Parish compliance is not just paperwork. It protects your people, your pastor, and your parish mission. Good compliance cuts audit risks, avoids financial loss, and builds trust. Neglect it, and you may face legal trouble, a tarnished reputation, or even lose tax exemption.
This checklist shows core areas that every parish should review at least once a year. Use it as a tool with your pastor, finance council, parish staff, and key volunteers.
1. Governance and leadership oversight
Strong compliance starts with clear governance and strict accountability. Even a devoted parish needs someone to lead oversight.
1.1 Define roles and responsibilities
Keep written, current documentation that shows:
- Who bears ultimate responsibility for compliance (often the pastor with help from an administrator or business manager)
- What the finance council can do and decide
- The role of the pastoral council (if used)
- Who may sign contracts, checks, or official documents
- Who looks after HR, safe environment, and facility safety
Document these roles in:
- Parish bylaws or charters (when needed)
- The parish handbook or policies manual
- Council charters and meeting minutes
1.2 Maintain active councils and minutes
- Finance council: Meet every month or at least quarterly, review financial statements, and write clear minutes.
- Pastoral council: Discuss the mission, pastoral needs, and long-term plans; record minutes in writing.
These records show that leaders act with care. They matter for audits and dispute resolution.
2. Financial controls and accounting
Financial integrity is a visible sign of parish compliance. Weak controls can lead to audit failures or fraud.
2.1 Segregation of duties
No one person should control a financial transaction. Try to:
- Have one person open mail and log checks.
- Have another record contributions and post to accounts.
- Assign someone else to prepare deposits and reconcile bank statements.
- Require two signers for checks over a set amount.
In smaller parishes, include finance council members or trusted volunteers to help secure separation.
2.2 Cash handling and collections
Sunday collections and donations are risky areas. For clear compliance:
- Always use two unrelated counters for cash.
- Rotate your counting teams.
- Count money in a safe, private spot on parish property.
- Prepare written count sheets that match bank deposits.
- Deposit funds promptly, preferably the next business day.
- Never take parish cash home or keep it in unofficial spots.
These simple steps keep volunteers safe and reduce audit risks.
2.3 Bank accounts and reconciliations
- List all parish accounts (operating, savings, restricted funds, etc.) on one master list.
- Use only parish accounts—avoid off-the-books or personal accounts.
- Reconcile each bank and investment account every month.
- Have someone not involved in cash handling review the reconciliations.
- Track restricted funds separately and use them only for their purpose.
2.4 Budgeting and reporting
A clear budget and regular reporting boost compliance and transparency. To do this:
- Prepare an annual budget approved by the pastor and finance council.
- Compare actual figures to the budget every month and look into differences.
- Share summary financial reports at least every year with the congregation.
- Keep all supporting documents for income and expenses.
The U.S. Conference of Catholic Bishops supports strong financial controls and clear reporting (source: USCCB – Stewardship).
3. Payroll, taxes, and employee classification
Payroll and tax issues carry high risks. They attract state and federal regulators.
3.1 Properly classify workers
- Employees: Most staff (office workers, musicians, maintenance, and educators) should be treated as employees.
- Independent contractors: Use them only for one-time or clearly independent services (such as a guest speaker, occasional plumber, or retreat leader). Follow IRS rules.
- Avoid wrongly classifying regular workers as contractors. Mistakes can lead to penalties.
3.2 Clergy compensation specifics
- Follow your diocesan guidelines for clergy stipends, housing allowances, and benefits.
- Report clergy compensation correctly and follow current tax laws.
- Keep clear records of stipends for weddings, funerals, and Mass intentions as required by your diocese.
3.3 Payroll compliance basics
- Use a trusted payroll provider or a well-kept system.
- Pay all payroll taxes on time.
- Issue W-2s to employees and 1099s to qualified contractors.
- Keep I-9 forms and all required employment documents.
4. Legal, insurance, and risk management
Compliance goes beyond finances. It also protects people and property through legal and risk management steps.
4.1 Legal entity and records
- List your parish correctly with the diocese and, if needed, in the group tax exemption.
- Secure all legal documents (deeds, leases, contracts, incorporation papers) in an organized file.
- Let only authorized signatories sign contracts after diocese review when needed.
4.2 Insurance coverage
Review and update:
- General liability coverage
- Property insurance for buildings and contents
- Workers’ compensation and employer liability
- Abuse and molestation coverage as required by your diocese
- Insurance for parish-owned vehicles (or proper coverage for volunteer drivers if there are no parish vehicles)
Check these policies each year with your diocesan insurance office or broker.
4.3 Facility safety and emergency plans
- Do regular safety inspections (fire extinguishers, alarms, exit signs, lighting, and trip hazards).
- Keep logs of inspections and maintenance.
- Create and share clear emergency plans (for fire, medical emergencies, severe weather, or active threats).
- Train ushers, staff, and ministry leaders in basic emergency steps.
5. Safe environment and child protection
Protecting children and vulnerable adults is key to your mission and compliance. Failure here can lead to deep moral, legal, and financial harm.
5.1 Background checks and training
Follow safe environment policies from your diocese:
- Do background checks for:
- Clergy and religious workers
- Parish employees
- Volunteers who work with minors or vulnerable adults
- Give initial and ongoing safe environment training (in person or online).
- Enforce the rule: no one without clearance should have unsupervised access to minors or vulnerable adults.
5.2 Policies and reporting procedures
- Keep a clear safe environment policy that explains supervision, proper conduct, and the safe use of social media.
- Publicly share and update:
- How to report suspected abuse
- Contacts for diocesan victim assistance
- Names of local authorities to contact when the law requires it
- Maintain records of training, attendees, and background checks.
6. Recordkeeping and data privacy
Good records support audits, protect legal rights, and smooth leadership transitions.
6.1 Sacramental and parish records
- Keep detailed sacramental registers for baptisms, confirmations, weddings, and funerals as directed by diocesan norms.
- Store physical registers in a secure, fire-resistant place. Back up digital copies regularly.
- Limit access to sacramental records.
- Follow guidelines for corrections, annotations, and certificates.
6.2 Financial and administrative records
Set up a clear retention policy for:
- Financial records (ledgers, bank statements, invoices, payroll)
- Tax documents
- Contracts and leases
- Insurance policies and claims
- Meeting minutes from finance and pastoral councils and major committees
Most parishes keep financial documents for 7 years, while key records (like deeds and sacramental registers) are kept permanently.
6.3 Data privacy and technology
Parish databases hold sensitive information. To stay compliant and respect privacy laws:
- Use secure, password-protected systems for parishioner data and donor records.
- Let only those who need the information have access.
- Use encryption or trusted cloud storage when possible.
- Set clear policies for:
- Email lists and newsletters
- Online giving platforms
- Website data collection and cookies
- Social media and livestreaming (including consent if minors appear)
7. Facilities, events, and third-party use
Compliance issues often arise with facility use or events when third parties get involved.
7.1 Facility use agreements
For any group that uses your space—AA meetings, sports leagues, community groups, or parish-affiliated ministries—do this:
- Use written facility agreements that list:
- The space used
- Dates and times
- Fees or donations
- Liability and insurance requirements
- Supervision duties and safe environment rules
- Ask external groups for a certificate of insurance that names the parish or diocese as an extra insured when needed.
7.2 Events, fundraisers, and raffles
- Check state and local laws for raffles, bingo, or gaming events; licenses may be required.
- Manage event funds with the same controls as regular parish donations.
- Clearly state which ministries or accounts receive the funds.
- Ensure events with minors follow safe environment and supervision rules.
8. Stewardship, transparency, and communication
Compliance is about more than avoiding problems. It shows Gospel values like honesty and good stewardship.
8.1 Communicating with parishioners
- Give regular financial summaries (via an annual report, bulletin inserts, or town halls).
- Explain clearly how funds support ministries, building maintenance, and outreach.
- Be honest about debts, major projects, or capital needs.
Open communication builds trust and encourages regular giving.
8.2 Internal reporting channels
- Set up a way for staff, volunteers, and parishioners to raise concerns about money, safety, or policy issues.
- Assure everyone that concerns are taken seriously and handled properly.
- Bring major issues to the diocese when needed.
9. Annual parish compliance checklist (quick reference)
Use this checklist as an annual self-audit tool. Each year, check that:
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Governance & Leadership
- [ ] The finance council holds regular meetings and keeps minutes.
- [ ] Roles and signing authorities are documented and kept up to date.
- [ ] Policies are reviewed and updated as needed.
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Financial Controls
- [ ] Duties are separated in cash handling and bookkeeping.
- [ ] Sunday collections and donations follow a clear, written process.
- [ ] All bank accounts are recorded in the parish name and reconciled monthly.
- [ ] Restricted funds are tracked and used only as intended.
- [ ] The budget is approved and variances are reviewed regularly.
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Payroll & HR
- [ ] Workers are correctly classified as employees or contractors.
- [ ] Payroll taxes and filings are kept current.
- [ ] I-9 forms and employment documents are properly stored.
- [ ] Clergy compensation follows diocesan guidelines.
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Legal & Insurance
- [ ] Legal and property documents are organized and secure.
- [ ] Insurance coverage is reviewed each year and fits parish activities.
- [ ] Safety inspections and emergency plans are recorded.
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Safe Environment
- [ ] Required background checks and training are up to date.
- [ ] Clear, posted procedures exist for reporting abuse.
- [ ] Policies for working with minors and vulnerable adults are enforced.
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Records & Data
- [ ] Sacramental registers are complete, accurate, and secure.
- [ ] Financial and administrative documents follow a retention policy.
- [ ] Data privacy and technology policies are in place and followed.
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Facilities & Events
- [ ] Facility agreements and insurance documents exist for third parties.
- [ ] Fundraisers and raffles meet local laws and parish policies.
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Transparency & Communication
- [ ] Parishioners receive regular financial reports.
- [ ] There is a clear way to report concerns or irregularities.
10. Working with your diocese and external auditors
Your diocese or denominational office helps you stay compliant. To work well together:
- Review diocesan policies each year and whenever leadership changes.
- Attend training or webinars for pastors, business managers, and finance councils.
- Respond quickly to diocese audit requests with full documentation.
- Ask for advice before making unusual financial agreements or major construction decisions.
Even if audits seem stressful, they offer a chance to improve your systems and show your parish’s commitment to integrity.
FAQs about parish compliance
What is parish compliance and why does it matter?
Parish compliance means following church policies, civil laws, financial rules, and safeguarding standards. It matters because it protects your mission, finances, and people, reduces audit and legal risks, and builds trust with parishioners and the wider community.
How often should a parish perform a compliance review?
Most parishes should hold an annual compliance review using this checklist. Larger or more complex parishes might benefit from quarterly internal reviews and periodic external or diocesan audits.
Who is responsible for Catholic parish compliance?
The ultimate responsibility lies with the pastor. Yet, the finance council, parish administrator or business manager, and key ministry leaders all share in this work. Diocesan policies provide a framework, but each parish must monitor and manage its own compliance.
Good parish compliance does not breed fear. It shows good stewardship of the gifts given to your community. With clear roles, strong financial controls, safe environment practices, and open communication, your parish can focus on its true aim: preaching the Gospel and serving God’s people.
