AFRICA INLAND CHURCH

(KENYA)

Finance Policy and Procedures Manual

This manual is the exclusive property of

Africa Inland Church – Kenya
It is not intended for copyright or reproduction.

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1.0 GENERAL INFORMATION
1.1 LIST OF ACRONYMS
AIC Africa Inland Church
CCC Central Church Council
ACC Area Church Council
RCC Regional Church Council
CAPEX Capital Expenditure
CBA Collective Bargaining Agreement
CCP Certificate of Contribution Paid
CCS Cash Count Slip
DIT Deposit in Transit
EC Executive Committee
EFT Electronic Funds Transfer
GAAP Generally Accepted Accounting Practices
GoK Government of Kenya
GPA Group Personal Accident Insurance cover
HELB Higher Education Loan Board
HOD Head of Department
IAS International Accounting Standards
ICPAK Institute of Certified Public Accountants- Kenya
IFRS International Financial Reporting Standards
IGA Income Generating Activities
KAS Kenya Accounting Standards
KRA Kenya Revenue Authority
Ksh Kenya Shillings
LPO Local Purchase Order
MIS Management Information System
SHIF Social Health Insurance Fund
NSSF National Social Security Fund
OC Outstanding Cheque
PAYE Pay As You Earn (income tax)
PIN Personal Identification Number
PTA Parents Teachers Association
PTC Personal Time Charge
RTGS Real Time Gross Settlement
SACCO Saving and Credit Co-operative Society
TER Travel Expense Retirement
ToR Terms of Reference
USD US Dollars

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 1.2 DEFINITION OF TERMS
Authority Legal right to carry out given mandates.
Bank Reconciliation Is the process of ensuring that all transactions during the period are
recorded and cash-in-bank balances are accurately reflected in the
books of accounts on a timely basis.
Board Governance team or organ.
Capital Expenditure Acquisition (by purchase or construction) of property, plant, and
equipment with a useful life over one (1) year (CAPEX) and whose
individual value is more than Ksh 20,000
Confidentiality This refers to accessing and interacting with the church's data and
information as a member of its staff.
Conflict of Interest Activities, practices, or acts which conflict with, or appear to conflict
with, the interests of the organization, its programs and projects, or its
members.
Core Values Are what the church believes in, the underlying principles, norms, and
beliefs that guide the organization in how staff members behave.
Values are a part of church culture. They may be stated or
unexpressed.
Deposit in Transit Un-cleared deposits and credits (DIT).
Equal Opportunity A non-discriminatory practice.
Float Cash given as interest or advance to staff to manage specific
programs and projects away from the office.
Goal Sub-components of the mission refer to an aim, desired result, or
simply the target.
Gratuity This refers to payment (usually a percentage of their monthly salary)
made to staff on fixed contracts at the end of the contract period.
Management The board empowers the Management team to carry out the church's
function (get things done).
Mission Basic reason why the church exists.
Objective Specific component of a goal.
Outstanding Cheque Un-cleared cheques and payments are reflected as (OC).
Petty Cash Cash is held in the office to facilitate payments of small and minor
expenses and reimbursement of duly authorized disbursements not
paid or covered by cheques.
Policy A guideline or principle for operation.
Responsibility Accountability for some authority.
Staff An employee (or employees).
Vision This is the church’s aspiration of the future (how it would like to be), the
ideal situation, the hoped-for “reality to be” – i.e., it is a dream of the
desired future.
Personnel Time Charge Allocation of staff costs among programs and support.
Per Diem This is an authorized expenditure that does not require submission of
returns disbursed to staff that travel out of the country.
Respective Level Council This means the leadership council at respective relevant level of the
church leadership, that is, LCC, DCC, RCC, ACC or CCC.

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1.3 ABOUT THIS MANUAL
1.3.1 The Purpose of this Manual
1.3.1.1 The purpose of this manual is to establish, communicate, and maintain consistent
Financial Policies and Procedures for AIC. It is the treasurer who bears the
responsibility of ensuring that employees have easy access to the manual.
1.3.1.2 The policies and procedures contained in this manual are based and will be primarily
guided by the Laws of Kenya and the International Financial Reporting Standard (IFRS)
or Generally Accepted Accounting Practices (GAAP), which are crucial in ensuring
adherence to legal and international standards.
1.3.1.3 The key objectives of the manual are to:
a) This manual provides comprehensive guidelines and a robust financial system,
ensuring strong management and financial controls, thereby instilling a sense of
security and guidance.
b) Provide standard working procedures within AIC concerning financial transactions.
c) The manual plays a crucial role in maintaining continuity in financial procedures, even
in the event of transition in leadership, providing reassurance and confidence.
d) Provide a reference for responsibilities and authorities with respect to financial
transactions.
e) The manual is instrumental in instilling and maintaining professional financial
management procedures, ensuring a high level of competence and professionalism.
f) Ensure compliance with the local statutory regulations.
g) Define financial policies, systems, and procedures and establish a standard basis for
official decisions, actions, and accountabilities.
h) Set up policies and procedures that ensure effective financial administration and
stewardship of resources within AIC and its institutions.
i) Give guidance on financial reporting requirements.
j) Ensure a uniform and consistent accounting practice within and across AIC and its
institutions.
1.3.2 Users of this Manual
The users of the manual will include:
a) The councils, departments and committees will use it to plan and control the financial
aspects of AIC programs and activities.
b) The administration and all personnel directly involved in collecting and processing financial
data should ensure conformity to the established procedures.
c) All AIC staff are expected to ensure the proper application of the procedures as a whole and
in their departments.
d) Auditors (both internal and external) who will use it in determining compliance and
applicability.
1.3.3 Approval of, and Adherence to this Manual
This manual is a legitimate document of AIC, having been approved by the CCC. Therefore,
a) Respective level councils should set an example in adherence and compliance to this
manual.
b) Adherence to the manual is a part of staff regulation provided in the terms and conditions of
service for every staff member.
c) Non-compliance with the procedures shall result in disciplinary action.
d) The treasurer in respective council level is responsible for the content and distribution of this
manual to the respective level council, the staff and all users.
1.3.4 The Scope

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 a) The manual contains general policy statements and should not be read as including each
policy's acceptable procedural guidelines or as forming an express or implied contract.
b) It is acknowledged that CCC will change, modify, or revoke any aspects of these policies,
either in part or in whole, in response to changes within AIC, government legislation, and
finance and accounting practices.
c) While the CCC finance committee will make every effort to keep the manual current, there
may be times when policy changes are adopted and advised to councils and staff before the
manual is revised and updated.
d) In some cases, procedures for implementing a particular policy may exceed the scope of this
manual. In such cases, the policy will be considered other procedural manuals (such as the
Human Resources Policy, and others).
1.3.5 Interpretation and Administration
a) The manual sets out all finance policy guidelines on the major operating issues and
concerns of AIC as laid out by the church leadership. The CCC finance committee is
responsible for the official interpretation of policies contained therein.
b) However, any issues that councils and staff may have regarding the application of policies
contained in this manual shall, in the first instance, be directed to the treasurer, who will
liaise with or refer the matter to the finance committee for resolution or escalation to the next
finance level as appropriate.
c) Operating mechanisms and programs will be developed in consultation with respective
council levels and leaders and staff members to ensure sufficient understanding and uniform
application of policies.
d) Should clarification or interpretation arise on matters not explicitly provided in this manual,
the CCC finance committee will be responsible for delivering such interpretation in
consultation with the treasurer.
e) Any policy, rule, regulation, procedure, or provisions that conflict or shall conflict with the
Laws of Kenya and other jurisdictions where AIC has presented International Financial
Reporting Standards (IFRS) or Generally Accepted Accounting Practices (GAAP) shall be
superseded by the latter.
1.3.6 Maintenance, Modification, or Amendments of the Manual
a) The CCC reserves the right to revise, eliminate, or add to the policies contained in this
manual. The finance committee is entrusted with the responsibility of interpreting,
implementing, and revising (if necessary) this manual. However, any change or review will
be initiated by the national treasurer, who shall make recommendations to the CCC finance
committee for consideration and approval. Policies shall only become valid after formal
approval by the church leadership.
b) The manual shall be reviewed every five (5) years. The CCC finance committee may consult
with the councils and staff as needed and submit the final recommendation for amendments,
revisions, or policy changes to the CCC for final consideration and approval. However, the
CCC finance committee shall keep a record of areas that need improvement. If an urgent
matter needs review midway, it shall go through the authorized approval process.
c) Councils and staff shall be advised to promptly amend any part or section of this manual.
Such advice shall be in writing and shall be signed by the national treasurer. Revisions to a
particular policy shall be noted by indicating the revision date in the upper right-hand corner
on top of each page of the revised policy.
1.3.7 Confidentiality
The finance committee shall ensure safe and restricted access of all accounting information to
maintain confidentiality. Consequently, it is implied that all leaders and staff who handle
accounting information shall maintain strict confidentiality on all matters about the finances of
respective =level council, a breach of which will result in appropriate disciplinary action (including
dismissal). Therefore, entry into the safes or whatever other room or space where accounting
information is kept shall be restricted to finance or accounting staff, the treasurer, and the other
signatories to the bank accounts or any other person authorized by them.

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1.4 THE IDENTITY OF AFRICA INLAND CHURCH - KENYA
1.4.1 History
The History of the Africa Inland Church goes way back to 1895 when an American Missionary,
Rev. Peter Cameron Scott, on a missionary expedition set his foot in the then remote Nzaui area
in Ukambani. Peter Cameroon Scott was the founder of the Africa Inland Mission (AIM). The
Gospel was proclaimed, and, despite a myriad of challenges, the number of converts increased,
and mission stations were opened in areas of Machakos, Kangundo, Mukaa, Mbooni, Mulango,
Kyome, Siyapei, Litein, Sitotwet, Kijabe, Githumu, Kapsabet, Eldoret, Kabarnet, and later to a
good distribution throughout Kenya and beyond.
As the Church grew and spread throughout Kenya, it assumed more and more responsibility for
its ministry and administration. The church began to support its ministries financially and thus
began functioning autonomously from AIM.
In December 1940, leaders of both the church and AIM began preparing a constitution. In 1943,
the church became nationalized and the name Africa Inland Church (AIC), Kenya began to be
used. In 1952 AIC completed the constitution and from this point on the Church managed its own
affairs according to its constitution.

On 21 October 1971, at a national service held at Mumbuni in Machakos, led by the Reverend
Wellington E. Mulwa, AIM ceded mission stations to AIC, and AIM became a department of AIC
in all church related matters. In 1975, AIC celebrated its eightieth (80 th) anniversary. In 1979, AIM
Kenya Field Council was dissolved, and in 1981 its Kenya branch ceased to function as a
department of the AIC, and instead as a separate organization, it began sending missionaries to
AIC. On 22 October 1995, AIC celebrated its centenary (100 th anniversary) at the Moi
International Sports Centre, Kasarani in Nairobi. Africa Inland Church membership stands at over
7 million.

Today, AIC has very many local churches led by Local Church Councils (LCC) that are under the
leadership of District Church Councils (DCC). The DCCs reports to the Regional Church Councils
(RCC) which are administratively managed through the Area Church Councils (ACC). The Area
Church Councils (ACC) report to the Central Church Council (CCC).
1.3.2 Vision Statement
A church that portrays the image of Christ.
1.3.3 Mission Statement
To fulfill the Great Commission of our Lord Jesus Christ through outreach, discipleship, and
equipping God’s people for ministry.
1.3.4 Philosophy of Ministry
a) Preamble
AIC believes that Jesus Christ is the all-sufficient answer to all human problems (Colossians
1:28-29) and therefore undertakes to fulfill God’s divine mandate of making disciples (Matthew
28:18-20) within the framework of the church’s philosophy.
b) AIC’s Statement of Faith
As stated in the church’s Constitution, members of AIC believe in:
A. The Unity and Trinity of God eternally existing in three co-equal persons: the Father, the
Son, and the Holy Spirit.
B. God, the Creator and Preserver of all things, who created man, male and female, in His
image and gave them dominion over the earthly creation.
C. The deity and humanity of God the son, the Lord Jesus Christ, who, being the very God, also
became man, being begotten of the Holy Spirit, born of the Virgin Mary, was crucified, died
and was buried, was raised bodily from the dead and ascended to the right hand of the
Father; whose two natures continue eternally and inseparably joined together in one Person.
D. The deity and the Person of God, the Holy Spirit and the necessity of His work to make the
death of Christ effective to the individual sinner who repents, granting him (the sinner)
forgiveness from God and faith in the Lord Jesus Christ; and in His ministry dwelling
permanently within and working through the believer for godly life and service.

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E. The divine verbal and plenary inspiration and infallibility of the Scriptures, both the Old and
New Testaments as originally given, and their absolute and final authority in all matters of
faith and conduct.
F. The universal sinfulness and guilt of human nature since the Fall, rendering man subject to
God’s wrath and condemnation.
G. The sacrificial death of our Representative and Substitute, the Lord Jesus Christ, the
incarnate Son of God, by the shedding of whose blood atonement was made for the sins of
the whole world, and whereby alone, men are redeemed from the guilt, penalty and power of
sin and death.
H. The necessity of the new birth as the work of God, the Holy Spirit is that men are saved by
grace through faith, not by works.
I. The eternal security of the believer, based entirely on the atoning work of the Lord Jesus
Christ, whereby, as a born-again child of God, he has assurance of salvation and has the
right to all privileges of the sons of God.
J. The maintenance of good works and obedience to the revealed will of God in life and
service, through which eternal rewards shall be received.
K. The True Church, whose Head is the Lord Jesus Christ and whose members are all
regenerate persons united to Christ and to one another by the baptism of the Holy Spirit.
L. The observance of the ordinances of Baptism and the Lord’s Supper, as appointed by the
Lord Jesus Christ.
M. The supreme mission of the Church as being to glorify God and preach the Gospel to all
mankind.
N. The personal visible return of the Lord Jesus Christ:
1. The Rapture, 1 Thessalonians 4:16, 17
2. The Tribulation, Revelation 3:10; Matthew 24:29
3. The Millennial Reign of Christ, Revelation 20:6
O. The literal resurrection of all people.
P. The eternal blessedness of the saved and the eternal punishment of the lost.
c) The Church Core Values
AIC is committed to nurturing its assemblies, ministries, and programs with these key values:
 Compassion and Justice
 Diligence
 Trustworthy
 Teamwork
 Stewardship
 Responsibility & Accountability

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1.5 GOVERNANCE AND MANAGEMENT STRUCTURE OF AIC
1.5.1 Introduction
The supreme governing body of the AIC is the Central Church Council (CCC), which meets at
least once every year and provides general guidance on the church's Vision and Mission.
AIC governance structure is made up of church councils at five (5) levels:
1. Local Church Council (LCC)
2. District Church Council (DCC)
3. Regional Church Council (RCC)
4. Area Church Council (ACC)
5. Central Church Council (CCC)
The LCC is comprised of a chairman, who is the pastor in charge of the local church, and several
elders. It is responsible for providing leadership and supervision of the affairs of the local
congregation. If, for acceptable reasons, the pastor is not in the position of chairman, the LCC
may appoint one of its other members to be their chairman in their full LCC meeting. The LCCs
are formed by, and report to, the DCC.
According to the current AIC constitution, the DCC enjoys a considerable degree of autonomy
and is key within the structure of AIC. It is responsible for planning, implementing, and
supervising the work of the church in each district. It usually authorizes the establishment of local
congregations and appoints and arranges for financial support of pastors and preachers within a
given district. It is composed of elected officials from various LCCs within the district, and its
chairman is usually one of the ordained pastors of the church. Its officials are chairman, vice
chairman, secretary, vice secretary, treasurer, departmental heads, 3 representatives from each
LCC which include the LCC chairman, secretary and treasurer. The DCCs are formed by, and
report to, the RCC.
The RCC oversees ministerial activities in the several DCCs. The RCC officials are drawn from
each of the DCCs, and the chairman is also one of the ordained pastors of the church. Its officials
are chairman, vice chairman, administrative secretary, treasurer, departmental heads, 3
representatives from each DCC which include the DCC chairman, secretary and treasurer, and
not more than two (2) co-opted members. The RCCs are formed by, and report to, the ACC.
The ACC comprises several RCCs. It is headed by a bishop, commonly referred to as the Area
Bishop. Its officials include the bishop (as chairman), assistant bishop, treasurer, administrative
secretary, representatives from each RCC which are RCC chairman, administrative secretary and
treasurer, heads of departments within the ACC, and not more than two (2) co-opted members if
need be. The ACC is the official employer of all employees within their areas.
The CCC comprises the Presiding Bishop, Deputy Presiding Bishop, Administrative Secretary,
National Treasurer, ACC Bishops, ACC Administrative Secretaries, ACC Treasurers, Principal
and Chairman of Scotts Christian University Governing Council, Chairman and Director of Biblia
Husema Broadcasting, Chairman and General Manager of Kijabe Printing Press, Chairman and
Principal of AIC Missionary College, Chairman and Director of AIC Health Ministries, Chairman
and Director of AIC Childcare Department, Chairman and Director of AIC Missions Department,
AIC Central Office Accountant, and Mission Agencies and Affiliates (AIM, Diguna, and others).
The CCC oversees the running of AIC in all matters of faith and practice.

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 1.5.2 Church Organizational Structure

Central Church Council

CCC Committees and

Boards

DEPARTMENTS Presiding Bishop

Executive Finance Missions Central

Committee Committee Committee Health
Council

Health Radio Missions Child Printing Administrative Deputy Presiding National

Ministries Care Press Secretary Bishop Treasurer

Area Church Council

(Bishops)

Regional Church Councils;

(Chairmen)

District Church Council

(Chairmen)

Local Church Council

(Pastors)

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1.5.3 The Finance Committee
1.5.3.1 Financial Responsibility
The finance committee is charged with the responsibility of finances in every level in the church
structure, that is, LCC, DCC, RCC, ACC and CCC. The committee is constituted after elections
every 5 years. It is chaired by the treasurer at each level.
The Committee shall be responsible for the oversight of the business affairs of the church and
shall undertake the following financial responsibilities:
a. It is responsible for the annual financial statements, which should be prepared using
appropriate accounting policies supported by reasonable and prudent judgments and
estimates in conformity with international Financial Reporting Standards (IFRSs).
b. It shall ensure that the financial statements give a true and fair view of the state of financial
affairs of the church and its operating results.
c. It is responsible for maintaining accounting records that may be relied upon in preparing
financial statements as an adequate system of internal financial control. In this regard, a
professional bookkeeper or accountant will be employed at every level as much as the
resources permit. Where resources do not permit, volunteer professionals should be sought
to support.
d. It is responsible for preparing all AIC budgets before any expenditures occur or payments
are made. This is subject to approval by the respective level council.
e. In consultation with the respective level council, it is responsible for authorization of the
physical development of the AIC assemblies and projects in conjunction with the
development committee.
f. It is responsible for sourcing funds for the AIC infrastructure development in conjunction with
the development committee.
g. Ensure that quarterly financial statements, subject to approval by the respective level
council, are issued to the congregation within one month after the end of the quarter.
h. Ensure that an auditor is engaged, and annual reports and annual audited accounts are
issued to the respective level council who shall review and authorize presentation to the
congregations within the first quarter after the end of the financial year.
i. Ensure that a register of all fixed assets, tools and equipment is maintained.
j. Do an annual asset survey for the purpose of verification, appraisal, disposal or writing off.
k. Leads the respective level council to prepare and monitor its budget (for both operating and
capital funds) and review it quarterly and make necessary recommendations for
adjustments.
l. Ensure payments are made within 30 days after all the requisite support documentation has
been received from the recipient. Emergency payments shall be made on demand.
m. Advise the council and its respective departments on financial matters.
n. At ACC and CCC levels, the finance committee, in conjunction with the HR committee is
overall responsible for determining the salary scales and payroll for approval by ACC or
CCC.

1.5.3.2 Composition
The committee is differently composed based on the respective level council. The following shall
comprise the committee members at each level:
i) CCC: The national treasurer (chairman) and treasurers from all ACCs.
ii) ACC: The ACC treasurer (chairman) and treasurers from all RCCs.
iii) RCC: The RCC treasurer (chairman) and treasurers from all DCCs.
iv) DCC: The DCC treasurer (chairman) and treasurers from all LCCs.
v) LCC: The LCC treasurer (chairman), the accountant or bookkeeper, one (1) other member of
LCC, development chairman, one professional (preferably an accountant).

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1.5.3.3 The Treasurer
Key Responsibilities
To support the committee on effective and prudent management of financial resources in a
manner consistent with existing policies and procedures. The treasurer shall not work
independently but will consult with the finance committee and the appropriate respective level
council on all matters finance. In the absence of the treasurer, the finance committee can appoint
one of its members to handle the responsibilities of the treasurer in conjunction with the council
and the other bank signatories. The treasurer should be someone who has background training
and experience in finance and/or accounting.
Key Functions:
The treasurer will be the chairman of the finance committee and the principal finance officer at the
respective level council and shall:
a. Periodically review and ensure that AIC maintains sound policies and systems for financial
management and procurement.
b. Review the monthly management accounts and ensure they are accurate and within budget.
c. Plan for adequate cash flow for ministry operations as needed.
d. Recommend to the council the most prudent and competitive investment of any excess
funds.
e. To ensure proper and timely preparation of the annual budgets and consolidate budget at
the respective level council.
f. To review and recommend to the council all capital expenditure proposals for appropriate
action as part of the annual budgeting process and offer advice on significant capital
expenditures and investments to ensure ministry activities are not adversely affected by
cashflow constraints.
g. To ensure that the accountants and/or bookkeepers have the right skills and competencies
for quality accounting, accountability, and producing accurate financial reports.
h. To review audited accounts and ensure they are correct, accurate, and compliant with IFRS
and within the government statutory requirements before forwarding them to the church
leadership for consideration and approval, reaffirming our commitment to accuracy and
compliance.
i. To ensure that audit recommendations are implemented.
j. To ensure appropriate purchasing tools (supplier contracts/agreements) are used and
synchronized with the church's fiscal planning.
k. To set and periodically review authorization limits for procurement and incurrence of other
expenditure and make appropriate recommendations to the church leadership for approval.
l. To appraise the council on any works in progress, evaluate price variations and the impact
on budget and cashflow, and advise appropriately.
m. To ensure that the tender process is managed professionally, effectively, and cost-
effectively.
n. To ensure an annual evaluation of the performance of suppliers and approve the list of
suppliers and service providers for the following year.
o. The treasurer shall be a signatory to council bank accounts and will ensure proper and timely
banking of all moneys.

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2.0 GENERAL ACCOUNTING POLICIES AND PROCEDURES
2.1 BASIS OF ACCOUNTING
The annual financial statements shall be prepared according to the historical cost convention and
incorporate the fundamental assumptions of a going concern and consistency. The principal
accounting policies are based on and substantially comply with the Generally Accepted
Accounting Practices (GAAP), International Financial Reporting Standards (IFRS), and the
relevant statutory requirements.
2.2 CLASSIFICATION OF INCOME AND REVENUES
The income and revenues of AIC shall be classified and reported based on the existence or
absence of donor-imposed restrictions, as follows:
2.2.1 Unrestricted Income and Revenues – General Funds
These are income and revenues that are not subject to any donor-imposed restrictions. All
contributions are considered unrestricted unless specifically designated by the donor. Under this
category are church offerings and tithes and any other open-ended donations from members,
companies, donors, and government agencies with no specific project inclination.
2.2.2 Temporarily Restricted Income and Revenues
These are incomes and revenues subject to donor-imposed restrictions that may be met either by
actions of AIC or by the passage of time. When a restriction expires, that is, a stipulated time
restriction ends, or purpose restriction is accomplished, the income and revenues are then
reclassified to unrestricted income and revenues and reported in the statement of activities as
income and revenues released from restrictions, i.e., general funds as above. These include
excess funds generated from workshops and seminars organized by AIC.
2.2.3 Permanently Restricted Income and Revenues
These are income and revenues subject to donor-imposed restrictions, which require that AIC
permanently maintain the principal as per the contractual agreement with the donors.
2.2.4 Designated Income and Revenues
These are revenues explicitly provided for a designated purpose and, therefore, must only be
used for the intention it was donated. Annual balances for such funds will be carried forward to
the following year until the project is realized, and any balance after that must obtain finance
committee and respective level council approval before being transferred to different purposes.
2.3 PROPERTY AND EQUIPMENT AND DEPRECIATION
2.3.1 Property and equipment are carried at cost and are depreciated at estimated rates to
reduce book values to the estimated net realizable values at the end of the useful lives of
the property and equipment concerned.
2.3.2 The initial cost of property and equipment comprises its purchase price, including import
duties and taxes paid (if any) and any directly attributable costs of bringing the asset to its
working condition and location for its intended use.
2.3.3 Donated assets shall be taken up at their fair market value at receipt.
2.3.4 Expenditures incurred after the fixed assets have been put into operation, such as repairs
and maintenance, are usually charged as operational costs in the years these costs are
incurred.
2.3.5 In situations where it can be demonstrated that the expenditures have increased the future
economic benefits expected to be obtained from the use of an item of property and
equipment beyond its initially assessed standard of performance, the expenditures are
capitalized as an additional cost of the property and equipment.

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Table 1 – Depreciation. Review the table below to ensure all is captured, e.g., under computers,
hardware three years, software five years, and new vehicles vs. second-hand vehicles.
ASSET APPROX USEFUL LIFE % APPLICABLE
1 Land No depreciation -
2 Buildings No depreciation -
3 Computers and accessories 3 years 30%
4 Furniture and office equipment Eight years 15%
5 Property, plant, and equipment Six years to 8 years 15%
6 Motor vehicle Four years 25%
7 Others: Heavy machinery & equipment Three years 37.50%
8 Tents Six years to Eight years 15%
The useful life of an asset is an estimate of the average number of years it is considered
usable, and its value is fully depreciated, after which the asset can be replaced. If the asset is
still usable and future economic benefits associated with it will flow to AIC, it can be used for
additional years.
When assets are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is credited or
charged to either the general account or the respective programs in the income and
expenditure account.
2.4 REVENUE RECOGNITION
2.4.1 Tithes and offerings shall be recognized as revenue when received.
2.4.2 Income generated by projects is recognized when goods or services are provided or
rendered. It is recognized and recorded on an accrual basis.
2.4.3 Contributions (and pledges) are recognized as revenues in the year they are received. An
unconditional promise to give is recognized when the promise is actualized.
2.4.4 Contributions and grants received for projects to be done in future years shall be
recognized in the year it is received and kept in earmarked funds as temporarily restricted
net assets.
2.4.5 Special projects funds are recognized when received from donors. The funds shall be
disbursed in accordance with agreements with the donors. Any income from such projects
shall be credited to the general fund under written advice from the donors.
2.4.6 Contributions and grants received that require that the principal be maintained permanently
by AIC are accounted for as permanently restricted net assets.
2.4.7 Gain and loss on income generating activities (IGA) and investments is reported as
increase or decrease in the respective project in the specific financial year.
2.4.8 A donated asset shall be brought into AIC books of accounts as per its valuation report.
2.5 ALLOCATION OF EXPENSES
2.5.1 Expenses that are directly related, and identifiable, to specific major programs or projects
are to be charged 100% to that program or project when incurred.
2.5.2 Expense related to more than one activity or service is to be allocated across various
programs and supporting services based on the approved expense allocation by functional
classification, otherwise these are to be allocated proportionately.
2.6 FOREIGN CURRENCY

2.6.1 Foreign Currency Transactions

a) Transactions in foreign currencies are accounted for at the rates of exchange ruling on the
dates of the transactions.
b) Gains or losses from the transactions are credited or charged to the respective program if
identifiable or to the general account if borne out of daily administrative operations.
2.6.2 Foreign Currency Translation

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a) Assets and liabilities denominated in foreign currencies are accounted for at the prevailing
central bank rates in effect at the financial position date. The rates shall be obtained from the
bank and attached to the end-of-year reports of the account.
b) Gain (loss) on translation is credited (charged) to the respective program if identifiable or
general account if borne out of daily administrative operations.
2.7 INVENTORIES
Inventories are valued at the lower cost or net realizable value.
2.8 FINANCIAL INSTRUMENTS
Financial instruments carried on the balance sheet include cash and bank balances, receivables,
payables, and loans. The recognition methods adopted are disclosed in the individual policy
statements associated with each item.
2.8.1 Cash and Cash Equivalents
a) Cash and cash equivalents comprise cash at the bank and in hand, mobile money, treasury
bills, and term deposits.
b) For the cash flow statement, the year-end cash and cash equivalents are comprised of cash
and cash equivalents as defined above.
2.8.2 Receivables
Receivables are recognized at the original invoice amount less an allowance for uncollectible
amounts. Specific provision is made for all known doubtful debts. Bad debts are written off by
respective level councils when the finance committee all reasonable steps to recover them fail.
2.8.3 Payables
Payables are stated at their nominal value.
2.9 TAXATION
AIC is exempt from income tax under paragraph 10 of the 1 st schedule to the Income Tax Act and
has a certificate of exemption from the Kenya Revenue Authority that is regularly renewed, after
every 5 years. However, AIC is not exempted from VAT and duty.
2.10 RETIREMENT BENEFIT CONTRIBUTIONS
2.10.1 AIC staff should contribute to a retirement benefit scheme. AIC must deduct employees’
portion and remit the total (employee and employer portions) to the scheme fund
managers.
2.10.2 AIC contributes to a statutory defined contribution pension scheme, the National Social
Security Fund (NSSF). Contributions are stipulated in the NSSF statutes.
2.10.3 AIC contributions to the above schemes are charged to the income and expenditure
account in the year they relate to.
2.11 EMPLOYEE ENTITLEMENT
2.11.1 Employees who contribute to a pension scheme are entitled to a pension upon exit per
the scheme trust deed.
2.11.2 The monetary liability for employees’ accrued leave entitlement at the balance sheet date
is recognized as an expense in the income statement. The number of leave days to be
considered for such recognition should be the maximum days carriable forward as per
AIC HR policy and procedures. Otherwise, leave days not taken at the end of the year will
be forfeited.
2.12 REVALUATION RESERVE
This is a fund accumulated from the surplus on the revaluation of freehold property and all other
assets carried out by independent professional valuers.
2.13 INTEREST BEARING LOANS AND BORROWINGS

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All borrowings are initially recognized at cost, the fair value of the consideration received net of
issue costs associated with the borrowings.

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3.0 FILING, FILE IDENTIFICATION AND RETRIEVAL
3.1 Introduction
3.1.1 This section describes the procedures for filing, identification and retrieval of financial
documents in AIC.
3.1.2 All documents shall be stored both electronically and physically where applicable.
Electronically, the document management system shall be used to save documents. The
treasurer, with the help of an ICT expert, shall ensure proper backup of the same regularly.
3.1.3 Where documents are stored physically, an appropriate reference shall be put on the ridge
in case of a box file and on top of other files. The accountant and/or bookkeeper shall be
responsible for ensuring that the appropriate reference has been used for each file and that
every document has been filed in the correct file and stored.
3.2 File Names and Indexing
Files will be named by reference to the subject and in alphabetical or reference number order.
The following is a guide to the type of files that will be maintained.
3.3 Income/Bank Deposits File
A box file will be maintained with dividers separating each month’s deposits. Offertory sheets for
the respective council level attached to the deposit slip will be filed, and other deposits will also
be filed within each month.

3.4 Cheque Payment Vouchers File

(a) This will be used to store all cheque payment vouchers together with relevant invoices, fee
notes, delivery notes, related purchase vouchers, and payment request notes.
(b) These files shall be partitioned by month to ease searches for documents.
(c) They shall also have written the numbers of the first and last payment vouchers on the ridge
of the file to further facilitate searches for particular documents.
(d) Petty cash vouchers and all supporting documents shall be attached to their related
reimbursement payment voucher.
3.5 Bank Statements File
For filing all bank statements and the relevant reconciliation statements, each bank account has
designated box files with dividers separating each month’s documents or an appropriate
electronic file for the same.
3.6 Fixed Term Deposits File
This is for filing all fixed deposit agreement certificates and correspondence about fixed-term
deposits.
3.7 Fixed Assets File
For filing, all records and copies of supporting documents for purchasing and disposing of fixed
and semi-current assets. Also attached shall be a copy of the Assets schedule. An electronic
fixed asset register shall be maintained for all the church assets. This will indicate the cost,
location of the asset, the person responsible, and depreciation rate.
3.8 Budget Proposals File
This is for filing all planned budget proposals for each financial year. These shall be kept with the
consolidated budget final copy at the top. Any amendments shall be attached to the final
consolidated copy with an appropriate note.
3.9 Financial Reports File
This is for filing all periodic financial reports for each period, including any interim reports. These
shall be classified by the term of the reference period, i.e., Monthly, Quarterly, and Annual
(Audited reports).

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3.10 Insurance Files
Insurance documents and correspondence will be in the file, which will be appropriately
partitioned

3.11 EFT Batches File

This will be used to file all the Electronic Funds Transfer (EFT) payment batches and all the
support documents for each batch. The files shall be written on the ridge the numbers of the first
to the last batch for ease of identification.
3.12 RTGS File
This will be used to file RTGS payment instructions. The documents in this file shall bear the
official bank stamp. The files shall be written on the ridge of the file, along with the dates of the
first and last documents in each file.
3.13 Statutory Payment File
This will include stamped copies of the E-slip and payment support documents (KRA, SHIF,
NSSF and others)
3.14 Storage of Files
a) The accountant and/or bookkeeper shall file all documents daily. All current (going back 12
months) files shall be stored in the designated storage area or office. Access to these shall
be restricted to Finance and other authorized staff.
b) Documents will be filed in individual files chronologically, with the most recent
document/correspondence file at the front.
c) A general file will be maintained for any general items that do not fall into any of the
categories. This type of file shall be kept separately from financial and accounting files since
access to them shall not be restricted.
d) When a file is considered complete, a continuation file will be opened. The first file will be
labeled “Volume 1” under the same name and same financial year.
e) Under no circumstances shall any files be removed from the premises of AIC without the
express authority of the treasurer.
f) A systematic and comprehensive file storage area shall be so designated, and it shall be the
responsibility of the treasurer to ensure it is kept damp-free and secure.
3.15 File Retrieval
a) A record of file movement in the form of a file register shall be maintained by the accountant
and/or bookkeeper to record all file movements outside the accounts office or designated
storage.
b) When a file is removed from the designated storage, the accountant and/or bookkeeper shall
note down in the record the borrower, the date removed and the authorization to do so.
Upon the file’s return, the accountant and/or bookkeeper shall initial its return in the file
register. Under no circumstance will accounts office files be allowed to leave the accounts
office without the express authority of the treasurer.
3.16 Confidential Files
All confidential files will be kept in the appropriate designated storage office, and access to these
files shall be by the treasurer’s authority.
3.17 Retention Policy
a) All documents will be stored for ten (10) years, after which they will be classified as active or
non-active before being put into long-term storage.
b) After files are non-active, they shall be kept for a further period of five years before they are
stored off-site in the archives or destroyed in accordance with the relevant law.

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4.0 SOURCE DOCUMENTS
4.1 Introduction
Accounting is the process of recording, classifying and summarizing financial transactions into
meaningful financial information. The source document is the basis of the initial recording of a
transaction and serves as supporting evidence for the transaction. No funds should be disbursed
or deposited, and no entries should be made in AIC books without proper support documentation.
All disbursements and deposits of funds and entries in the books of AIC must be supported by
original source documents unless otherwise stated in this manual. Photocopies, carbon copies,
and duplicates are not acceptable. The purpose for this is to prevent accidental or intentional
duplicate payment or recording of a transaction, as well as provide assurance to a third party and
auditors that the transaction(s) is (are) bona fide and in accordance with AIC Policy and
Procedures.
4.2 Payment Vouchers’ Policy and Procedures
1 If the original source document is not available, the accountant shall do the following before
making payment:
a) The document must be marked duplicate, and the reason the original is not available should
be put in writing. A source document copy should be obtained and stamped “Certified True
Copy of Original.”
b) The accountant shall scan through all the suppliers’ payments and ledger entries on the ERP
to satisfy himself that “this duplicate” has not been previously paid. The accountant shall
then write on the face “duplicate” – “no record of previous payment” and initial the
“duplicate.”
2 The expenditure form must be signed by the applicant, the unit/local church lead, the person
verifying the calculations, arithmetic, prices, and budgets, and the person authorized to
approve the payment. The delivery notes and service acknowledgments shall be signed by
the applicant or recipient of the goods and services.
3 The accountant shall check all supporting documents for proper pricing, extensions, and
coding. There shall be a notation on the supporting document to show the arithmetic checks
and signed by the accountant. Cheques issued for deposits in advance of delivery of goods
should be authorized by the same persons that approve payment for purchases.
4 Payment vouchers are to be recorded in numerical sequence using cheque numbers.
5 When more than one expenditure account exists on one payment voucher, the same
numbering sequence will apply.
6 After completing the cheque payment voucher, it should be submitted to the authorized
cheque signatories with supporting documentation and a cheque drawn for the amount in the
voucher.
7 Cheque signatories are responsible for ensuring that the payment is in accordance with AIC
policy, that an original invoice is attached to the voucher to support the payment, and that
the invoice is approved correctly.
8 The responsibility of cheque signing should be taken seriously and not performed casually or
just because there is a need for a “rush check.” Cheque signatories have the right to decline
to sign a cheque if, in their opinion, it is not by the financial manual requirements as to
documentation or if they have any reason to believe the disbursement is improper.
9 Cheque writing shall be scheduled with sufficient time to allow the proper preparation of
cheques by the finance department and the proper review by the cheque signatories.
10 After payment has been made, each supporting document must be stamped “paid” and the
date paid indicated. This prevents duplicate payments.
11 The payment voucher is also used to replenish the petty cash fund. In such a case, the
accountant will check the accuracy and proper support of petty cash receipts/returns
following the procedure described above. The cheque should be drawn payable to the petty
cash custodian or the various imprest accounts held for the respective level council.

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12 The cheque should then be cashed by the custodian or banked into the imprest account and
petty cash fund reimbursed, bringing the petty cash total back to the prescribed balance.
4.3 EFT Payment Procedure
1 The accountant receives the invoices and orders from the applicants and confirms that the
invoices are in order.
2 The senior accountant will post the paid batches on the ERP system.
4.4 Receipt Voucher
Cash received must be deposited into the bank intact daily. For offertory receipts, cash collected
will be kept safe and secure as it awaits its being deposited into the bank or handed over to
security services personnel, where applicable, on Sunday after the services.
Where applicable, a form from the security services firm showing the security codes and parcel
numbers should be signed by the security firm personnel and the persons handing over the
money. When the person responsible for receipting is on leave, the finance committee will identify
one among them to take full responsibility for the receipt documentation duties. The elders
involved in offertory counting shall witness the transactions and sign the forms as witnesses.
4.5 Journal vouchers
1 The journal vouchers substantiate and explain the recording of various miscellaneous
transactions, including adjustments, corrections, reversing entries, closing entries, stop
payments, etc. The numbers for the journal vouchers shall be serialized.
2 Adequate supporting documentation must be attached to each journal. These will include
printouts showing the source entry, internal memos authorizing any write-off, supporting
schedules to back up journal entries, copies of earlier journal entries, and other
documentation pertinent to the purpose of the journal entry. Generally, adequate supporting
documentation should be sufficient to enable an uninformed reviewer to understand the
entry's nature and purpose and verify that it is a confide entry. These documents should be
stamped “updated” to avoid possible duplication.
3 The journal voucher must be checked by the accountant and approved by the treasuer
before it is posted to the AIC books. All payment requirements discussed earlier must apply
before checking and approving a journal voucher.

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5.0 CASH MANAGEMENT
5.1 Purpose of Cash Management.
1 It is AIC policy to develop sufficient internal and external sources of funds to finance ministry
activities and maintain a satisfactory level of liquid assets. The development of such sources
provides the means for more effective ministry decisions.
2 The treasurer ensures that respective level councils know their current and prospective cash
positions.
3 Accountant and/or bookkeeper will work with respective level council, using a cash budget,
so that the councils can determine their cash needs and distinguish between short-term and
long-term requirements.
5.2 Centralization of Cash Management
1 All AIC cash shall be consolidated into a single pool, that is, the funds for Sunday school,
women fellowship, men fellowship, etc at the respective level councils will be managed by
the same finance committee under the leadership of the council.
2 The objectives of centralizing the AIC cash balances are to:
a) Improve cash control.
b) Maintain less staff for cash management.
c) Reduce banking costs and bank accounts.
d) Provide better cash forecasts.
e) Obtain a higher return on funds invested.
3 Any cash or cheque received should be receipted immediately. All monies, including
cheques, will be bundled together and secured together with a copy of the cash count slip
ready to be handed over to security personnel (where such arrangement exists) or to the
finance committee. The elders involved in cash counting should verify and confirm the cash
count. The person who prepared and the others counting the money should sign on the cash
count certificate.
5.3 Bank Policies and Procedures
5.3.1 Introduction
The management of bank accounts is critical, given that AIC receives a lot of liquid funds. Below
are the policy guidelines to manage the operations of AIC bank accounts.
5.3.2 Policies and Procedures
a) A bank account can only be opened after the approval of the council to which the
respective level council reports to, for instance, DCC for LCC, RCC for DCC, etc.
b) The council shall appoint the designated signatories for each bank account.
c) The council shall specify the approval levels before opening any bank account.
d) The council will evaluate bank accounts annually regarding validity and economy and
will be informed when a bank account needs to be closed.
e) The council shall review the bank signatories annually to ensure that only qualified,
appropriate, and available persons are retained as the AIC bank account signatories.
f) Among the signatories at the respective level council, at least three (3) must always sign
for withdrawal of funds from the bank or cheque payments.
5.4 Receipts
The following are the types of receipts that AIC considers as a source of funds.
5.4.1 Tithes and Offerings
Handling worship service collection of tithes and offerings:

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I. During the Service
1. The elders responsible for collection ensures bags are on hand for each service.
2. Offering bags shall be counted before they are distributed, and the number noted down and
initialed by the treasurer on the “Offertory Tally Sheet.”
3. When the collections have been taken, the treasurer ensures that all the bags are brought
back into the vestry area of the church; he must ascertain that the number of bags is correct.
4. The number of service bags thus received shall be confirmed and noted on the tally sheet.
The tally sheet should also note who is present.
5. The tithes and offerings are counted, and the ‘Offertory Tally Sheets are filled out by the elders
and/or those designated to count who are present. The offertory sheets should show the
following:
i) Date of the service.
ii) Time of worship service.
iii) Name of the elders and their initials about the number of bags used for the collection.
iv) Breakdown of currency by denomination and the numbers of each.
v) Cheques and their total tally.
vi) Foreign cash by currency.
vii) Foreign cheques by currency.
viii) Names of all involved in counting and their signatures.
6. The treasurer or accountant will pack the collection into the tithes and offerings delivery
packages, for example, boxes, envelopes, carrier bags, etc.
II. After the Service
Where a security firm is involved:
1. The security social numbers are recorded on the offering seal, which should only be broken
once boxes are delivered to the bank and recorded by the banking staff/officers who open
and break the seal.
2. The security firm officers collect the boxes with the money and keep it until the set day/date
for taking it to the bank.
3. At the end of the banking period, all the Cash Count Slips (CCS) are forwarded to the
accountant and/or bookkeeper who will then reconcile the total receipted as per CCS to the
total banked. Any variance should be cleared early to avoid a banking shortage or excess
due to money not being receipted.
4. Foreign currency cash and cheques must be kept in a safe and secure cash box after being
counted, recorded, and accounted for in a separate forex currency receipts and payments
register/book. Foreign currency cash is to be treated differently, as noted below.
Where a security firm is not involved:
1. At the end of the counting, the Cash Count Certificates (CCC) are given to the accountant
and/or bookkeeper who will then ensure the cash is banked immediately or is kept safe and
secure in the established storage until it is banked, either later on the same day or on the
immediately following day as appropriate.
2. Foreign currency cash and cheques must be kept in a safe and secure cash box after being
counted, recorded, and accounted for in a separate forex currency receipts and payments
register/book. Foreign currency cash is to be treated differently, as noted below.
III. Treatment of Forex Currency receipts & payments
A separate foreign currency register/cashbook must be maintained to record all in-flows and out-
flows of foreign currency cash and cheques. These should be recorded on a weekly basis at the
time of filling in the ‘Offertory Tally Sheet’.

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 i) Forex Currency Cheque Receipts
All cheques received shall be accounted for in the Offertory Tally Sheet and recorded in
separate Cash collection slips, then handed over to the security firm for banking or kept in
safe custody until they are deposited into banked account.
ii) Forex Currency Cash receipts
All forex cash shall be counted, recorded just like the local currency, and handed over to the
security firm for banking or kept in safe custody until it is banked as appropriate. Foreign
currency not acceptable in Kenyan local banks shall be delivered to the accountant at the
Head office for safe custody. These other foreign cash currencies must be exchanged for
Kshs at the best available rate and the proceeds banked into the Kshs bank account(s). It
may entail exchanging these at a forex bureau rather than the AIC’s bank.
2) After the service, the accountant shall analyze all collections in an Excel summary and send
the summary to the treasurer with a copy to the relevant chairman of the respective level
council. The finance committee shall send a standard format of the model Excel summary.
3) The collections through other church systems and mobile money shall be received after the
service, and the documents showing all necessary reference numbers shall be availed to the
accountant every Tuesday of the week.
4) Late offerings collected on Sundays shall be appropriately recorded and banked together
with tithes and offerings collected during the week.
IV. Tithes and Offerings during the Week
a) The elders and the accountant should count and record the offerings collected from services
during the week.
b) The elders and the accountant shall fill in the CCS, sign, and keep the cash in safe custody.
The accountant records the cash in the church system. The cash can remain in the safe and
be banked together with the Sunday collections or the following day. Bank all received cash
receipts, tithes, offerings, and other ministry monies.
c) A copy of the deposit slips will be retained at the respective level council.
d) Pay slips filed in the local church will be made available to the treasurer and/or finance
committee to confirm that the correct amount has been banked.
e) Where moneys are not banked within a period of two working days, an explanation in writing
should be provided by the officer in charge of banking to the council.
f) The deposit slips will be filed in the respective box file in the finance department, and the
data will be keyed into the accounting program.
5.4.2 Investments Income
i. Investment income will be credited to the bank directly. The investment income
documents will be filed in the appropriate box files for each month.
ii. The income earned and credited to the bank accounts as indicated in the bank statement
will be booked in the appropriate AIC accounts.
5.4.3 Donations
All donations received will be issued with an acknowledgment receipt.
a) The amount received should be banked immediately or by the next banking day.
b) The deposit slips and analyzed receipts of donations should be filed in the appropriate
income box file.
Guidelines for non-cash donations from members and well-wishers

i. AIC accepts non-cash donations as gifts given to the church without any attachments.
ii. The treasurer will receive all donations or gifts given to the church on behalf of the church.

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 iii. The treasurer will keep a record of all gifts received, showing the donor's name, the
description of the gift, and, where possible, the value of the donation.
iv. The treasurer will send the donor a letter of acknowledgment and appreciation on behalf of
the church.
v. The value of the gift will be determined upon receipt of the same and appropriately recorded
in AIC books of accounts. A registered valuer should value the capital gifts like property.
vi. The donor will avail to the treasurer all the relevant documents and authorization needed for
the transfer of ownership to AIC.
vii. Where the church leadership believes that selling the gift and using the cash for a specified
purpose would be most beneficial to the church, the sale will be done in liaison with the
donor.
viii. These guidelines will be given to all donors intending to give gifts to AIC, and they will be
requested to sign them as an indication that they are ready and agreeable to the guidelines.
5.4.4 Designated Offerings in Special Projects
1 Special offerings shall be handled like the tithes and offerings are collected and counted.
2 The special offerings will be recorded in separate accounting sheets and marked
“DESIGNATED OFFERING FOR PROJECT.”
3 Cash and cheque deposits will be handled according to the procedures and policies
governing all the monies collected and banked by AIC.
4 The offertory sheets and the banking slips will be attached and filed appropriately.
5 The amounts shall be banked in the designated account for which the offertory was made.
5.4.5 Refunds
Cash refunds fall under the following categories:
 Refund of unutilized travel advances
 Refund for unused imprest
 Recoveries for staff loans and advances
 Other receipts
5.5 Payments
5.5.1 Policies
a. The general disbursement policy of AIC is to issue cheques for goods and services received
or direct funds transfer via EFT or RTGS to the recipient's bank account. However, cash
payments can be made up to Kshs 5,000 to facilitate certain ministry transactions.
Depending on the nature of the payment, 5,000 may be paid for or reimbursed out of petty
cash.
b. To ensure that payments are for valid ministry use, petty cash expenditure staff shall obtain
sales receipts whenever possible. No refund claim without receipts will be reimbursed
during petty cash replenishment.
c. Items not receipted may be accounted for by completing a “petty cash voucher” signed by
the payee receiving the money for reimbursement.
d. A receipt may not necessarily be sufficient evidence of approval of a particular payment. In
such circumstances, additional support documents may be required and attached to the
petty cash voucher before such payment is authorized.
e. To control cash disbursement, the church has set up petty cash imprest accounts whose
total amount may occasionally be determined by management.
f. Whenever cash is withdrawn from the bank, the cash receipt or vouchers must be placed for
replenishment from the finance department. A cheque will be issued to bring the float up to
the authorized cash balance.

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 g. When replenishment of the float is required, the requesting person will forward the receipt
and voucher to the approving authority using the petty cash returns form. Receipts,
vouchers, and cash in hand in the float should always equal the authorized float amount. No
purchase may be split into smaller purchases to bypass monetary limits.
h. The accountant shall prepare a monthly bank reconciliation of the imprest bank accounts
and forward it to the senior accountant, who will check and ensure the reconciliation agrees
with the authorized imprest amount.
i. When properly completed, a requisition form requests the finance committee to issue a
cheque. A payment voucher supports Cheques for payment to an outside organization.
Payment vouchers are used to simplify the expense coding exercise. All vouchers will be
processed through the regular channel with all the supporting Documents attached.
The procedure covers the revised operational and accounting practice for all cash payments and
receipts related to church activities as managed by all AICs.

5.5.2 Petty Cash Payments

Cash payments fall under the following categories:
a) Payroll payments (Salary Advances that do not exceed Kshs 5,000).
b) Travel Advances that are strictly related to AIC business and have been duly approved.
Where such Travel Advances exceed Kshs. 5,000, then a cheque payment will be made.
c) Expense claim reimbursements that have been incurred wholly and exclusively for the
business of AIC. Such expense items include but are not limited to:
- Refreshments like tea leaves, sugar, and milk.
- Minor repairs costing KShs 5,000 or less that have been duly approved.
- Postage for all AIC mail.
- Official stationery for AIC.
d) There may be exceptions to the rule where more than Kshs 5,000 may be paid through
petty cash, but such exceptions should be approved and supported by a note from the
treasurer.
e) Float reimbursements will be done separately by Cheque payment.
5.5.3 The Procedures
a) Cash Payments
i) A duly signed expenditure request form should be provided before the cashier disburses
cash. The expenditure form should state clearly the purpose of the request.
ii) The expenditure request form should be prepared by the accountant and approved by the
HOD/HOU/Pastor before disbursement. If the heads are not in, their deputies should
approve the documents.
iii) The expenditure form should contain the following information:
1. The date.
2. The account code to be affected.
3. The amount in words and figures.
4. Description of the expenditure
5. The name, ID Number, and signature of the person receiving.
iv) Payment may not usually be collected on behalf of staff by a third party. By the third party,
we mean collecting cash on behalf of another person. If the amount is to be collected by a
third party, the person collecting it must have proof of the payee's full authority and identify
himself/herself adequately. However, their authorized persons may collect cash for senior
management staff (senior pastors and above).
b) Departmental Reimbursements

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 i. These will be based on the revised approved limits and reimbursed once the replenishment
limit is reached.
ii. The returns should be submitted two days earlier to facilitate review and submission to
accounts payable to prepare the reimbursement cheque.
iii. The accountant and/or bookkeeper will notify the respective departments via e-mail or
telephone for cash collection.
iv. The designated departmental personnel will collect cash from the accounts office.
v. The personnel collecting the cash will sign a cash payment voucher, which will be retained
in the cash office at the head office.
c) Receipts
The cashier will issue manual receipts for all cash and cheques received.

5.5.4 Imprest

Imprest is used when requisitioning petty cash or seeking payment for proforma invoices by some
suppliers who need to be paid upfront for their goods. These are processed as follows:
I. The applicant applies/requests the imprest, giving their full details (name, payroll number,
local church, and department).
II. The purpose of the imprest has to be stated. (In all cases imprest shall be made for official
AIC business only).
III. When the advance is for travel, the period to be away has to be disclosed.
IV. Whenever possible, the itinerary has to be indicated/disclosed. (List of activities and when
to be carried out).
V. The amount requested, both in figures and in words. (This figure shall always be supported
by a schedule/breakdown).
VI. Applicant shall sign the imprest warrant.
VII. The treasurer shall approve the imprest warrant after satisfying oneself that the request is
in order and within the approved work plan and budget.

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6.0 CHART OF ACCOUNTS
6.1 Purpose
To establish a chart of accounts for coding accounting transactions.

6.2 Policy
a) AIC will use a departmental accounting system that allocates and reports all receipts and
expenses into separate units to produce the church's management reports and financial
statements.
b) A general ledger will be maintained that appropriately allocates all assets and liabilities, all
funding, revenue, and expenditure by the local church, donor, project, internally generated
funds, and the aggregated position of AIC arising from the various sources and activities.
c) The AIC Local church expenses shall be divided into three categories.
1. Staff costs.
2. Operation costs.
3. Ministry costs.
4. Other expenses (for schools, children's center & media)

The system in use at the respective level council clearly shows the categories in detail.
6.3 Procedures
a) The AIC Chart of Accounts will be used to code all accounting documents of the first
entry
b) The Chart of Accounts will be reviewed by the Finance Committee from time to time and
amended as necessary
c) Upon approval by the Board, the Chart of Accounts will be appended to this manual
6.4 Summary of List Chart of Accounts

TITLE CODE CATEGORY

1. Assets 10001
a) Non-Current Assets 10010
ix. Tangible Non-Current Assets 11000
ii) Intangible Non-Current Assets 12000
b) Long-term Investments 13000
c) Current Assets 15000
i) Inventory 15010
ii) Receivables 16000
iii) Bank & Cash 17000
iv) Short Term Investments 18000
2. Liabilities & Fund Accounts 20000
a) Capital Funds 20010
b) Liabilities 25000
i) Current Liabilities 25100
ii) Payroll Liabilities 26000
iii) Designated Funds 27000
iv) Non-Current Liabilities 28000
v) Loans 28020
3. Retained Earnings 19999
4. Income Account 30000
5. Staff Expenses 51000
6. Administrative Expenses 52000
7. Ministry Expenses 55000
8. Other Expenses 56000
9. Radio and TV Running Expenses 57000

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 10.Children’s Centre Expenses 58000

7.0 BUDGET PROPOSALS AND APPROVALS

7.1 Introduction
This section describes the types of budgets, when to prepare the items to be included, and who
to prepare. It also states who will approve the budget and the next course of action after
approval.
7.2 Objectives
The objectives of budget proposals are:
a) To set up a control framework to keep expenditure within agreed limits.
b) To serve as a means of communicating plans and objectives for each financial year to staff
and the members.
7.2.1 Types of Budgets
The types of budget proposals that the church could prepare are:
a) Long-term financial estimates.
b) Annual budgets.
c) Mini or supplementary budgets to take care of any adjustments in the annual budget.
d) Budgets for specific projects being undertaken by the church.
7.2.2 Budgeting Time
a) Long-term financial estimates will be prepared at the time of the preparation of the strategic
plans.
b) The annual budget will be prepared before the commencement of the year in which it
results.
c) Mini or supplementary budgets will be prepared anytime it becomes necessary to
supplement the annual budget with a mini budget to take care of any externalities or
unanticipated but ultimately crucial direction.
d) Each project undertaken by the church will also require a budget prepared before the
commencement of the project.
7.3 Budget Items
The budget proposals should be concrete on areas of expenditure for the different ministries,
such as personnel, hire of venues, equipment, rent, etc. They are stating the projected level of
expenditure in each area in numerical terms. These expenditure areas could then be put into four
priority categories: Staff, Operations, Ministry, and Capital Expenditure. Ministry combines the
personnel expenses of church ministries and program activities for the congregation outreach.
7.4 Long Term Financial Estimates
a. The long-term financial estimates cover the same period of the church's strategic plans. In
this instance, the financial estimate reflects the financial commitments to achieve the desired
long-term AIC objectives. There must be a correlation between the strategic plans and the
long-term expenditure projections. Expenditure should include capital and recurrent.
b. When preparing and deciding on the AIC strategic plans, the corresponding long-term
estimates for capital and current expenditure items should also be prepared. In the
preparation of the estimates, the following procedures will be adhered to:
i. Each local church, unit, or department income analysis for the last five years shows the
annual growth in each income category.
ii. Similarly, the last five years' expenditure lines (i.e., staff, Operations, and Ministry will be
analyzed) and their annual growth rate indicated.

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 iii. Using the analyzed trend in income and each expenditure line for the last five years,
come up with projected annual growth rates for income and individual expenditure lines
for the next ten years of the rolling plan.
iv. Appropriate adjustments are made in the forecast income and expenditure where
specific variations from the norm are identified or anticipated. The causes and extent of
these variations should be clearly explained.
v. Financial estimates for all assemblies, units, and projects shall be consolidated, and
each year’s surplus/ (deficit) calculated.
vi. According to the strategic plans, prioritized capital expenditure will be determined and
spread out over the plan period.
vii. The capital expenditures will be implemented as per the strategic prioritized plans over
the plan period unless the church leadership makes changes.
viii. The financial plans will be translated to annual budget plans with appropriate
adjustments to contextualize the budget items and amounts where circumstances have
varied from the ones initially anticipated.
7.5 Budgeting Procedures
7.5.1 This section presents the procedures that guide the preparation of AIC Capital and
Recurrent budgets. The budgets shall be prepared based on a zero-base and modified by
historical data where necessary. In summary, the activities of the year shall be:
i) Initiated at the local church level/cost center level.
ii) Submitted to the church leadership through the Finance Committee.
iii) Reviewed by the church leadership before being included in the overall AIC annual
plans.
7.5.2 The approved annual plans become the basis for the AIC budget, considering the financial
resources available. Similarly, the budget is drawn at the Local church/cost center level
based on these activities and using the guidelines provided by the finance committee.
7.5.3 The budget for each cost center/local church shall be compiled based on the planned
activities for the financial year and financial estimates submitted by the various units.
7.5.4 It is necessary that the various units have a meeting with the treasurer before the
budgeting process begins. All queries regarding the budgets should be discussed in the
meetings.
7.5.5 The finance committee shall approve the annual and quarterly budgets.
7.5.6 Budget allocations shall be communicated to each unit by the end of the year or the
following review.
7.5.7 Once the budget is approved, the only expenditure unbudgeted will be incurred with the
approval of the finance committee.
7.5.8 The activities and budget shall be reviewed regularly by the Finance Committee. The
Finance Committee, as established, has the following terms of reference for budgets:
i) To set priorities in resource allocation and to review such priorities from time to time.
ii) To prepare policy guidelines for the budgets for the Church and to re-establish budget
procedures and timetables.
iii) To ensure that approved budgets align with projected income and expenditure.
iv) To monitor and review budget performance against set targets and to advise the
church on how to make any necessary adjustments.
v) To oversee the administration of the entire budget process.
vi) To assist in preparing the Church’s long-term financial projections and to advise the
leadership on how to meet the projected resource requirements.

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7.5.9 The finance committee shall submit the annual activities and budgets to the church
leadership for approval.
7.5.10As the leadership approves, the budget shall show funds assigned to the recurrent and
capital budgets for the period.

7.6 Recurrent Budgets

7.6.1 The recurrent budget shall include operations and maintenance, ministry, and personnel
costs. In drawing the budget, cognizance shall be taken of the following factors:
i) Rates of inflation
ii) Recent and prevailing developments in the financial sector, such as the depreciation of
the Kenya Shilling.
7.6.2 The cost categories used in setting up the AIC recurrent budget are included in the AIC
chart of accounts and a detailed description of the composition of each item shall be
worked out and included in this budgetary procedures’ manual as an appendix.
7.6.3 The recurrent budget process shall begin with the treasurer sending a circular to all the
cost center heads asking them to submit the recurrent estimates according to their annual
plans.
7.6.4 Submission of financial estimates shall be registered, and the treasurer shall generate
summaries.
7.6.5 Using the summaries, the treasurer shall compare these against the available funds using
the revenue statistics and present the results to the Finance Committee.
7.6.6 The finance committee shall prepare the budget for the financial period.
7.6.7 The recurrent budget shall be presented to the Finance Committee for approval by the
Treasurer.
7.6.8 The budget shall be the control and guiding tool for the financial operations of AIC. All
financial transactions shall conform to the prioritization of the strategic plan and budget.
Activities shall be financed based on the available funds derived from the approved budget,
with less expenditure incurred for each cost center and activity/category.
7.6.9 The amount budgeted for any activity shall not be exceeded without specific written
authority being obtained from the tresaurer through the finance committee. Similarly, the
reallocation of funds from one line item to the next shall be done only with the authority of
the finance committee.
7.6.10 For new AIC projects and assemblies, the Treasurer would propose a proposal to
determine the payback period.
7.6.11 The annual budget proposals will be reviewed quarterly in March, June, and September.
7.6.12 The committee must approve annual budget proposals and prepare them for adoption on
or before November 30th of each preceding year.
7.6.13 In reviewing the proposals, the following considerations will be made:
1. Highest priority shall be given to ongoing projects.
2. High priority shall be given to projects that promise to yield immediate results in terms
of efficiency, ministry enhancement, expansion of the Kingdom of God, and increase
in revenue.
3. Medium priority shall be given to projects that can be postponed for one or two years
without significant repercussions.
5. Low priorities are projects that can be postponed for up to two years without significant
repercussions.
7.7 Revenue Allocation Proportions
All local church tithes and offerings shall be distributed in the following expenditure categories.

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 i.Mission support
Each local church shall allocate 10% of all its tithes and offerings to Mission Support before
meeting its expenses.
ii.Local Church Recurrent Expenses
Recurrent expenses shall be allocated to three main recurrent expenses:

a) Staff Costs
b) Operating expenses
c) Ministry Expenses
Based on the expenditure trend for the past six years, the overall annual recurrent expenditure
should be at most 65% of the total revenue.

iii.Capital Expenditure
Each assembly/Unit is allocated a certain amount of capital expenditure according to its yearly
needs. The ministry should not spend more than 20% of the total income on CAPEX. However,
this capping can be revised when the ministry undertakes significant projects.
iv.Reserve Fund
AIC will set aside 15% of the surplus before capex as a reserve. This will be a designated reserve
fund
7.8 Responsibilities
7.8.1 The finance committee shall be responsible for the budget's overall administration. The
treasurer shall manage the budget (mainly the recurrent budget). Correspondence and
other communication on recurrent budget issues shall be addressed to the treasurer. The
treasurer shall manage the budget and the accounts office.
7.8.2 As indicated above, the treasurer, under the direction of the finance committee, shall be
responsible for consolidating the recurrent and capital budgets. In addition, he will liaise
with the treasurer and the finance committee to compile revenue resources for the
budgeting period.
7.8.3 The finance committee shall document all reallocation requests from units. In addition to
the above, the accounts office shall monitor each center's actual expenditures and
monthly budget against budgeted expenditures.
7.8.4 Similarly, based on the above, the accounts office shall prepare a variance report on
expenditure versus budget performance.
7.8.5 The local church administration, led by the Senior Pastor or equivalent, shall collect and
correct all subsequent year's budgetary inputs and submit them to the Head of Finance
on or before September 15th of the preceding year.
7.8.6 The accounts office shall thoroughly discuss the financial reports with the various
Departmental Heads or their representatives to update them on the financial status of the
different departments.
7.8.7 The accounts office should give copies of the Income Analysis to those managing
financial resources in the various Departments every month.

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8.0 ALLOWANCES
8.1 Travel Allowance
8.1.1 Purpose
The purpose of the imprest system is to ensure that:
a) Imprest is issued for approved activities and expenditure types
b) Proper approval systems are adhered to in making imprest payments
c) Reasonable amounts are paid out as imprest
d) Imprest is promptly and thoroughly accounted for with appropriate supporting documents
e) Travel and other activities requiring imprest are adequately planned for in advance

8.1.2 Policy
8.1.2.1 Allowable travel/expenses
a) AIC will pay for travel and a per diem to cover reasonable living expenses for employees
on official AIC business.
b) For all official overseas trips, AIC will provide economy-class air tickets, which will be
charged to the relevant budget line.
c) Per diem for official business will be based on guidelines and rates set out in the Terms
and Conditions of Service and subject to the applicable tax rates as per the Income Tax
Act. These details are elaborated on in a personnel policies and procedures manual, but in
summary, the expenses will be claimed as detailed in the section below.
The out-of-pocket allowance is not for accommodation needs or travel expenses. For the
seminars and workshops sponsored by other organizations or by self, the maximum days of
payment shall be up to five days (5 days)
8.1.2.2 Mileage
a) If staff is required to use their own private vehicles for travel out of their normal duty station,
the prior approval of the council must be obtained, indicating the reason for using the
personal car and the estimated distance to be covered.
b) Mileage payments will only be made for vehicles whose evidence of ownership has been
filed with AIC.
c) Mileage payment request will contain:
i. A Log of the actual distance traveled.
ii. Identification of vehicle used.
iii. The purpose of the trip and project/activity are to be charged.
d) Mileage will be paid according to the guidelines published by AA of Kenya and approved by
the council.

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 9.0 FIXED ASSETS
9.1 Purpose:
a) To prescribe policies and procedures for efficient management and control of AIC assets,
which include:
 Motor vehicles
 Office Equipment
 Furniture and Fittings
 Computers
 All other property that is categorized as fixed assets.
9.2 Policy

All AIC assets will be procured through competitive quotations or bids per the procurement
procedures.
a) All AIC assets will be insured immediately on procurement against damage, fire, loss, theft,
etc. Refer to insurance guide 9.5
b) All assets will be appropriately recorded, labeled, and accounted for to ensure complete
control.
c) Assets will be maintained in workable conditions using competent contractors to protect
them from loss of value except for everyday wear and tear.
d) Assets disposal will be done based on competitive tendering or quotation systems.
e) Applicable depreciating rates stated
9.3 Procedures
a) A Fixed Asset Register (FAR) will be maintained accurately on both computerized and manual
systems, including the following details:
i) A description of the property.
ii) Manufacturer’s serial number and model number.
iii) Source of the property, including donations or other related findings.
iv) Whether title rests with AIC or the other partner
v) Acquisitions date and cost.
vi) The depreciation rate.
vii) Location, use, and latest condition of the asset.
viii) Ultimate disposal data, including date of disposal and sale price and method used to
determine disposal value.
b) At least annually, the Head of Finance will inventory all AIC assets, listing the asset’s location,
description, cost/book value, and current condition.
c) Maintenance contracts will be drawn with various suppliers to ensure good working conditions.
d) A Motor Vehicle Movement log will be maintained for each vehicle and filled in for all official
movements. This thorough record-keeping ensures transparency and accountability in our
operations.
9.4 Custody of Fixed Assets
9.4.1 All AIC assets purchased or acquired by donation must be free of any encumbrances,
and the title of the ownership must be fully transferred into AIC by the completion of the
acquisition process.
9.4.2 All land title deeds for AIC properties shall be placed in the custody of a board-appointed
safe custodian and administered by board-appointed lawyers.
9.4.3 The Treasurer is in charge of the records showing clearly the following details for each
AIC property.
i) The name of the property.
ii) The plot registration number.
iii) Date of transfer or acquisition.
iv) Provide a description of the nature of the ownership, e.g., freehold,
leasehold, joint ownership, government allocation, share allocation, etc.

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 v) Appointed lawyers for the administration of the property
vi) The appointed custodian of the property title deeds.
vii) The latest valuation of the property.
viii) Record any charges of the property.
ix) Photostat copies of all title deeds of AIC properties.
9.4.4 The finance committee will ensure that all land rent and rates for each property are paid
at the appropriate time to avoid any accrual of penalties and interest for late payment
after taking advantage of any rate exemption granted to charities as and when the
authorities provide them.
9.5 Motor vehicles
9.5.1.1 The logbooks shall be kept in a secure safe by the Trustees’ Secretary.
9.5.1.2 The Trustees’ Secretary shall keep copies of the logbook on file for insurance renewal
and other related transactions.
9.5.1.3 The Trustees’ Secretary will adhere to all the finance-related aspects of the motor
vehicles.
9.6 Insurance
9.6.1 Purpose:
To ensure all AIC Property and insurable risks are adequately insured.
9.6.2 Policy
a. AIC will maintain adequate insurance coverage for all its movable and immovable
properties against fire, theft, and damage.
b. AIC will maintain statutory insurance covers to ensure that employees' and employers'
liabilities are adequately covered.
c. AIC will insure all its risks with a reputable insurance company.
d. AIC will review its insurance requirements annually to cover asset additions, remove
disposals, and review the insurable value.
9.6.3 Procedures
a. The accountant, with the authority of the treasurer, will obtain quotations from reputable
insurance brokers for the Church's insurance requirements.
b. The appointed brokers will play a crucial role in advising the treasurer on choosing the
insurance company that would offer the best insurance services through the brokerage.
Their advice will be based on the quotations obtained and their expertise in the insurance
industry, ensuring that the Church's insurance needs are met effectively.
c. In the last quarter of each financial year, the treasurer and the broker will comprehensively
review the insurance coverage before any renewals are made. This review will consider
any changes in the Church's assets, disposals, and current insurable value, ensuring that
the Church's insurance coverage is always up-to-date and adequate.
d. The treasurer will regularly advise the broker of any items that should be added to or
removed from the insurance list.

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10.0 FINANCIAL REPORTING AND AUDITING
10.1 FINANCIAL REPORTING
10.1.1 Introduction
AIC has several users for the financial reports generated by the accountant and/or bookkeeper
and the finance committee. The reports should be accurate, appropriate, and timely so that they
can be applied to their intended use. The congregants, finance committee, the respective level
councils, employees, pastors, heads of departments, suppliers, customers, government agencies
like KRA, banks, investors, and general public are some of the AIC end users of various financial
reports.
10.1.2 Policy
i) All reports are prepared from validated posted data to ensure accuracy in coding and
amounts shown.
ii) The appropriate accountant and/or bookkeeper should review all reports before they are
forwarded to the treasurer.
iii) No financial report should be released from AIC before the council authorizes it.
iv) A report preparation schedule with deadlines should be made against which the treasurer
checks report-processing progress.
10.1.3 Procedure
The following cycle shows the flow of financial reports after the data for different functions has
been keyed in and validated.
i) The accountant prepares reports monthly from postings before sending it to the treasurer.
ii) The treasurer reviews the reports from the database.
iii) The accountant generates appropriate reports for the treasurer, finance committee, and
the council as appropriate.
iv) The finance committee reviews the monthly reports and gives their feedback before the
reports can be dispatched to other users.
v) Appropriate reports are forwarded to relevant users periodically.
10.2 AUDITING
10.2.1 Introduction
AIC books of account and vouchers of its business shall be examined by independent auditors
with a view of forming an opinion as to whether they have been appropriately kept according to
AIC constitution, policies and procedures, and International Financial Reporting Standards, as to
whether the financial statements drawn there from portray a true and fair view of the AIC state of
affairs and financial performance as at a given date and the period covered.
There shall be internal audits (where circumstances and resources permit) and external auditing.
10.2.2 Internal Audit
Where resources and circumstances permit, AIC shall have an internal audit team. The Finance
Committee may choose to outsource services from qualified and experienced audit firms to
undertake internal audits for specified assignments approved by the respective level council.
10.2.3 Audit And Internal Control
10.2.3.1 Purpose
a) To prescribe AIC’s audit requirements and ensure effective control and security over
assets and efficient utilization of resources.
b) Provide independent reports to the Finance Committee and other stakeholders in
accordance with the agreed-upon content, format, and reporting timetables.
c) Comply with statutory requirements.

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10.2.3.2 Policy
a) AIC will establish and maintain an accounting and financial system with strict adherence to
the requirements of AIC policies and procedures and other statutory regulations.
b) There shall be an Internal Auditor at ACC and CCC who shall report administratively to the
area bishop and presiding respectively directly and functionally to finance committee. The
Auditor will conduct a continuous audit evaluation of the AIC financial and other
administrative systems and report appropriately.
c) There shall be an external auditor appointed by the CCC. The selection will be done on a
competitive basis from competent local firms who are currently members of the Institute of
Certified Public Accountants of Kenya (ICPAK) with demonstrated technical ability and
experience in church and institutional audits.
d) The financial records, books of accounts and vouchers of AIC shall always be open to audit
and shall be audited periodically in accordance with statutory and specific AIC
requirements.
e) The external auditor’s report shall be tabled first to the finance committee, then to the
council.
10.2.3.3 External Audit Procedures
a) The church accounts and records will be made available for audit, not later than 30 days
after the end of the financial year.
b) AIC leadership and management at all levels will furnish such information and explanations
as required by the auditor, who shall have a right of access at all times to the books and
vouchers of the church.
c) Specifically, the auditor will express an opinion on:
i) The statement of Income and Expenditure indicating whether it fairly reflects the
stated position and results of its operation.
ii) AIC internal control structure indicating its adequacy and/or shortcomings.
iii) AIC compliance with applicable laws and regulations indicating instances of non-
compliance and their impact on the financial statements.
d) The auditor will present the audited accounts to a selected team from the respective level
council made up of at least the treasurer, the chairman of the respective level council, the
secretary/administrative secretary, and the accountant for discussion before they are
signed by at least two members.
e) Approved audited accounts will be sent to the appropriate government bodies not later than
3 months after the closure of the financial year.
f) Implementation of auditors’ recommendations will be coordinated by the treasurer, who will
keep, on behalf of the finance committee, the respective level council informed on
progress.

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