FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS- A CASE STUDY OF CATHOLIC CHURCH IN ENUGU DIOCESE

FINANCIAL RECORD KEEPING IN RELIGIOUS ORGANIZATIONS: A CASE STUDY OF CATHOLICCHURCH IN ENUGU DIOCESE UNIVERSITY OF NIGERIA ENUGU CAMPUS... This research project concerned a study of the

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

CHURCH IN ENUGU DIOCESE

UNIVERSITY OF NIGERIA ENUGU CAMPUS.

MARCH, 2009

UNIVERSITY OF NIGERIA ENUGU CAMPUS.

MARCH, 2009

The work embodied in this project report is original and has notbeen submitted in part or in full for any other diploma of this any otheruniversity

………

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 withregistration number PG/MBA/06/45065 has satisfactorily completedthe requirements for project research in partial fulfillment of therequirements for the Award of Masters of Business Administration(MBA) in Accountancy

This project is dedicated to all men and women of goodwill

To accomplish an academic research of this nature, manypeople must have contributed in one way or the other towards thesuccess To start with, this project would not have been madepossible 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 whosework have been helpful to the successful accomplishment of thisproject I feel indebted

I am particularly grateful to my supervior and HOD ofAccountancy, Dr Mrs R.G Okafor for the able way she hassupervised this write up to its conclusion I cherish her knack forthoroughness and objectivity In fact I enjoyed every bit of my tutelageunder her

My thanks goes to other lecturers and staff of the Department ofAccountancy, University of Nigeria Enugu Campus for theircontributions 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 JoeCatechist, Our Lady of Lourdes Imezi Owa and Sir Pius Onyia,Secretary C.M.O Enugu Diocese Holy Ghost Cathedral Ogui Enuguand 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 BasicEducation Board, Enugu and Ezeagu Central LGEA Aguobu Owa forhaving tolerated me while combing this programme with my work I

extend much grace to my colleagues in the Department ofAccountancy – Ogbonna Ogbu, Esom Stanley, Agu Betty, Angela,Ngozi Obeta and especially Innocent Okonkwo of Department ofBanking and Finance who was also the General class rep for isenviable contributions Thanks go to other innumerable friends fortheir personal material contributions which I found quiet useful for myresearch.

My appreciation goes to the members of my family andrelations for their love and understanding of my position during thistime of work

Finally, my thanks and supplications go to the Almighty god forHis infinite mercy and kindness

Ozotamgbo Christopher March, 2009

This research project concerned a study of the financial recordkeeping of religious organizations: A Case Study of CatholicChurches in Enugu Diocese A sample of sixty-three parishes wasmade from the diocese Investigations were carried on their financialcontrol used both internally and externally, the accounting system andfinancial decisions/reporting adopted This showed whether there was

an efficient and effective financial record keeping in the church Sincerth research aimed at investigating existing financial record keeping

or practice the employment of descriptive method of research wasfound adequate The main instruments used for the collection ofprimary data were the structured libraries and other research unitsserved as secondary data The researcher ensured that thequestionnaire possessed to a large extent the characteristicsnecessary and adequate for the purpose of validity and reliability.Data collected were analyzed and presented with percentages andtables and hypothesis were tested with the chi-square (X2) statisticsand the following results emerged

The study revealed that the church keeps proper record of itsaccounts and that there is accountability and responsibility, everymember of the finance council has to give account of the moneyentrusted to him It also showed that the church makes yearly budgetbefore expenses are incurred and that authorization and control ofchurch expenditure is vested on the management team

Based on the finds, both short and long term measures wererecommended as ways of enhancing financial record keeping inreligious organizations

CHAPTER ONE: INTRODUCTION

1.1 Background of the Problem……… 1-41.2 Statement of the Problem……… 4-51.3 Objectives of the Study……… 5

1.5 Statement of the Hypothesis ……… 6

1.7 Limitations of the Study ……… 7-81.8 Significance of the Study ……… 8-91.9 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……… 15-172.2 The Growth of Catholic Church in Enugu Diocese……… 17-212.3 The Administrative Set Up of the Diocese……….21-232.4 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

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY

Every organization both business and non-business requiresand uses finance for its various activities The business organizationsare set up primarily for profit making like banks, companies and otherrelated ventures while the religious organizations are not meant forprofit 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 Thereligious organization of interest is Christian religion and indeedCatholic Church

Since finance is very vital for the welfare and growth of theseorganizations, its administration has to be well accorded financialrecords keeping Finance at the macro level is the study of financialplanning, assets management and fundraising for business, whilemacro is te study of finance institution and finance market and howthey operate within financial system (Anyafo, 2000:3) In view ofEmekekwue (1993:1), finance is primarily concerned with money andmomentary matters In general, finance can be taken as a body of

principles and theories dealing with raiding, investing, managing andemploying funds by individual and organizations in private and publicsectors (Oye: 2002:7).

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

of an ordered arrangement of interdependent elements, with acommon goal, related by a network of relationships Such a systemhas input process-output component, and it is in itself an informationsystem

Financial systems are subsystems in a business organizationwhose responsibility is to ensure that business transactions arerecorded in proper books of account on the basis of recognizedaccounting practice, analyzed, interpreted and presented to the users

of accounting information (Ubesie, 1998:97) He further stressed thatfinancial system consists of financial intermediaries, financial market,financial instruments, rules and norms that facilitate and regulate theflow of funds through the macro economy

In essence, Catholic Church as one of the religiousorganizations is not meant for profit making but for bringing souls toChrist The church requires fund to administer its affairs and to carryout its daily religious obligations The funds are not necessarily

adequate to meet up to its numerous demands, though there arevarious sources of generating income It is then necessary todetermine the financial income being used by the churches whetherthere are proper record keeping, the financial decisions and reportingmade and the accounting system or procedure adopted There arisesthe need for the church to keep track of its financial operations, thishelps form an adage for it to control its income against itsexpenditure Thus, a house built on a solid foundation remains astrong house but that whose foundation is shaky can crumble at anytime 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 thechurch and how these are managed and controlled has led to thetopic 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 theproblem of finance, the inadequacy of funds to carry outs theirreligious rites Catholic churches are not an exception as most of the

churches are incapacitated in terms of fund, yet there are severalsources of finance but the church seems not to meet up its financialdemand For good financial records, there must be a well developedfinancial decision and reporting procedures and financial controlbeing used or operated.

It is based on this, that the researcher topic is chosen to assesthe financial record keeping of religious organizations taken intoconsideration, Catholic Church in Enugu Diocese so as to know howthe church manages and controls its fund and to suggest ways theycan be improved for a better result

1.3 OBJECTIVES OF THE STUDY

The main purpose of this research work is to determine thefinancial record keeping in use for Catholic Churches in EnuguDiocese and appropriateness of the financial management andcontrol The research work will attempt to provide an in-depthinformation on the financial record-keeping of religious organizations

of the Catholic Churches in Enugu Diocese Specifically, the study isintended 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 thechurches, 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 ameans 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 managementand control and how the funds are being administered and itsadequacy to the individual churches form the basis for research work

However, the scope of inquiry for this study is based on theCatholic Diocese of Enugu and some selected parishes like St JudeJude’s Catholic Church Parish 9th Mile Corner, Ngwo and Our Lady ofLourdes, Imezi Owa for the analysis The reason being that CatholicChurches are the same everywhere and indeed in all the parishesand they also follow the same doctrine and system of operation,therefore covering all the parishes will be a waste of time and willmake no difference

1.7 LIMITATIONS OF THE STUDY

One of the limitations of this study is the transportation costincurred in visiting the Dioceses, as most times, the priest or thefinancial administrators of the dioceses were met absent, therefore,the researcher has to repeat the visit so as to get the informationrequired

Also, much time were wasted in the process of collecting thenecessary data for the study as those responsible to divulge theinformation were so reluctant, therefore the researcher/writer waitedfor some information that could be gotten concerning the study.Those times wasted in waiting for the collection of data would havebeen used by the researcher to meet up or acquire knowledge on thestudy in view or related study

Besides, the greatest limitation to the study has been theinability to collect data for the study Apart from having no relatedwork done on the topic, the researcher could not easily get theinformation for the study Though, some of the data were gotten later,the researcher did not find it easy, but managed to get small data forthe 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 inEnugu Diocese It shows at a glance and most importantly, theoverview of the financial records, the financial control, the accountingsystem and procedure and indeed financial decision and reporting ofthe catholic churches There is no doubt that the study will benefit notonly the Catholics but also other Christians and other religiousorganizations to borrow a leaf from the church so as to maintain asound financial system in their various religious groups Also, thestudy will help to remove the misconception from the minds of somepeople that church leaders spend church’s fund anyhow Also, theanalysis and recommendations on this study will go a long way toalleviate this

In essences, the study will be beneficial to students of financeand accounting so as to enlighten them more on finance andaccounting system of religious organizations It will also serve as areference 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 individualsand organizations in the private and public sectors Financialmanagers can take three main decisions; finance, investing anddividend decisions

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

cheques, drafts, money orders, etc The term may be used toinclude securities which have a ready market and can bequickly liquated

3 FINANCE COMMITTEE: This is an association where those

involved or are specialized in finance shall have power tosupervise the financial affairs of the corporation or organizationand 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 termalso applies to governing bodies of the church with official

governing bodies in the Vatican, the branch of the Roman Curiawhich 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 thosepurposes 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 thebaptized This power is referred to that belonging to the church

as a perfect society, whereby the church affects a rule for thespiritual 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 therequest and facts together with the reasons and then offers the

answers with the conditions It is the usual form through whichdispensation 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

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 WestPublishing 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 CatholicFather Borghero stationed at Whydah in Dahomey In 1860 he visitedAbeokuta and Lagos, the freed slaves from Brazil had settled inLagos and were mostly Roman Catholic, Father Borghero landed inLagos in 1862 and was surprised at the number of Brazilians who atsome time in their history had been baptized in the Roman CatholicChurch At this time, it was impossible to make Lagos autonomous as

a mission station with resident priest; thus Lagos was treated as anout station of Whydah in Dahomey Hence, with in ten years of FatherBorghero’s visit to Nigeria, the Roman Catholic Church in Nigeria hadbecome so well established that it was separated from the RomanCatholic Church in Dahomey

However, in 1868, Father Pierre Bouche arrived as the firstresident 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 whoworked 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, Ossamariand 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 werealmost insurmountable At that time, the first missionaries landed atOnitsha in November 1885, there were only few Igbo men who couldspeak and understand English, so communication problem posed amajor obstacle between the early missionaries and their hosts whowere given frontal attack by the establishment of schools where thepeole studied how to read and write and the products of these

schools became interpreters for the missionaries The interpretersbecame teachers and Catechists, and it was only after the civilian war

85 years after the advent of Catholic Missionaries that the roles ofinterpreters phased out as indigenous clergy came on the scene totake over from expatriate mentors

Other problems were the double standards of some Catholicswho though baptized and even received the Holy Communion yetindulged in pagan rituals like Odo, Omobe, Ibuno etc There werealso neo-paganism which as the most common among the so calledelites who think that by reverting to pagan practices and idol worship,they were preserving their culture However, the missionariespreached 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 bodiesand Protestants and that of Catholics over who could convert morefollowers and thus generate influence Though there were no bloodyclashes but the rivalry almost took the form of struggles to acquiremore lands for mission, to establish schools and to organize moresocial Christian activities

2.2 THE GROWTH OF CATHOLIC CHURCH IN ENUGU

DIOCESE

It was on November 21, 1962 that Enugu was declared adiocese by His Holiness, Pope John XXIII and John Cross Anyoguwas appointed its first bishop of Enugu Diocese on January 15, 1963,before this, the coming of Catholicism was thoroughly prepared for inEnugu area even before the actual coming of Christian missionaries.The people spontaneous hospitality, the irreversible process ofcommunication in consciousness in every community, the oversimplicity and in humility of the normal man of the area and theirtransparent openness to truth are few of the wonderful work of theWord of God written in the hearts of men A witness was noted to thiscentury in making world know that “zoning system” initiated by Iva-Valley in 1956 by the Parish Priest, Father Michael Eneje hasbecome one of the most effective modern evangelization strategiesfor reaching every person and getting all Catholics committed to trueChristians in Igbo land

Moreso, the growth and the future of the church especially thesecond century Christianity in Enugu diocese has a very solidfoundation in that its youths is a group of committed enthusiastic and

selfless Christians This dedication became very apparent during thevisit of Pope Paul II in Nigeria in 1982 The youths worked so hard toprepare the Enugu Airport that the Pope was compelled to change hisprotocol in order to show appreciation for the marvelous arrangementmade in the airport by the diocese and indeed the whole Nigeriansprepared so much for the coming of the Pope for the second time inNigeria The coming of Pope John Paul II the second time in Nigeriawas the beatification of Rev Father Michael Cyprian Iwene Tansi atOba in Anambra State on 21st of March 1998 The visit was sowonderful and Enugu Diocese prepared in a special way for the visit.

However, the theology of incarnation is so favorite theme of thediocese and the Catholics of the diocese having a saying that thechurch 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 thediocese 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 toorganize and hold a synod and from the synod diocese; one can seethe far-reaching theological decisions of the diocese which nowpaves the way to a smooth flow over into the theological life of thesecond century, making solid foundation for the future of Christianity

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 newbishop of Enugu Diocese Rt Rev Dr Anthony Okonkwo Gbuji toadminister its affairs

2.3 THE ADMINISTRATIVE SET UP OF THE DIOCESE

According to Eneasota (1985:35) that Catholic Church has aninherent 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 divineworship, the provision of fitting support for the works of the sacredapostolate and charity especially the needy According to Code of Cannon Law (1967:135), the universal church and other public andprivate juridical persons are capable of acquiring, retaining,administering ands alienating temporal goods in accordance with thelaw under the supreme authority of the Roman Pontiff, ownership ofgoods belong to that juridical person which has lawfully acquiredthem

In every diocese, there is to be a special fund which collectsofferings and temporal goods for the purpose of providing inaccordance with CAN 281, for the support of the clergy who serve thediocese, unless otherwise catered for where there is yet no properlyorganized system of social provision for the clergy, the Episcopalconference is to see that a fund is established which will furnishadequate social security for them To the extent that it is required, acommon reserve is to be established in every diocese by which theBishop is enabled to fulfill his obligations towards other persons whoserve the church and to meet various needs of the diocese this canalso be the means by which wealthier dioceses may help poor ones.

In carrying out acts of administration which in the light of thefinancial situation of the diocese, are major importance, the dioceseBishop must consult the finance committee and the college ofconsulters For acts of extraordinary administration, except in casesexpressly provided for in the universal law or stated in the documents

of foundations, the diocesan bishop needs the consent of committeeand of the college of consulters It is for the Episcopal conference todetermine what are to be regarded as acts of extraordinaryadministration

The administration of ecclesiastical goods pertains to the zonewith the direct power of governance over the person to whom thegods belong, unless particular law or statutes or legitimate customerstate, otherwise and without prejudice to the right of the ordinary tointervene where there is negligence on the part of administrators.

Where no administrators are appointed for a public juridicalperson by law or by documents of foundations or by its own statutesthe ordinary to which it is subject to appoint suitable persons asadministrator for a three year term The same persons can be re-appointed by the ordinary Every juridical person is to have its financecommittee or at least two counselors, who are to assist in theperformance of the administrator duties, in accordance with thestatutes

2.4 THE DIOCESAN FINANCIAL MANAGEMENT PROCEDURES

Management is the process of converting information intoaction (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 financemanager fall into three broad areas, provision, allocation and control

of financial resources to enable the organization to achieve itsobjectives Having secured the necessary financial resourceswhether raised from internally generated sources or from externalsources, the financial manager needs to ensure that the fund areallocated to their most efficient and productive uses.

Consequently, to ensure a proper and correct administration oftemporal diocesan ordinaries (or their equivalents) there should beestablished, financial committee or council as presented by Cannons(492-494) These committees or councils are to fulfill their task withthe greatest possible transparency and responsibility and that theysend to the Holy See annually detailed and precise report, concerningthe subsidies received from agencies of organizations and themanner they are to be utilized

The administrators of the church are to render financial accountannually to the diocesan ordinary and also to the faithful of the usethat has been made of the goods which they have offered to thechurch in accordance with the norms established by particular law

More so, the Parish Finance Council and Parish PastoralCouncil 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 havefinancial council as follows:

- Parish Finance Council is therefore obligatory in all parishes

irrespective of the size and value of the temporal goods theypossess

- It prepares budgets of anticipated income and expenditure for

the forthcoming financial year which shall be submitted to thediocesan Bishop before 31st October, of the proceeding year Abudget system is planning for the futures even parishes withmeager can reduce finance of the church with the budget, theparish budgeted estimate must be presented by the parishfinance council in joint meeting of the two for discussion andapproval The two bodies should in this joint meeting draw aproper parish policy guidelines to guide the Parish FinanceCouncil in the preparation of the current budget committees inconformity 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 paymentaccount (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 parishprojects

- 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 personnelemployed 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, cashand bank books, preparation of payment voucher or petty cashand 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 unfavourabledeviation from approved budget plan

- it sanctions the preparation of supplementary estimates for

expenditure above amount already approved in the budget andobtains the approval of the parish pastoral council and parishfinance council before any expenditure budget

However, the congregation to evangelization of peoples inRome has instructed the entire diocese to comply to Cannon law inrespect 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 theyhave offered to the church in accordance with the establishment ofparish 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 andGreece Early Babylonians had begun by 4500BC, to levy and collecttaxes 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 expresshimself in drawing but he could not write Therefore, record keepingcould 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 bythe Arabs as early as 850AD greatly enhanced the development ofrecording keeping

The emergency of money as a medium of exchange hasprovided impetus for development of accounting and record keeping(Okafor, 1996:1) It becomes necessary to record business events onmonetary aspect rather than on physical quantities Moreover, theindustrial revolution of 18th century which brought about ample growth

in the world trades and industry provided an important stimulus toaccounting and record keeping.

The businesses have been on continuous growth andexpansion, resulting in increased need for information through properrecording Before this era, businesses were on small scale andindividual proprietors were so personally involved in the business tatthe need for information was less required The industrial revolutionwas in effect the basis of the modern business enterprises rangingfrom partnership to joint stock companies In view of Okpe (1998:1),described business organization as the vehicle for mobilization offunds and human resources” He further stressed that it involves theprinciple 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 communicationnetwork between the enterprises and the interested parties especiallyfor 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 indicatedthat an adequate record keeping system helps to increase thechances of survival and reduces probability of early failure Similarly,

for established industrialist, it has been clearly demonstrated that agood record keeping system increases his chances of staying inbusiness and or earning desirable profits.

Record-keeping can help owner managers of small enterpriseskeeping 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 torender services and not to make profits (Freeman, 1988:14) theobjectives of most non profit organizations are to provide as manygoods or as much service each year as their financial and otherresources 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 awide variety of organizations in the present social and economicenvironment They include government units – Federal, State andother educational institutions, hospitals and health care organizations,voluntary association, research organizations, foundation and othersocial and cultural organizations

According to Freeman (1988:16), he observed that financialmanagement of a non-profit organization typically focuses on

“acquiring and using financial resources upon sources and uses ofworking capital, budget status and cash flow rather than on netincome 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 forChristian services Again businesses may be re-organized, sold orliquidated, churches are difficult to re-organize or liquate and theirproperties are rarely considered as cash assets The use of funds isrestricted when given by donor for specific purpose In other words,some assets are restricted for a particular purpose like in a club, themembers may be assessed for certain capital improvements such asthe construction of a swimming pool, the proceeds from theassessment will be set in a restricted fund to be used only for thatparticular 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 oredifficult since the attainment of goals can be measured only in term of