPORAL GOODS: This are created materials and extended

to creatures and possession that can acquire such as money,

precious items. Temporal goods are used only for those

purposes to the teaching of Christ the Lord.

7. JURIDICAL PERSONS: This is the public power granted by

Christ or by His Church Canonical Mission of favoring the

baptized. This power is referred to that belonging to the church

as a perfect society, whereby the church affects a rule for the

spiritual goods of its members. In matters referring to salvation,

it is the right of a person or agency, to pass or apply a given law

in a specific situation.

8. PRESCRIPTS: This is a written reply of a religious supervisor

to a request report or question. In the make of it, it repeats the

request and facts together with the reasons and then offers the

answers with the conditions. It is the usual form through which

dispensation are granted or derived.

10. CLERGY: Any clerical person but not reverend sisters.

11. DIOCESAN BISHOP: Bishop of the Diocese is different from

Monks and Abbot e.g. M.U Eneje.

12. EPISCOPAL CONFERENCE: Conference of the Popes.

13. MENDICANT RELIGIONS: Religions that live on begging.

REFERENCES

Emekekwue; P.E (1993), Principles of Public Finance, Kinshasa-

Zaire, African Bureau of Educational Sciences Special Agency of the Organization of African Unity, P.1

Melicher, and Welshans (1986), Finance: Introduction to Markets, Institutions and Management, 8th Edition, Ohio, South West Publishing Company.

Osisioma, B.C. (1996), Studies in Accountancy: Text and Reading,

Enugu, Acene Publishers Limited, P.63.

Oye, A. (2002), Financial Management, Papa Ajao Mushin Lagos, EL-Toda Ventures Limited, P.7

The New Catholic Encyclopedia (1967), The Catholic University of America Washington D.C, Printed in America, P.64

Ubesie, M.C (1998), Advanced Financial Accounting, Enugu, Computer Edge Publishers, P. 97

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 BACKGROUND OF THE STUDY

A. ORIGIN OF CATHOLIC CHURCH IN NIGERIA

The Roman Catholic Mission came to Nigeria via Dahomey

(presently the Federal Republic of Benin), the Italian Roman Catholic

Father Borghero stationed at Whydah in Dahomey. In 1860 he visited

Abeokuta and Lagos, the freed slaves from Brazil had settled in

Lagos and were mostly Roman Catholic, Father Borghero landed in

Lagos in 1862 and was surprised at the number of Brazilians who at

some time in their history had been baptized in the Roman Catholic

Church. At this time, it was impossible to make Lagos autonomous as

a mission station with resident priest; thus Lagos was treated as an

out station of Whydah in Dahomey. Hence, with in ten years of Father

Borghero’s visit to Nigeria, the Roman Catholic Church in Nigeria had

become so well established that it was separated from the Roman

Catholic Church in Dahomey.

However, in 1868, Father Pierre Bouche arrived as the first

resident priest of this mission in Nigeria. A Chapel was built and in

1869, two Irish brothers started a school in Lagos. From these

beginning, the Roman Catholic Church in Nigeria was spread and by

1885, this chuch had gone further inland, thanks to Father Lutz who

worked around Onitsha. Another missionary important in the spread

of Catholic Church in Nigeria was Bishop Shanahan from Ireland.

B. THE HISTORY OF CATHOLIC CHURCH IN IGBO LAND.

The first Catholic Missionaries came to Eastern Nigeria in 1885

with Holy Trinity Onitsha as centre; these French Holy Ghost

Missionaries spread the faith to Nsugbe, Aguleri, Nkwelle, Ossamari

and Igbariam. They defied all hardships and continued the push into

th hinterland, sowing more seeds of faith in Christ among the peoples

of Eastern Nigeria. The pioneers were Father Lutz, Horne, Buben

Dorf, Lejeune and Brother Herman Lean Sotto and David. Indeed,

the problems and difficulties faced by the pioneer missionaries were

almost insurmountable. At that time, the first missionaries landed at

Onitsha in November 1885, there were only few Igbo men who could

speak and understand English, so communication problem posed a

major obstacle between the early missionaries and their hosts who

were given frontal attack by the establishment of schools where the

peole studied how to read and write and the products of these

schools became interpreters for the missionaries. The interpreters

became teachers and Catechists, and it was only after the civilian war

85 years after the advent of Catholic Missionaries that the roles of

interpreters phased out as indigenous clergy came on the scene to

take over from expatriate mentors.

Other problems were the double standards of some Catholics

who though baptized and even received the Holy Communion yet

indulged in pagan rituals like Odo, Omobe, Ibuno etc. There were

also neo-paganism which as the most common among the so called

elites who think that by reverting to pagan practices and idol worship,

they were preserving their culture. However, the missionaries

preached against traditional worship, burial ceremonies, title taking,

oracular consultations, polygamy, killing of twins, masquerading,

native dancing and even body painting with idigo and clam-wood.

Again, there were serious rivalries between the missionary bodies

and Protestants and that of Catholics over who could convert more

followers and thus generate influence. Though there were no bloody

clashes but the rivalry almost took the form of struggles to acquire

more lands for mission, to establish schools and to organize more

social Christian activities.

2.2 THE GROWTH OF CATHOLIC CHURCH IN ENUGU

DIOCESE

It was on November 21, 1962 that Enugu was declared a

diocese by His Holiness, Pope John XXIII and John Cross Anyogu

was appointed its first bishop of Enugu Diocese on January 15, 1963,

before this, the coming of Catholicism was thoroughly prepared for in

Enugu area even before the actual coming of Christian missionaries.

The people spontaneous hospitality, the irreversible process of

communication in consciousness in every community, the over

simplicity and in humility of the normal man of the area and their

transparent openness to truth are few of the wonderful work of the

Word of God written in the hearts of men. A witness was noted to this

century in making world know that “zoning system” initiated by Iva-

Valley in 1956 by the Parish Priest, Father Michael Eneje has

become one of the most effective modern evangelization strategies

for reaching every person and getting all Catholics committed to true

Christians in Igbo land.

Moreso, the growth and the future of the church especially the

second century Christianity in Enugu diocese has a very solid

foundation in that its youths is a group of committed enthusiastic and

selfless Christians. This dedication became very apparent during the

visit of Pope Paul II in Nigeria in 1982. The youths worked so hard to

prepare the Enugu Airport that the Pope was compelled to change his

protocol in order to show appreciation for the marvelous arrangement

made in the airport by the diocese and indeed the whole Nigerians

prepared so much for the coming of the Pope for the second time in

Nigeria. The coming of Pope John Paul II the second time in Nigeria

was the beatification of Rev. Father Michael Cyprian Iwene Tansi at

Oba in Anambra State on 21st of March 1998. The visit was so

wonderful and Enugu Diocese prepared in a special way for the visit.

However, the theology of incarnation is so favorite theme of the

diocese and the Catholics of the diocese having a saying that the

church is never a tenant in any part of the world but rather a landlord.

We can say that Jesus Christ is actually structurally incarnated in the

diocese when we think of the numerous ecclesiastical establishment

such as Sacred Heart Seminary Nsude, St. John’s Cross Seminary

Nsukka, Novitiates Missionaries, The Institute of Ecumenical

Educational Thinkers Corner, Leadership Training Camp Awhum,

The Spiritual House of Philosophy at Isienu, the theological faculty of

Bigard Mermorial Seminary Enugu and the Pastoral Centre, Ugwu di

nso at Eke in Udi Local Government Area.

Indeed, the diocese was the first catholic diocese in Nigeria to

organize and hold a synod and from the synod diocese; one can see

the far-reaching theological decisions of the diocese which now

paves the way to a smooth flow over into the theological life of the

second century, making solid foundation for the future of Christianity

in Igbo land.

In its administrative affairs, the diocese has witness changes in

the appointment of its Bishop (Babalola, 1976:67). As at November

12, 1962, when Enugu was made a diocese by His Holiness Pope

John XXIII, John Cross Anyogu was appointed its first Bishop on

January 15th 1963 after the death of Bishop Anyogu, no new bishop

was immediately elected or appointed, instead the administration of

the diocese was left in the hands of a vicar general in the person of

Monsignor S.N Ezeanya – a position he occupied till 1971, His

Holiness Pope Paul VI of Blessed Memory transferred Rt. Rev. Dr.

Godfrey Mary Paul Okoye, C.S.S.P, former Bishop of Port Harcourt to

Enugu Diocese. He took possession of the see canonically on 17th of

March 1971 with the death of Bishop Godfrey Mary Paul Okoye, the

seat of the bishop was vacant. It was Rt. Rev. Michael .U.

Eneje who succeeded the late Bishop Okoye and now former Bishop

of Isele-UKu diocese has been transferred to Enugu as the new

bishop of Enugu Diocese Rt. Rev. Dr. Anthony Okonkwo Gbuji to

administer its affairs.

2.3 THE ADMINISTRATIVE SET UP OF THE DIOCESE

According to Eneasota (1985:35) that Catholic Church has an

inherent right, independently of any secular power to acquire, retain,

administer alienate temporal goods in pursuit of its proper objectives.

These proper objectives are principally the regulation of divine

worship, the provision of fitting support for the works of the sacred

apostolate and charity especially the needy. According to Code of

Cannon Law (1967:135), the universal church and other public and

private juridical persons are capable of acquiring, retaining,

administering ands alienating temporal goods in accordance with the

law under the supreme authority of the Roman Pontiff, ownership of

goods belong to that juridical person which has lawfully acquired

them.

In every diocese, there is to be a special fund which collects

offerings and temporal goods for the purpose of providing in

accordance with CAN 281, for the support of the clergy who serve the

diocese, unless otherwise catered for where there is yet no properly

organized system of social provision for the clergy, the Episcopal

conference is to see that a fund is established which will furnish

adequate social security for them. To the extent that it is required, a

common reserve is to be established in every diocese by which the

Bishop is enabled to fulfill his obligations towards other persons who

serve the church and to meet various needs of the diocese this can

also be the means by which wealthier dioceses may help poor ones.

In carrying out acts of administration which in the light of the

financial situation of the diocese, are major importance, the diocese

Bishop must consult the finance committee and the college of

consulters. For acts of extraordinary administration, except in cases

expressly provided for in the universal law or stated in the documents

of foundations, the diocesan bishop needs the consent of committee

and of the college of consulters. It is for the Episcopal conference to

determine what are to be regarded as acts of extraordinary

administration.

The administration of ecclesiastical goods pertains to the zone

with the direct power of governance over the person to whom the

gods belong, unless particular law or statutes or legitimate customer

state, otherwise and without prejudice to the right of the ordinary to

intervene where there is negligence on the part of administrators.

Where no administrators are appointed for a public juridical

person by law or by documents of foundations or by its own statutes

the ordinary to which it is subject to appoint suitable persons as

administrator for a three year term. The same persons can be re-

appointed by the ordinary. Every juridical person is to have its finance

committee or at least two counselors, who are to assist in the

performance of the administrator duties, in accordance with the

statutes.

2.4 THE DIOCESAN FINANCIAL MANAGEMENT PROCEDURES

Management is the process of converting information into

action (Olademeji, 1985:25). Effective internal control should be part

of the management function for an organization to be run as effective

as and efficient at the same time. The responsibilities of the finance

manager fall into three broad areas, provision, allocation and control

of financial resources to enable the organization to achieve its

objectives. Having secured the necessary financial resources

whether raised from internally generated sources or from external

sources, the financial manager needs to ensure that the fund are

allocated to their most efficient and productive uses.

Consequently, to ensure a proper and correct administration of

temporal diocesan ordinaries (or their equivalents) there should be

established, financial committee or council as presented by Cannons

(492-494). These committees or councils are to fulfill their task with

the greatest possible transparency and responsibility and that they

send to the Holy See annually detailed and precise report, concerning

the subsidies received from agencies of organizations and the

manner they are to be utilized.

The administrators of the church are to render financial account

annually to the diocesan ordinary and also to the faithful of the use

that has been made of the goods which they have offered to the

church in accordance with the norms established by particular law.

More so, the Parish Finance Council and Parish Pastoral

Council are responsible for the financial management of the church.

With the establishment of parish finance council in the diocese in

compliance with Canon 537, it states that each parish is to have

financial council as follows:

- Parish Finance Council is therefore obligatory in all parishes

irrespective of the size and value of the temporal goods they

possess.

- It prepares budgets of anticipated income and expenditure for

the forthcoming financial year which shall be submitted to the

diocesan Bishop before 31st October, of the proceeding year. A

budget system is planning for the futures even parishes with

meager can reduce finance of the church with the budget, the

parish budgeted estimate must be presented by the parish

finance council in joint meeting of the two for discussion and

approval. The two bodies should in this joint meeting draw a

proper parish policy guidelines to guide the Parish Finance

Council in the preparation of the current budget committees in

conformity with the diocesan outlines and directives.

- It prepares the annual financial report which shall be submitted

to the diocesan bishop. The annual financial reports consist of

(a) income and expenditure account (b) receipts and payment

account (c) balance sheet of the parish and all parish projects.

- It maintains proper books of accounts of all receipts and

payment, assets and liabilities of the parish and all the parish

projects.

- It advises an appropriate investment of some money not

immediately needed avoiding recklessness in such investment.

- It maintains parish fixed assets register to include all parish

properties.

- It helps the parish to observe the social doctrines of the church

regarding labour relations and social security of personnel

employed in the parish (like the catechist, the cook, watchman,

washer man and gardener etc.

- It reconciles parish bank accounts quarterly.

- The number of the parish finance council may on invitation

assist the parish priest in the maintenance of accounts, cash

and bank books, preparation of payment voucher or petty cash

and 6 months bank reconciliation statement.

- It organizes the collection of accounting, banking and recording

of all collection other than collection on account B.

- It monitors the budget and reviews its performance and takes

immediate remedial actions to forestall any unfavourable

deviation from approved budget plan.

- it sanctions the preparation of supplementary estimates for

expenditure above amount already approved in the budget and

obtains the approval of the parish pastoral council and parish

finance council before any expenditure budget.

However, the congregation to evangelization of peoples in

Rome has instructed the entire diocese to comply to Cannon law in

respect of:

- Proper administration and safe guarding of eccelestical goods

(Cannon 1277, 1284 etc).

- Offering the ecclesial community and guarantee of

transparency and of the faithful administration of church goods

(Cannon 1287B).

- Preparation of Audited Financial Report to the diocesan

ordinary thence to the Holy See.

Rendering an account to the faithful of the goods which they

have offered to the church in accordance with the establishment of

parish by particular law.

2.5 THE CONCEPT OF FINANCIAL RECORD-

KEEPING/EVOLUTION OF RECORD KEEPING

The origin of recording according to Okafor et al (1996:1) can

be traced back to ancient civilization in Babylon, Egypt, Rome and

Greece. Early Babylonians had begun by 4500BC, to levy and collect

taxes and records the receipts and disbursements. The development

of “papyrus” and “calamus” as paper and pen respectively by early

Egyptians is a great impetus to record keeping.

Before the advent of writing, man could talk and could express

himself in drawing but he could not write. Therefore, record keeping

could be dated back to about 300BC with the discovery of

“hieroglyphics and cuneiform” writing by early Egyptians and

Babylonians respectively. The introduction of the decimal system by

the Arabs as early as 850AD greatly enhanced the development of

recording keeping.

The emergency of money as a medium of exchange has

provided impetus for development of accounting and record keeping

(Okafor, 1996:1). It becomes necessary to record business events on

monetary aspect rather than on physical quantities. Moreover, the

industrial revolution of 18th century which brought about ample growth

in the world trades and industry provided an important stimulus to

accounting and record keeping.

The businesses have been on continuous growth and

expansion, resulting in increased need for information through proper

recording. Before this era, businesses were on small scale and

individual proprietors were so personally involved in the business tat

the need for information was less required. The industrial revolution

was in effect the basis of the modern business enterprises ranging

from partnership to joint stock companies. In view of Okpe (1998:1),

described business organization as the vehicle for mobilization of

funds and human resources”. He further stressed that it involves the

principle of stewardship or accountability which marks a step further

in the development of accounting and record-keeping.

There is great need for effective and efficient communication

network between the enterprises and the interested parties especially

for showing how the resources are utilized.

In the opinion of Okpe, (1998:1), he stressed that of the man or

an entity just going into business, experience has clearly indicated

that an adequate record keeping system helps to increase the

chances of survival and reduces probability of early failure. Similarly,

for established industrialist, it has been clearly demonstrated that a

good record keeping system increases his chances of staying in

business and or earning desirable profits.

Record-keeping can help owner managers of small enterprises

keeping their business on a sound basis.

2.6 THE NATURE AND CHARACTERISTICS OF FINANCIAL

SYSTEM OF NON-PROFIT ORGANIZATIONS

The non-profit making organizations are established mainly to

render services and not to make profits (Freeman, 1988:14) the

objectives of most non profit organizations are to provide as many

goods or as much service each year as their financial and other

resources permit. They typically operate on a year-to-year basis,

raising as much financial resources as possible and expending them

in serving their constituency. The non-profit organizations include a

wide variety of organizations in the present social and economic

environment. They include government units – Federal, State and

other educational institutions, hospitals and health care organizations,

voluntary association, research organizations, foundation and other

social and cultural organizations.

According to Freeman (1988:16), he observed that financial

management of a non-profit organization typically focuses on

“acquiring and using financial resources upon sources and uses of

working capital, budget status and cash flow rather than on net

income or earning per share”. There is no profit motive and there is

no individual share holders to whom dividends are paid.

In essence, businesses are organized for profit, the church for

Christian services. Again businesses may be re-organized, sold or

liquidated, churches are difficult to re-organize or liquate and their

properties are rarely considered as cash assets. The use of funds is

restricted when given by donor for specific purpose. In other words,

some assets are restricted for a particular purpose like in a club, the

members may be assessed for certain capital improvements such as

the construction of a swimming pool, the proceeds from the

assessment will be set in a restricted fund to be used only for that

particular purpose.

In view of James et al (1976:24) in their handbook titled “The

Modern Accountant Handbook” the measurement of the benefits

resulting from sacrifices of the non-profit organizations are much ore

difficult since the attainment of goals can be measured only in term of

“performance” to compare to that of commercial enterprises which

can be measured as net income. The commercial organizations do

have the responsibilities to report on the stewardship of their

resources, the emphasis of their accountability is on the utilization of

the resources to earn a profit. But in non-profit organization, the

emphasis is placed on accountability and stewardship.

It is important to understand that the standard of reporting for

non-profit organizations have developed differently from commercial

accounting standards because there is a difference in emphasis in

the objectives for recording the date and because of legally binding

restrictions in non-profit organizations which have no real counterpart

in business enterprises. One of the characteristics of non-profit

organization is that those contributing financial resources to the

organization do not necessary receive or proportionate share of its

goods or services (Freeman, 1988:40).

The non-profit organizational financial reporting should provide

the economic resources, obligations and net resources of an

organization and the effects of transactions, events and

circumstances tha change resources and interests in those resources

(Harry, 1993:16). The performance of an organization during a

periodic measurement of the changes in the amount and nature of

the net resources of a non-business organizations, and information

about its service efforts and accomplishment provided that the

information most useful in accessing its performance. How an

organization obtains and other factors that may affect an

organization’s liquidity should include an explanations and

interpretation to help users understand financial information provided.

In relation to James et al (1976), the objective of record keeping

and the presentation of data is to make available meaningful financial

information. This requires appropriate and adequate disclosure of the

information required by the users of financial data. The purpose of

preparing and presenting such data are comparable to the purposes

of presenting financial statements for commercial profit seeking

corporations.

Because of both and special nature of the data required and

historical developments specialized accounting principles and

reporting practices can and, in a number of instance, do differ

materially from the principles and reporting practices of commercial

organizations.

The emphasis in a non – profit organization accounting is on

“stewardship” rather than on matching cost with revenues. This

emphasis arises from the fact that non-profit organizations receive

funds for which they must maintain accountability. This takes the form

of general accountability and specific accountability. The non-profit

organization (school or colleges, church, hospital, community funds

etc) are established to carry out special functions and to meet the

designed objectives of the organizations. The organizations have the

general accountability to use the funds and resources it receives for

the established objectives. In some cases, funds are contributed for

use in a specific accountability to be certain that the specific

requirements on the donor are carried out.

The general characteristics of recording and reporting data for

the various types of non-profit organizations are similar; the historical

development of accounting principles and procedures has resulted in

a variety of record-keeping procedures and forms of presentation of

the financial data. Recognizing the need for uniformity in reporting

some of the organization groups (e.g. colleges and universities,

hospitals, states and local government, churches, voluntary health

and welfare organizations) developed manual doe use by their

groups.

2.7 THE CHURCH ACCOUNTING MANUAL

In the opinion of Harry (1993:20) the general accounting

manuals includes a general description of the overall accounting

system, the charts of accounts, numbering scheme, account

description and if desired the general accounting principles and

policies being followed. Parts of the general accounting manual are

usually included in the user manual to provide account coding

information to outside department such as purchasing, receiving and

others to code transaction documents or otherwise providing

accounting information a more complete manual containing a section

of accounting principles and general procedures.

The accounting manual may contain copies of reports, and

accounting statement produced by the system. The user manual is

most useful in interpreting where non accountants initiate or prepare

original accounting forms or documents that provide accounting

information to the general accounting operations. The users’ manual

has a listing of income and expense account numbers and codes and

descriptions and use of accounting forms. It can be used as a training

tool for non accounting supervisors, secretaries and others who are

involved in adding or checking data on accounting input documents.

However, the 1998 annual budget estimate of the catholic

diocese of Enugu suggested that the following items should be

guided by a church accounting manual:

1. Revenue Receipts:

A. Income Accounts

Various sources:

i. Zonal Contributions

ii. Harvest and bazaar proceeds (90%)

iii. Sales of cards, forms, certificates, bulletins

iv. Sales of fixed assets.

v. Other sales.

B. Income Accounts

Investment income

i. Dividends

ii. Interests on bank deposits

C. Income Account A.

Donations and levies

i. Diocesan levies

ii. Parish donations and gifts (non-capital)

iii. Parish Approved levies (non capital)

D. Income Account A.

Trust and Loans

i. Scholarships

ii. Non capital loans receivable

iii. Major seminary support

iv. Minor Seminary support

v. Seminarians on Apostolic work

vi. Non capital diocesan grants

E. Description

Income Account B.

i. Offering collections

ii. Mass stipends

iii. A.M.C

iv. Stole fees

v. 10% Harvest and Bazaar proceeds

F. Special Collections

Income Account

Diocesan Collections

i. Cathedraticum

ii. Diocesan Day

iii. Pentecost Week

iv. Vocation week

v. Lenten fast

vi. Catechetical week

vii. Bible week

viii. Any other specify

Pontifical Collections

i. Holy Child

ii. Seminary/Good Shepherd

iii. World Communication Day

iv. Peter Pence

v. Mission Sunday

vi. Holy land

vii. Youth Day

viii. Any other (Specify)

Sub-Total Pontifical Collection

National Collections

i. CIWA

ii. AECAWA

iii. CSN

iv. Abuja Sec. Complex

v. Rwanda

vi. Any other (Specify)

Sub-Total National Collections

Local Collections

i. Armed Forces and Remembrance Day

ii. Any Other (Specify)

Sub-Total Local Collections

Total special collections

(i) to (ii)

Parish Project Receipts

E.g. Project A: Rental Income

Project B: Hiring Receipts

Project C: Transport Receipts

Project D: School fees

Project E: Poultry Receipts

Total Parish Project Receipt

2.8 FINANCIAL DECISION MAKINGS PROCEDURES IN

RELIGIOUS ORGANIZATIONS

The financial decision making in religion organizations like

Christian religions is being taken by the church officials in charge of

finance with the overall conclusion by the pastor or priest for the

particular church. Before any expenses or project is to be executed,

the priest in conjunction with finance council will deliberate on it and

decide the amounts that are to be expended. This forms a basis for

controlling excessive spending and relating actual income to it

expenditure. Most of the churches operate a bank account of which

the priest or the pastor forms the signatory to the account along with

the person that handles the cash. Thus financial decision making in

religious organizations involves taking risks.

According to Anyafo (1997:25) in his book “God’s People

Finance”, decision making is not an easy task, it is even more difficult

when it has to do with money. We are talking about financial

derivation by risk taking. Financial decision making is made most of

the time under conditions of uncertainty. Because of uncertainty of

outcome, there is risk. A systematic approach to solving decision

problems under conditions of uncertainty is referred to as decision

analysis (Anyafo, 2001:8). It seeks to prescribe a decision for the

individual that is consistent with his or her preferences and attitude

towards risks.

Real life decision problems; financial or otherwise involves the

selections of a course of actions from among two or more

alternatives. This can be classified into two or more categories:

i. Decision-making under uncertainty: This entails the selections

of a course of actions when we do not know the certainty the

results that each alternative action will yield. However, it is

assumed that the outcome of whatever course of action we

selected is affected only by chance and not by an opponent or

competitor.

ii. Decision-making under conflict: This is similar to decision

making under uncertainty in that we do not know with certainty

the result each available alternative course of action will yield.

However, the reason for this uncertainty is different in the case

of decision making under conflict. In such cases, we are in

effect confronted by one or more opponents or competitors.

The outcome of our chosen course of action depends on

decisions made by our opponents. Decision problems of this

type fall under the discipline known as game theory.

Because Satan is an opponent, the Christian is confronted most

of the time with decision making under conflict. Nevertheless, the

bible assures that you are of God, little children, and have overcome

them; because greater is He that is in you than he that is in the world

(1 John 4:4). The Christian is well equipped to take risk because

greater is Jesus Christ that is in Him than Satan that is in the world.

Making money involves risk-taking of some degree. Every child or

God has the privilege of transferring these risks to Jesus Christ who

stretches out His hands to take over the risks with the words come

unto me, all ye that labour and are heavy laden, I will give you rest

(Matthew 11:28).

However, the financial decision making in Catholic Church is

being taken by the Parish Finance Councils of the parish with the

parish priest as the chairman. The Parish council decides the

financial strength of the parish by consulting the Finance Committee

and discusses all financial prospects of each organization or society

that make up the parish and act accordingly. Thus, the Parish Council

calls for tenders, selects and approves one and authorizes treasurer

and parish priest to pay on completions of the project. The parish

finance council discusses relevant issues concerning the church with

the parish priest and decides how the matter will be solved financially.

In other words, the parish priest does not have sole authority to the

church’s funds but takes directives or works along with the parish

council on issues concerning finance. Because of the vital importance

of the financial decisions to the church. It is essential to set up a

sound and effective organization for the finance functions. The

ultimate responsibility of carrying out the financial functions lies with

the Bishop see the fig below:

BISHOP

FINANCE COMMITTEE PARISH COUNCIL

FINANCIAL ADMINISTRATION

i. Bishop: Is in charge and responsible for all financial state of

the diocese. He oversees dioceasan financial council and the

parish council.

ii. Parish Council: it is made up of all elected station council

representative, elected presidents of societies that operate at

the parish level ands reverend father’s representatives. The

Reverend Father is the head of the parish priest as regards the

financial state of the parish.

iii. Finance Committee: Seeks means of generating funds to

parishes. It advises the parish priest on how to use the funds,

where to use the funds, when to use it and how much to use for

the benefit of the parish.

iv. Financial Administrator: In charge of the Cathedral and also

its financial record-keeping. According to Code of Cannon Law,

(492-494), the finance committee is established in each diocese

to be presided over by the diocesan bishop or his delegate.

Besides this function entrusted to it in book v on the temporal

goods of church, it is the responsibility of the finance committee

to prepare each year a budget of income and expenditure over

the coming year for the governance of the whole diocese in

accordance with the direction of the bishop. It is also the

responsibility of the finance committee to account at the end of

the year for income and expenditure. The financial director is

also appointed in each diocese by the bishop, after consulting

the college of consulters and the finance committee. It has its

responsibility under the authority of the Bishop to administer the

goods of the diocese in accordance with the plan of the

payments from the diocesan funds which the bishop or his

delegates have lawfully authorized. At the end of the year, the

financial administrator must give the finance committee an

account of income and expenditure.

2.9 FINANCIAL CONTROL: INTERNAL AND EXTERNAL

The establishment of church is mainly channeled towards

bringing souls to God and not for profit making (Olademej, 1985:35).

Though the fund for managing its affairs has to be controlled, there is

the necessity for an effective approach to the exercise of appropriates

and effective controls over the finance of the church. Control is a

management activity of comparing actual output or performance with

pre-determined or planned situation and analyzing any differences for

purpose of managerial corrective actions and co-ordination. Such

controls are of two types viz.: internal controls and external controls.

Internal control must be such that it will establish the credibility

and project the image of the church as semi-autonomous

organization able to plain their financial programmes and collect and

disburse their monies in a controlled and systematic manner

designed to achieve their objectives without waste or loss and at a

minimum cost. Millichamp (1986:42), internal control system is

defined as the whole system of controls, financial and otherwise

established by the management in order to carry on the business of

the enterprise in an orderly and efficient manner, ensure adherence

to management policies, safeguard the assets and secure as far as

possible the completeness and accuracy of the record. The individual

components of an internal control system are known as “control”.

More so, a good system of supervision and control over church

fund is necessary in order to be able to prevent fraud and detect

errors as soon as possible. They advocated for the appointment of

church auditors both internal and external. The duties of the

accountants will not stop with the preparation and submission of

income and expenditure accounts but also must find the best way to

present and communicate to members the financial statement of the

church at various levels of expenditures and to the appropriate

bodies.

It is however, pointed out that managers should see that money

is being expended in a systematic way and should make sure that

church items are not consumed too fast. Thus, for financial control

purpose, the manager or whoever is in control of church’s fund

should try to control cost by eliminating unnecessary spending and

making sure that money donated by people are judiciously utilized for

the purpose it was received.

In essence, the existence or effective internal and external

control of this nature should be of considerable importance to the

progressive development of sound financial management. The most

important to the internal financial control fund in catholic churches are

the preparation of annual and supplementary estimate of income and

expenditure and the operation of a system designed to ensure that

actual expenditure does not exceed the approved estimates. Also,

that of revenue reaching the budgeting figure so that the finance of

the church will be well managed.

Each individual parish in the diocese sends their yearly budgets

to the diocese. In the parish level, there is internal control where the

financial secretary collects, records and deposits money into the bank

account of the parish. The parish priest and treasurer or one other

person are the authorized signatories to the account. Also another

form of internal control is the appointment of financial committee who

have special responsibilities for the maintenance of effective system

of financial control.

In terms of external control, the diocese controls over the

finances of the parishes. Each parish priest is expected to present an

annual budget of his parish to diocese, and also expected to render

an annual or semi-annual account of all income and expenditures of

the parish. The parishes should be encouraged to stand on their own

feet and prove that they have demonstrated a sound understanding

of their financial responsibilities and of public accountability.

2.10 FINANCIAL REPORTING AND ACCOUNTING RECORDS IN

CATHOLIC ORGANIZATIONS

In “Government and Non – profit Accounting Theory and

Practice by Freeman Craig and Lynn (1988:50) the authors stipulated

that the financial reporting of non profit organization each included

religious organization (church) emphasized that such reporting should

provide the following information:

- The economic resources, obligations and net resources of an

organization and the effects of transactions, events and

circumstances that change resources and interest in those

resources.

- The performance of an organization during a periodic

measurement of the changes in amount and nature of the net

resources of a non-business organization and information must

be useful in assessing its performances.

- How an organization obtains and spends cash or either liquid

resources, its borrowing and repayment of debt and others

factors that may affect an organization’s liquidity should include

explanations and interpretation to help user understand

financial information provided.

According to encyclopedia of accounting system volume 1, a

simplified treasurer’s financial report is prepared at the close of each

month to provide each member of the board of trustee with monthly

information on the cash transactions of the various funs. Certain

trustees may feel that knowledge of the amounts received during the

month, the disbursement made during the months, and the balance

on hand at the end of the month is sufficient. A balanced sheet is

prepared at the close of each month to provide on comparative basis

monthly information on the assets, liabilities and fund balances so

that the current financial standing of the entire church organization

may be determined.

More so the accounting system of a religious organization

(church) involves financial activities that are performed by the

treasurer, the financial secretary and other committees. The treasurer

keeps or oversees the keeping of the financial records, but is not

usually burdened with details, especially the counting of collections

opening of pledge envelopes and the like. He prepares or has

prepared the quarterly statements on pledges and also monthly

reports of receipts, expenditures and assets and liabilities to the

board of trustees and he also signs cheques. The financial secretary

on the other hand usually handles all accounting and book keeping

matters fund in non profit organization accounting is a self contained

accounting entity with its own assets, liabilities, revenue, expenditure

or expense and fund balance or other equity accounts and within its

own ledger.

A church as a religious organization is established mainly to win

souls to Christ and not for profit making. Therefore, a church is not

supposed to have profit and loss account but an income and

expenditure account with a balance sheet. This then means that the

system of accounting that is involved is a receipt and a payment

account.

In addition, all those engaged in the finance of the church – the

church stewards, the treasurers, the book keepers, and ministers

should be guided how to keep accounts of funds raised by the church

and how to manage them. For good accounting process, the book

keeping of church funds will not be complete without the cash book,

the ledger, the journals, analysis book, petty cash book or imprest

books. At the end of the period, the treasurer or whoever is in charge

with the book keeping will prepare an income and expenditure

account.

In a religious organization (church) the financial reporting in

Catholic church is done in parish level and also in diocesan level

where the financial secretary reports all financial mattes to the Parish

Priest who in turn reports to the Bishop at the diocesan levels. The

Parish priest relays and reports all financial records of the parish to

the bishop. The accounting is the guide post for managements. Every

religious organization should know the financial implications of its

operations. The financial scope is kept by the accounting system, it

points on the problems faced or likely to be faced. The accounting

system identifies and gathers data. In every parish there is parish

council account that is all monies belonging to the parish house

account like offertory collections, stole fees, stipends and other

sources.

It is the responsibility of the Diocesan Bishop through the

diocesan finance council to audit annually the financial reports of

every parish and parish projects. Also, it is the responsibility of the

diocesan finance council to audit the financial council to audit the

financial report of the bishop house, the diocesan secretariat and

diocesan project. It is the consolidation of the diocese proper and

parishes’ financial report that it sent to Rome annually at a particular

time as stipulated by the congregation for Evangelization of Peoples.

With the establishment of Parish Finance Council in the

Diocese in compliance with Cannon 537, these councils are obliged

to fulfill their tasks with the greatest possible transparency and

responsibility (Cannon 1281-1289). They are to send report

concerning all incomes received from all sources and the manner of

their utilization, the financial report must be signed by the priest, his

assistant and by all members of the Parish Finance Council. For

uniformity and comparative purposes, the congregation for the

Evangelization of People has proved suggested outlines to be

followed for diocesan financial reports.

However, for the accounting record-keeping of the church te

code does not prescribe any norm on the system to be adopted from

common experience, no one system of rendering accounting is

perfect. Not to have a system at all would amount to culpable

inexcusable grievous fault.

Some dioceses in Nigeria adopt central fund system. Adequate

funds are then made available to the priests on pastoral duties in the

diocese from the centre. Many dioceses, it appears, are not satisfied

with these systems/records which entail levying every parish and

institution in the diocese on an agreed basis. Besides, how does one

calculate what is adequate for a given parish?

Moreover, in this system, priests are normally placed on

salaries just like civil servants. This system of salaries to priest is very

odious to many because of many obvious disparities in status and

abilities of priest and above all the inequalities in the parish stations.

Another system very much in vogue is the budgetary system. In

this, the Parish Finance Council with their pastor draw up an annual

budget in which every item of income and expenditures are paid to

the diocesan common fund. Thus, for the parish accounting books

and records and returns, the parish accounting books and records to

be kept by the parish are classified into two:

i. Account B - For priest

ii. Account A - For Parish Finance Council

For the Account A; books, records and returns, the sample formats

are distributed and they are:

a. Account A: Parish Income day and analysis book,

b. Account B: Parish expenditure and somebody daily analysis

book,

c. Account A: Cash and bank book,

d. Account A: General Ledger,

e. Official Receipts books,

f. Official payments voucher or petty cash voucher,

g. Parish Fixed Assets Register and Inventories,

h. Account A: Quarterly Remittance Returns,

i. Account A: Monthly Financial Returns,

j. Account A: Parish Bank Reconciliation Quarterly Statement.

For the Account B: books, records and returns (for priests), the

sample;

a. Account A: Income day and analysis book,

b. Account B: Priest Maintenance Expense Day and Analysis

Book

c. Account B: Cash and Bank Book.

d. Payment Voucher.

e. Account B: Monthly Financial Returns.

f. Account B: Banks Reconciliations Statement

REFERENCES

Anyafo, A.M.O (1997), God’s People’s Finance, UNEC Enugu, Banking and Finance Publication, P.25

Anyafo, A.M.O (2001), Investment Risk Evaluation: The Statement of Arts in Investment and Project Analysis, UNEC Enugu, Banking and Finance Publication, P.8

Babalola, E.O (1976) Christianity in West Africa (A Historical Analysis) Ondo, Bamigboye and Co Press (Nig.) Ltd.

Cannon Law Society of Great Britain and Ireland (1976), The Code of Cannon Law, India Theological Publication, pp, 60-70.

Emekekwue, P.E (1993), Principles of Public Finance, Kinshasa Zaire, African Bureau of Educational Sciences Special Agency of the Organization of African Unity. P.1

Eneasato, M.O. (1985) Advent and Growth of Catholic Church in

Enugu Diocese, Enugu, Jet Publishers Nigeria Ltd. P.35

Freeman, J.R. et al (1988), Government and Non-Profit Accounting Theory and Practice, 3rd Edition, New Jersey, Prentice Hall, pp. 14 -16

Harry, L.B. (1993), Design and Maintenance of Accounting Manuals, Second Edition, USA, John Wiley and Sons Inc. pp.16 - 20

James, D.E and Horner A.B. (1976), The Modern Accountants Handbooks, USA, Jersey Inc. p.24.

Jerome, K.P. (1979) The Encyclopedia of Accounting System, New York: Litton Educational Publishing Inc.

Millichamp, A.H. (1986), Auditing: An Instructional Manual for Accounting Students, 5th Edition, London, D.P. Publication Limited

Okafor, K.O and Okoye E.I. (1996), Principles and Practice of Financial Accounting, Nkpor, Baset Printing and Publishing Limited, P.1

Oye, A. (2002), Financial Management, Papa Ajao Mushin Lagos, El-Toda Ventures Limited, p. 7

Okpe, I.I (1998), Principles and Practice of Book Keeping and

Accounts 1, Enugu, Ochumba Printing and Publishing Limited, p.1

Olademeji, A. (1985), Financial Management of Local Government in

Nigeria, Ibadan, Fourth Dimension Publishers, P. 25 Osisioma, B.C. (1996), Studies in Accountancy: Text and Reading,

Enugu, Acene Publishers Limited, P.63

Ubesie, M.C. (1998), Advanced Financial Accounting, Enugu, Computer Edge Publishers, P. 97

CHAPTER THREE

RESEARCH METHODOLOGY AND DESIGN

3.0 INTRODUCTION

This chapter deals with the methodology used by the

researcher in the course of the study. It shows the design of the study

as well as the instrument of the survey or data collection or sources

of instrument as contained in this chapter.

The basis of this research work is the study of financial book

keeping in religious organizations. A case study of catholic churches

in Enugu Diocese. Because the researcher has no definite figure,

validation was resorted to in order to test the instrument and this was

also used in determining the sample size and this chapter discusses

the statistical method of data analysis.

3.1 SOURCES OF DATA COLLECTION

The researcher’s main source of information for this study was

based mainly on secondary and primary sources, and the use of

finance and accounting textbooks and other religious textbooks.

Primary data are those first hand information sourced purposed for

the work at hand. As already stated above, primary data were

sourced using the two instruments of questionnaire and oral

interviews. The researcher designed a wells structured multiple

choice questionnaire for the church leader. There were personally

administered by the researcher. The questionnaires were collected

later as some of the respondents could not give the information

easily, they were so reluctant and skeptical to divulge the information.

Some of the questionnaires were answered while some were

returned. However, direct and close-ended questionnaires were

asked for simple and direct responses which the respondent could

not easily avoid. The oral interview served as a follow up to the

questionnaire which makes the respondents to explain certain

questions in detail. The researcher met the respondents face-to-face

and necessary questions were asked.

3.2 DATA COLLECTION METHOD

The researcher used personal interviews and discussion with

some church officials who were reluctant to disclose the information.

It was not easy for the researcher to collect data as some of the

church leaders confronted with the topic, saw it as being irrelevant

and uncalled for, but the researcher managed to get some of the

information.

More so, the researcher used questionnaire which was well

designed and structured. Also the researcher made use of the library

research where textbooks in accounting and finance were used.

There has not been any research work carried out on this study; the

researcher decided using any related text on the topic.

3.3 POPULATION AND SAMPLE SIZE

The population for this research work was based on the

diocese as a whole. The sample size was based on selected

parishes. The researcher distributed 63 questionnaires of which 50

respondents were gotten or received and 13 were returned back

unattended. Equally, oral interview which serves as a follow up to the

questionnaire were asked and defined by the researcher to the

appropriate respondents.

However, the total number of parishes in Enugu Diocese is 75.

Thus the formula for determining the sample size using Yaro’s

Yamen’s formula:

n = N 1 + N(e)2

Where:

n = sample size

N = Population size

e = proportion of sampling error put at 0.05 level of

significance

1 = Constant

n = ?

N = 75

e = 0.05

Note: The choice of 0.05 level of significance (i.e. 95% confidence

limit) is purely an executive decision of the researcher.

Substituting the above values into the formula, we have:

75 1+ 75 (0.05)2

75

1.1875 = 63

n = 63

3.4 METHOD OF DATA ANALYSIS

The researcher administered questionnaire and used

percentages to analyze the data. The researcher also used a test of

hypotheses where chi-square were used to determine if there is

significant difference between the financial and accounting records of

the church to its expenditures and to verify if budgetary system as a

form of financial control is dependent on good financial management,

etc. Thus, the research questions and distributed questionnaires of

which some of the questions were picked and analyzed.

3.4 RE-STATEMENT OF HYPOTHESIS

The hypothesis is a tentative statement of conclusion. It is a

statement of claim which is to be proved right or wrong having

confirmed with facts.

Ho: Null hypothesis – This is a statement of claim which is to be

proved right or wrong having confirmed with facts

Hi: Alternative hypothesis: - This is a hypothesis that will be

accepted if the null hypothesis is rejected.

i. There is significant relationship between proper financial and

accounting records of the church to its expenditures.

ii. Budgetary system as a form of financial control is independent

of good financial management.

iii. The Catholic Church accounting records keeping is in

conformity with the Diocesan Accounting Manual.

iv. Authorization and of Catholic Diocesan Expenditures are


3.6 STATISTICAL METHOD OF DATA ANALYSIS

Having collected the various data, they were collected and

analyzed based on the analytical statistical method of testing

hypothesis, the chi-square (X2) test which included the tests of

independence and relationship/homogeneity. Thus the formula is:

X2 = (O – E)2 E

Where

X2 = Chi-square

O = Observed data

E = Expected data

(D.F) = Degree of Freedom

DF = (C-I) (R-I)

Level of Significance = 5%

This was used by the researcher in order to determine whether

the incidences were by chance or statistically significant. This made it

possible for the researcher either to accept the null hypothesis or

reject it.

DECISION RULE:

Reject Ho if calculated value is greater than critical table of

values, otherwise accept Ho.

Furthermore, each of the aforementioned hypotheses were

analyzed using the responses from interviews, research questions

and questionnaires.

REFERENCES

Baridam Don M. (1995), Research Method in Administrative Science, Second Edition, Choba, University of Port Harcourt Publishing House.

Ogunbiyi, M.B (1992), Understanding Researcher in the Social Sciences, Ibadan, University Press PLC.

Yamane, (1964), Statistics: An Introductory Analysis, Third Edition, New York: Harper and Row Publishers (1964).

CHAPTER FOUR

ANALYSIS OF RESEARCH RESULTS

4.1 PRESENTATION AND ANALYSIS OF DATA

Having collected the necessary data, the researcher has

adopted a systemic approach to analyze the data. Some of the

questions in the questionnaires distributed were examined to

evaluate the frequency of responses and what they reveal concerning

the financial record keeping of religious organization in relations to

Catholic Church in Enugu Diocese.

The answers to the research questions were analyzed using

simple percentages. The calculations of the percentages were done

based on 50 successfully completed questionnaires.

Those who had the same opinion to each type of question

asked wee placed over the total number of respondents and thus

multiplied by hundred.

Thus, we have,

Percentage Response:

Frequency of each type of opinion X 100 Total of Respondents 1

4.2 ANALYSIS OF QUESTIONNAIRES

Here, the answers to the question in the questionnaire were

represented in a table showing the number of respondents and their

percentages.

4.2.1 PARISHES RETURN TO THE DIOCESES

When respondents were requested to indicate how often

parishes make returns to the diocese, out of 50 respondents 15 or

30% indicated making yearly return to the diocese yearly, 15 or 30%

returns quarterly 15 or 30% making their returns semi-annually. Only

5 or 10% shows that parishes makes their returns occasionally, it all

shows that parishes makes annual returns yearly, quarterly and semi-

annually to the process.

TABLE 4.2.1

PARISHES RETURNS TO THE DIOCESE

Types of Returns No of Respondents Percentage

Yearly 15 30

Quarterly 15 30

Semi-annually 15 30

Occasional 5 10

Total 50 100

Source: Data from field Survey 2009.

4.2.2 HOW THE CHURCH KEEPS ITS MONEY

Table 4.2.2 presented the responses cncernng how the church

keeps its money. The responses revealed tha seven (7) respondents

or 14% of the sample showed that the church’s money is kept with

the parish pries, while thirty (30) respondents or 60% of the sample

indicated tha the church’s money is kept in the bank. From this, it is

easily noticeable that the church keeps its account in the bank. Also

thirteen (13) respondents or 26% of the sample believed that the

church lends its money to those in need.

Description No of Respondents Percentage

With the parish priest 7 14

In the bank 30 60

Lending to those in

need

13 26

Total 50 100

Source: Data from field survey 2009.

4.2.3 PEOPLE THAT FORM THE SIGNATORIES TO THE

CHURCH’S BANK ACCOUNT

From the responses received on the number of people that

form signatories to the church’s bank account, the table 4.2.3 shows

that four (4) people said that only the parish priest forms a signatory

to the church’s bank account. This number represented 8 percent

(8%) of the total respondents. On the other hand, six (6) people

agreed that the parish priest and his assistant form the signatories to

the account showing twelve (12%) of the total respondents. While

forty (40) people were in support that the parish priest, the treasurer

and any other person authorized or appointed by the Parish Finance

Council form the signatories to the account of the church in the bank.

This represents eighty (80%) of the total respondents showing that

the there people form signatories to the bank account.

In essence, the parish priest or his assistant does not deal with

the church’s money and however, they do not form signatories to the

account alone.

TABLE 4.2.3 PEOPLE THAT FORM SIGNATORIES TO THE

ACCOUNT

Signatories No of Respondents Percentage

Parish Priest 4 8

Parish priest and his

assistant

6 12

Parish priest,

Treasurer and any

other person

authorized.

40 80

Total 50 100


4.2.4 AUTHORIZATION OF CHURCH’S EXPENDITURE

The table 4.2.4 below indicates that 12% or 6 respondents out

of the chosen sample agreed that parish priest authorizes the

expenditure while thirty (30) or 60% of the respondents showed that

the Parish Finance Council authorizes the church’s expenditure. On

the other hand, seven (7) or 14% of the respondents each believes

that the building committee and Laity Council authorize the

expenditure of the church’s funds.

TABLE 4.2.4 AUTHORIZATION OF CHURCH’S EXPENDITURE

Authority No of Respondents Percentage

Parish Priest 6 12

Parish Finance

Council

30 60

Building Committee 7 14

Laity Council 7 14

Total 50 100

Source: Data from Field survey 2009.

4.2.5 METHOD USED AS GOOD FINANCIAL MANAGEMENT

The response on the method the church uses or adopts to

ensure good financial management is presented in the table 4.2.5

below. From the result, it indicates that twenty (20) or 40% of the

respondents adopts the method of budget control system. While

eighteen (18) or 36% of the respondents show that expenditure are

discussed by the Parish Finance Council. There was twelve (12) or

24% of the respondents that believes that the parish priest can incur

any cost.

TABLE 4.2.5 METHOD USED AS GOOD FINANCIAL

MANAGEMENT

Methods No of Respondents Percentage

Budgetary system 20 40

Parish Finance

Council Discusses

expenditure to incur

18 36

Parish Priest incurs

any cost

12 24

Total 50 100

Source: Data from field survey 2009

4.2.6 HOW THE CHURCH’S FUND ARE ACCOUNTED FOR

The respondents were asked on how the church’s fiund are

being accounted for, that is their sources of funds like launching,

donations, special thanksgiving and others.

From the table 4.2.6, the researcher was able to observed that

eighteen (18) or 36% of the respondents each agreed that the fund id

accounted for by making oral announcement and statements of

accounts. While nine (9) or 18% showed that the fund is accounted

for by the issuance of receipts. The remaining five (5) or 10%

indicates no records.

TABLE 4.2.6 HOW THE CHURCH’S FUNDS ARE ACCOUNTED FOR

Description No of Respondents Percentage

Oral announcements 18 36

Statements of

accounts

18 36

Issuance of receipts 9 18

No records 5 10

Total 50 100


4.2.7 MAINTENANCE OF PROPER BOOKS OF ACCOUNTS

From the responses received on whom maintains the proper

books of accounts of the church, table 4.2.7 below indicates that

thirty-five (35) or 70% of the respondents agreed that the Parish

Finance Council maintains the proper books of accounts of the

church. Six (6) or 12% shows that the treasurer maintains the proper

record keeping, five (5) or 10% indicates that the parish priest

maintains the accounts. While the remaining four (4) showed that the

financial secretary maintains the proper books of accounts or record

keeping.

TABLE 4.2.7 MAINTENANCE OF PROPER BOOKS OF

ACCOUNTS

Maintenance No of Respondents Percentage

Parish Finance

Council

35 70

Treasurer 6 12

Parish Priest 5 10

Financial Secretary 4 8

Total 50 100


4.2.8 TYPE OF ACCOUNTING SYSTEM IN USE

In order to determine the type of accounting system used by the

church, table 4.2.8 presents an immediate picture. Out of the fifty (50)

questionnaires distributed, fifteen (15) or 30% of the respondents

showed that the church uses income and expenditure account,

fourteen (14) or 28% agreed that the church operates receipts and

payment account while thirteen (13) or 26% of the respondents said

that they keep balance sheet, while the remaining eight (8) or 16%

indicated that the church keeps profit and loss account.

TABLE 4.2.8 TYPE OF ACCOUNTING SYSTEM IN USE

Types No of Respondents Percentage

Income and

expenditure account

15 30

Receipt and payment

account

14 28

Balance sheet 13 26

Profit and loss

account

8 16

Total 50 100


4.2.9 PREPARATION OF BUDGET

Table 4.2.9 below depicts that forty-five(45) or 90% the total

respondents showed that the church prepares budget while five (5) or

10% of the total respondents indicates that the church do not prepare

budget.

TABLE 4.2.9 PREPARATION OF BUDGET

Opinions No of Respondents Percentage

Yes 45 90

No 5 10

Total 50 100


4.2.10 AUDITED ACCOUNT

The results from the respondents on whether the church

account is audited, thirty-five (35) or 70% of the total respondents

agreed that account of the church is being audited while fifteen (15)

or 30% did not agree and believed that the account is not audited.

TABLE 4.2.10 AUDITED ACCOUNT

Opinion No of Respondents Percentage

Yes 35 70

No 15 30

Total 50 100


4.2.11 OBSERVING CHURCH ACCOUNTING MANUAL

The table 4.2.11 below shows that 70% or 35 of the

respondents of the chosen sample agreed that the catholic churches

observes her use of accounting manual properly, while 30% or 15 of

the respondents were of the negative opinion that Catholic Churches

observe the use of accounting manual.

TABLE 4.2.11 OBSERVING CHURCH ACCOUNTING MANUAL

Opinions No of Respondents Percentage

Yes 35 70

No 15 30

Total 50 100


4.3 TESTING OF HYPOTHESES

Hypothesis being a tentative statement of conclusion is a

statement of claim which is to be proven right or wrong having

confirmed with facts. There are four hypotheses to test.

4.3.1 HYPOTHESIS I

THERE IS SIGNIFICANT RELATIONSHIP BETWEEN THE

PROPER FINANCIAL AND ACCOUNTING RECORDS AS A

MEANS TO CONTROL EXPENDITURE.

When respondents were asked whether proper financial and

accounting records of church’s expenditure shows a good financial

control or whether it deters it financial capacity, their responses were

as well revealed in table 4.3.1

TABLE 4.3.1

CONTINGENCY TABLE ON PROPER RECORD KEEPING

AS A FINANCIAL CONTROL

TOTAL

Opinion O e f %

Accountability 40 13 53 84

Ill-management 10 - 10 16

Total 50 13 63 100


These constituted sixty-three (63) respondents whose

responses were used for analysis and for test of hypothesis. Their

responses on whether proper record keeping or accountability has a

significant difference to its expenditure has been presented in table

4.3.1. The table revealed clearly that eight-four percent (84%) of the

respondents in the church which is made up of fifty-three were in

favor of the idea that proper record keeping has no difference to its

expenditure while sixteen percent (16%) of the respondents which

constituted the church members where therefore not in favour of the

idea. A 5% level of significance and a chi-square test revealed that

there was no significant difference between the financial and

accounting record of the church to its expenditure.

HYPOTHESIS II

4.3.2 BUDGETARY SYSTEM AS A FINANCIAL MANAGEMENT

STRATEGY

On the questions of budgetary system as a financial

management strategy, the church leaders were asked whether

budgetary system is a good financial management strategy or

whether the church incurs cost as they arise. Their responses were

shown or revealed in table 4.3.2

TABLE 4.3.2

CONTINGENCY TABLE ON BUDGETARY SYSTEM AS A

FINANCIAL STRATEGY

TOTAL

Opinion O E F %

Budgetary 30 12 42 67

Extravagant 10 11 21 33

Total 50 23 63 100


The responses obtained from the church leaders on whether

budgetary system is a financial management strategy has been

presented in table 4.3.2. The study revealed that forty-two

respondents (67%) were in support or in favor that budgetary system

ensures a good financial management. Only twenty-one respondents

which constitute thirty-three percent (33%) were against the idea.

A chi-square test of independence at 5% level of significance

showed that budgetary system as a form of financial control is

dependent on good financial management.

However, the calculations of the hypotheses are shown

below.

HYPOTHESIS I

Table 4.3.1: The concern here was whether any significant

relationship existed between the proper financial and accounting

records of the church to its expenditure and hence the null

hypothesis.

HO: There is no significant relationship between the proper financial

and accounting records of the church to its expenditure.

Test Statistics:

(1) Applicable test statistics is the chi-square test formula given by:

X2 = (O – E)2 E

Where O = Observed frequencies

E = Expected frequencies

(ii) From table 4.3.1,. the expected frequencies were for

accountability thirteen (13) and ill-managements none while the

observed frequencies were accountability forty (40) and ill-

management ten (10).

(iii) Chosen level of significance: = 0.05

(iv) Degree of Freedom for 2 X 2 contingency table given by the

formula (C-I) (R-I).

Where C = Number of columns

R = Number of rows

i.e. (2-1) (2-1) = 1

(v) From table of critical values of the chi-square distribution, (See

Appendix C) the critical value for I degree of freedom at 0.05 of

significance X2 0.05 = 3.841.

Applying the formula:

X2 = (O – E)2 E

= (40-30)2 + (10 – 0)2 13 0 = 56 + 0

= 56

Calculated X2 = 56

Decision: Since X2 (calculated) 56 is greater than critical value X2

0.05 D.O.F = 3.841, we reject HO, and conclude that there is

significant relationship between proper financial and accounting

records of the church and its expenditure that is they work together,

the expenditure is curtailed and proper accounting and financial

record kept.

HYPOTHESIS II

The relevant test of concern to the researcher was that of

independence that is whether preference budgetary system as a form

of financial control is dependent on good financial management.

HO: Preference for budgetary system as a from of financial control

is in dependent of good financial management.

TEST OF STATISTICS

(i) This is a test of independent and the applicable test statistics is

chi-square test formula which is given by:

X2 = (O – E)2

E Where O = Observed frequencies

E = Expected frequencies

(ii) The expected frequencies as shown in table 4.3.2, for

budgetary system, it was twelve (12) and extravagant ten (10)

while the observed frequencies were thirty (30) for budgetary

system and ten (10) for extravagant.

(iii) Level of significance = 0.05

(iv) Degree of freedom = 1

(v) Critical value of DFs = 1 at 0.05 level of significance

X2 0.05, df = 3.841

Apply the chi-square formula:

X2 = (O – E)2 E = (30 – 12)2 + (10 – 11)2

12 11 = 27 + 0.09 = 27.09

DECISION

Since X2 (calculated) 27.09 is greater than the critical value X2

0.05 df1 = 3.841 we reject the null hypothesis and conclude that

preference for budgetary system as a form of financial control is not

independent of good financial management, therefore, they are

related and works hand in hand. A good financial management entail

having a budgetary system.

HYPOTHESIS III

H3: The Catholic Church accounting records keeping is in

conformity with the Diocesan accounting manual.

HO: The Catholic Church accounting records keeping is not in

conformity with the Diocesan accounting manual.

TABLE 4.3.3

The contingency table for testing hypothesis three of the

research question is derived from table 4.2.7.

TABLE 4.3.3

COMPUTATION OF OBSERVED AND EXPECTED FREQUENCY

TOTAL

Opinion O E O – E (O – E)2 (O – E)2

E

Parish Council 35 13 22 483 37.2

Treasurer 6 13 -7 49 3.8

Parish Priest 5 13 -8 64 4.9

Financial

Secretary

4 13 -9 81 6.2

Total 100


(O – E)2 + (O – E)2

E E

i.e. (35 – 13)2 + (6 – 13)2 + (5 – 13)2 + (4 – 13)2

13 13 13 13

= 37.2 + 3.8 + 4.9 + 6.2 = 52.1

DF (Degree of Freedom) = (C-I) (R-I)

= (2 – 1) (4 – 1)

= 1 X 3

= 3

Critical value of X2 at 0.05 and d at 3 is 7.6147.

DECISION RULE

Since X2 computed is 52.1 is greater than X2 critical value of

7.6147. We therefore reject the null hypothesis and conclude that

Catholic Church accounting records keeping is in conformity with the

diocesan accounting manual.

TEST OF HYPOTHESIS

H4: Authorization and control of (Catholic Church) Diocesan

Expenditure are vested on the church management team.

HO: Authorization and control of (Catholic Church) Diocesan

Expenditure are not vested on the church management team.

The contingency table for testing this hypothesis four is derived

from table 4.2.4 of the research work.

TABLE 4.3.4

COMPUTATION OF OBSERVED AND EXPECTED FREQUENCY

TOTAL

Opinion O E O – E (O – E)2 (O – E)2

E

Parish Council 6 13 -7 49 3.77

Parish Financial

Council

30 13 17 289 22.23

Building

Committee

7 13 -6 36 2.77

Laity Council 7 13 -6 36 2.77

Total 100


OR

(O – E)2 + (O – E)2

E E

i.e. (6 – 13)2 + (30 – 13)2 + (7 – 13)2 + (7 – 13)2

13 13 13 13

= 3.77 + 22.23 + 2.77 + 2.77 = 52.1

DF (Degree of Freedom) = (C-I) (R-I)

= (4 – 1) (2 – 1)

= 3 X 1

= 3

NOTE: Critical value of X2 at 0.05 and df at 3 is 7.6147.

DECISION RULE:

Since the calculated value is 31.54 is greater than the critical

value of X2 being 7.6147, we reject the null hypothesis and conclude

that authorization and control of catholic diocese expenditure are


CHAPTER FIVE

SUMMARY, RECOMMENDATIONS AND CONCLUSION

This chapter presents a resume of the findings conclusion

arrived at by the researcher and some recommendations regarding

the form of financial record-keeping the church should employ where

appropriate, so as to meet up to its financial needs.

5.1 SUMMARY OF MAJOR FINDINGS

Having analyzed the questionnaires, some of the major findings

on the research work are:-

5.1.1 The study revealed that parishes make returns to the diocese

yearly, semi-annually and also on quarterly basis so as to

ensure that proper accounts are kept and returns are made

when appropriate.

5.1.2 The study showed that the church keeps its money in eth bank

and otherwise operates bank accounts. It does not leave it

money with the priest. Only the money collected from the

offertory is used for the welfare of the priest.

5.1.3 As the church keeps it money in the bank, it was observed that

only three people form the signatories to the account;

comprising the parish priest, treasurer and any other person

that may be authorized by the council. The priest does not form

only the signatory as well as its assistant, this will ensure that

the members of the Parish Finance Council is made aware

when any money is to be deposited or withdrawn from the

church’s bank account.

5.1.4 The study revealed that only the Parish Finance Council which

the parish priest is the chairman authorizes the expenditure to

be made by the church, he works in conjunction with the Parish

Finance Council to ensure that the money available are utilized

in the appropriate ways.

5.1.5 In order to ensure a good financial management, it was

observed that the church adopts budgetary system so, as to

curtail its expenditures. Also in line with the budgetary system,

the Parish Finance Council discusses any expenditure to be

incurred and approves the budget.

5.1.6 The accountability of the church’s fund is important and the

members of the church are always notified on any amount

realized for its growth. This is done either by oral

announcement by a member of the Parish Finance Council or

by preparing a statement of account. In short, the two of them

work together.

5.1.7 The study revealed that only the Parish Finance Council

maintains proper books of account of the church and also are in

custody of them.

5.1.8 It was revealed that the accounting systems in operation by the

church are income and expenditure, receipt, payments and

balance sheet. These form the basis for financial statement

analysis. There is no profit and loss account for the church

because it is not profit-oriented.

5.1.9 The study revealed that the Catholic Church prepares budget

which can be made quarterly, semi-annually and yearly. This is

used to curtail incurring expenses higher than the actual money

at hand. Indeed, the church operates a surplus budget where

revenue is always greater than the expenditure.

5.1.10 According to the study, the church’s account is being

audited. It is the responsibility of the Diocese Bishop through

the Diocesan Finance Council to audit annually the financial

reports of every parish and parish projects. Also, it is the

responsibility if the Diocesan Financial Council to audit the

financial reports of the Bishop’s house, the Diocesan secretariat

and the Diocesan projects.

5.1.11 From the test of hypotheses 1, the study revealed that the

church keeps proper record of its account that is there is

accountability and responsibility, every member of the Finance

Council has to give account of the money entrusted to him.

There is no room for siphoning church’s fund into personal

pockets or not managing the church’s money properly. A test of

significance revealed that there is no difference between proper

financial record keeping and its expenditure. A good record

keeping or accountability reduces the church’s expenditure

because each amount has to be accounted for.

5.1.12 The study revealed that majority of the churches adopts

budgetary system as a financial management strategy. As

finance is a major problem of religious organization, the church

deems itr necessary to make yearly budghet before expenses

are incurred. This budget is normally reviewed by the Parish

Finance Council to curtail extravagant spending by the church.

A chi-square test of independence showed that preference for

budgetary system is dependent on a good financial

management. This means that budgetary ensures good

financial management.

5.1.13 Findings from hypothesis three: The chi-square test of the

hypothesis three revealed that accounting records keeping is in

conformity with the diocesan accounting manual. This shows

that the financial record keeping of the church is in consonant

with the accounting records keeping of the church as shown in

table 4.2.7.

5.1.14 The study revealed that only the Parish Financial Council

which the parish priest is the chairman authorizes the

expenditure to be made by the church and this is proved by

testing hypothesis four of this research question by accepting

the alternative that authorization and control of Catholic Church

expenditure is vested on the management team of the church.

5.2 OTHER FINDINGS

1. Every parish must send its annual financial statement to reach

the Diocesan Finance Council before 28th February of the year

following the end of the financial year.

2. The parish annual budget brings together estimated or

proposed expenditure (recurrent expenditure) to be incurred by

the budget period (1st January to 31st December) and a capital

to attain a given objective(s).

3. The Parish Finance Council shall from the month of July send

budget call to zone, societal organizations and pastoral council

in the parish for inputs into next financial year’s budget of

income and expenditure both recurrent and capital.

4. The church adopts or uses security documents which

comprises of official receipt books, payment vouchers/petty

cash vouchers.

(a) The official receipt book shall be serially numbered, issued

serially, entered in receipt book register and shall be kept in

safe custody by the parish priest.

(b) The payment voucher/petty cash voucher shall be serially

numbered, issued serially, if in a book form shall be entered in

payment voucher register and kept in after custody by the

parish priest.

5. The approved budget estimate now called the Annual Approved

Budget is signed by the parish priest, assistant parish priest,

secretary to the Parish Finance Council, the vice chairman of

the parish, pastoral council and the secretary of the parish

pastoral council and is sent to the diocesan bishop through the

diocesan finance administrator.

6. The accounting system for those in institutions, hospitals or

projects and those on salaries should have governing council

which must include a diocesans representative. They should

send approved budget to the diocesan finance council and it is

returned at the half of the year.

7. The researcher observed from the information in table 4.2.11

that the Catholic Churches in Enugu Dioceses adopt the use of

accounting manual.

5.3 RECOMMENDATIONS

Having highlighted some of the major findings it would be

appropriate and logical to tender the following recommendations for

achieving effective financial record keeping.

1. There should be an in-built and automatic feedback network

embedded in the system-both financial and administration. This

will make for quick responses to current issues requiring

management attention.

2. The church should consider computerizing its affairs and

documents since it is large in size and controls many parishes.

3. The line of authority for expenditure should be explicitly defined

and strictly adhered to. Funds should as much as possible be

applied to what they are meant for, to ensure the growth of the

church.

4. The issue of internal control system should be properly

addressed.

5. There should also be a management supervision and review of

expenses.

6. Also chartered accountants and accountants who are experts in

the areas of accounting and management of fincance should

help to the system the more.

5.4 CONCLUSION

The inefficient financial management hampers the performance

and threatens the existence of any organization be it business or

religious organizations, that is why the study of this is very important

and constitutes one of the major reasons the researcher wants to

know if such exists in religious organization.

A lot of muddling up is seen in some churches (and of course in

every non-business organization). Personal interests tend to over-ride

the parish management of the church. Indeed, the church just as any

other non-business organization is regarded to be very poor;

everything associated with it is equally poor. But when you take a

critical look at the make up of the church funds, you will believer that

it has various sources of funds, the problem being the cost it incurs

and control of such funds.

Nevertheless, the system of operation, that is the financial

record-keeping of Catholic Church is said to be good, after going

through the analysis and system of their operation. The church is a

well organized body and takes authority based on their hierarchy.

The man at the apex of the Catholic churches, the Pope gives

orders and directives on how the churches are to be run financially

and otherwise. The other leaders of the church like the Bishops and

priest work along with the law guiding the church and administer its

affair in truth and in faith.

However, the church being a large organization should adopt a

computerized system of account and where such exists should be

properly maintained. On the issue of auditing the account, the charted

accountants and the accountants who are experts in these areas

should be properly maintained. On the issue of auditing the account,

the charted accountants and the accountants who are experts in

these should help to guide the system.

BIBLIOGRAPHY

Anyafo, A.M.O (1997), God’s People’s Finance, UNEC Enugu, B&F Publications.

Babalola, E.O (1976) Christianity in West Africa (A Historical Analysis), Ondo, Bamigboye and Co Press (Nig.) Ltd.

Baridam Don M. (1995), Research Method in Administrative Science, Second Edition, Choba, Port Harcourt: University of Port Harcourt Publishing House.

Cannon Law Society of Great Britain and Ireland (1976), The Code of

Cannon Law, India: Collins Theological Publications.

Catholic University of America (1967) The New Catholic Encyclopedia, Washington: Printed in USA.

Emekekwue, P.E (1993), Principles of Public Finance, Kinshasa Zaire, African Bureau of Educational Sciences Special Agency of the Organization of African Unity.

Eneasato, M.O. (1985) Advent and Growth of Catholic Church in

Enugu Diocese, Enugu, Jet Publishers Nigeria Ltd.

Freeman, J.R., Griag O.S and Lynn S. (1988), Government and Non- Profit Accounting Theory and Practice, Third Edition, New Jersey: Englewood Cliffs, Prentice Hall Inc.

Harry, L.B. (1993), Design and Maintenance of Accounting Manuals, Second Edition, Heinemann: USA, John Wiley and Sons Inc.

James, D.E and Horner A.B. (1976), The Modern Accountants Handbooks, USA, Jersey Inc.

Jerome, K.P. (1979) The Encyclopedia of Accounting System, New York: Litton Educational Publishing Inc.

Melicher, and Welshans (1986), Finance: Introduction to Markets, Institutions and Management, Eighty Edition, Ohio, South-West Publishing Company.

Millichamp, A.H. (1986), Auditing: An Instructional Manual for

Accounting Students, Fifth Edition, London: D.P. Publications Ltd Shepherds Bush Green.

Okafor, K.O and Okoye E.I. (1996), Principles and Practice of Financial Accounting, Nkpor, Baset Printing and Publishing Limited.

Oye, A. (2002), Financial Management, Papa Ajao Mushin Lagos, El-Toda Ventures Limited.

Okpe, I.I (1998), Principles and Practice of Book Keeping and

Accounts 1, Enugu, Ochumba Printing and Publishing Limited.

Ogunbiyi, M.B (1992), Understanding Researcher in the Social Sciences, Ibadan: University Press PLC.

Olademeji, A. (1985), Financial Management of Local Government in

Nigeria, Ibadan, Fourth Dimension Publishers. Osisioma, B.C. (1996), Studies in Accountancy: Text and Reading,

Enugu, Acene Publishers Limited. World Bank (1989), Statistics: An Introductory Analysis, Third Edition,

New York: Harper and Row Publishers. Yamane, (1964), Statistics: An Introductory Analysis, Third Edition,

New York: Harper and Row Publishers. Ubesie, M.C. (1998), Advanced Financial Accounting, Enugu,

Computer Edge Publishers.

APPENDIX A Department of Accountancy

School of Post-Graduate Studies Faculty of Business Administration

University of Nigeria Enugu Campus

1st Dec., 2008. Dear Sir/Madam,

QUESTIONNAIRE

I am a post-graduate student of University of Nigeria, Enugu

Campus in the Faculty of Business Administration, Department of

Accountancy, carrying out a research work on financial record-

keeping of religious organizations. A Case Study of Catholic

Churches in Enugu Dioceses.

Through this medium, I forward with this letter a copy of the

attached questionnaire for you to complete. Kindly help in this

important research by supplying honest answers to the questions as

contained here in. the answers will help us to offer some useful

suggestions for future improvement and reliability on the research

work. Every information provided will be treated with strict confidence

and used purely for academic purposes.

God bless you and thanks for your co-operation.

Yours faithfully,

……………………………

Ozotamgbo Christopher O.

Researcher

APPENDIX B

INSTRUCTION: Please fill in the information and tick like this ( ) in

the blank spaces provided for each question as appropriate.

1. As part of financial control, how often do the parishes make

return to the diocese?

(a) Yearly ( ) (b) Quarterly ( )

(c) Semi-Annually ( ) (d) Occasionally ( )

2. How does the church keep its money?

(a) With the parish priest ( )

(b) In the bank ( )

(c) Through lending to those in need ( )

3. If in the bank, how many people form the signatories to the

accounts?

(a) Parish priest ( )

(b) Parish priest and his Assistant ( )

(c) Parish priest, treasurer and any other person authorized ( )

4. Who authorizes the expenditure of the church?


(b) Parish Finance Committee ( )

(c) Building Committee ( )

(d) Laity Council ( )

5. What method does your church use to adopt as its financial

management?

(a) Budgetary system ( )

(b) Expenditure is discussed by parish finance council before it is

incurred ( )

(c) Parish priest incurs any cost ( )

6. How is donation received, launching fund or special

thanksgiving offering accounted for in the church?

(a) Oral Announcement ( )

(b) Statement of Accounts ( )

(c) Issuance of Receipt ( )

(d) No record ( )

7. What type of accounting system is kept by the church?

(a) Income and expenditure account ( )

(b) Receipt and payment accounting ( )

(c) Balance Sheet ( )

(d) Profit and Loss Account ( )

8. Who maintains proper book of accounts of the church?


(b) Treasurer ( )

(c) Parish Finance Council( )

(d) Financial Secretary ( )

9. Does the church prepare budget?

(a) Yes ( )

(b) No ( )

10. If yes, who makes and initials budget?

(a) Parish Priest ( )

(b) The societies/association leaders ( )

(c) The church committee ( )

(d) Parish Finance Council ( )

11. Do you prepare financial account?

(a) Yes ( )

(b) No ( )

12. If yes, is the account being audited?

(a) Yes ( ) (b) No ( )

13. If yes, what is the nature of the audit?

Please specify………………………………….……………………

…………………………………………………………………………

14. Is the church observing any accounting manual?

(a) Yes ( )

(b) No ( )

15. If yes, what are the make up?

Please specify………………………………….……………………

…………………………………………………………………………

16. Is the financial reports of the church being signed?

(a) Yes ( )

(b) No ( )

17. If yes, who signs the reports?

(a) Diocesan Ordinaries ( )

(b) Member of Finance Committee ( )

(c) Parish Finance Committee ( )

(d) Parish Priest and his assistant ( )

(e) All of the above ( )

18. Do you think that proper financial and accounting recording of

the church’s expenditures and its projects ensure a good

financial control or does it deter its financial capacity?

(a) Proper financial records entail good accountability of the church

funds ( )

(b) Deters financial capacity of the church ( )

19. What method do you use in collecting members contributions?

(a) Through church wardens ( )

(b) Through membership cards ( )

(c) Through addressed envelopes ( )

(d) All of the above ( )

20. Under the issue of inadequacy of funds in religious

organization, would you prefer your church to adopt a

budgetary system as a method of financial management or

would you prefer them to incur any cost as they arise?

(a) Prefer budgetary system ( )

(b) Satisfied with the method of incurring cost as they arise ( )

Documents

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