Accounting standards in church financial management “bringing financial practice and theology more intimately intertwined”

Abstract

Purpose: This paper aims to assess accounting application in church financial reporting. Methodology: There were two main stages of this research methodology. Firstly, an extensive literature study was to develop the framework of the relationship between religion and accounting and to find the research gap to be fulfilled in theoretical based. Secondly, the technical research method included a case study approach to examine the current application of the church financial report and the PSAK 45 accounting application. Results: There are significant discrepancies between the Treasury Report made by the church and the financial statements made under PSAK 45. The information under PSAK 45 provides more relevant information to the stakeholders to assess how the church actualizes the theology values into its activities. Firstly, the PSAK 45 Activity Report reveals the information for the stakeholders, particularly the management, to evaluate the effect of money proportioned into church activity. Secondly, the reports show how the direct and indirect costs are allocated into services activities to assess, how much direct cost has been allocated to successfully implement the mission through the roles. Thirdly, the reports tell stakeholders how the church manages its activities effectively to serve not only the congregations but also the wider society in order to attain its vision. Finally, the balance sheet reveals the increasing or decreasing value of net assets and how the assets are effectively used – or not. Implications: The benefits of the implementation of the accounting standard to help the church to implement their sacred mission and criticizes the opponent's views that perceive accounting as profane, and irrelevant as well as irreverent. It provides significance that accounting standards should be mandatory in Indonesia for all non-profit groups.