BETHEL LUTHERAN CHURCH AND SCHOOL

AUDIT REPORT – January 18, 2005

The Bethel Audit Committee, Susan Horvath, David Lofgren and Patrick Ross, with the help of Joan Christensen, has completed the internal audit of Bethel's financial statements, processes and procedures for FY04 (7/1/03 to 6/30/04).

The Profit and Loss Statement is summarized as follows:

CHURCH SCHOOL

Total Income $806,110 $1,582,764

Total Expenses 818,715 1,575,259

Net Income (Loss) ($12,605) $7,505

At year-end, the unrestricted cash available for the Church was $48,960 and was $7,505 for the School.

CAPITAL EXPENDITURES

Capital expenditures for FY04 were $435,731 for the Church and School combined. The primary expenditures were for:

School Playground Equipment $36,380

Visual Connection 290,535

HVAC Improvements Zoar/Torvend 4,350

Parking Lot 80,773

Phone System 9,606

Beam Repair 10,483

Other Purchases (Projectors) 3,603

BENEVOLENCES

Bethel contributed $80,462 during FY04 for benevolences, including both contributions based on General Fund giving and Designated Offerings. The largest contributions, aside from those to the Synod and National Church, went to support ELCA missionaries Eric and Beth Hanson and the MaaSai Girls’ School in Tanzania, to Mount Cross Lutheran Camp, to Kurt & Karyn Morrill, serving with InterVarsity in France, and Esperanza, the organization through which our youth and adult Missions to Mexico are sponsored. In total, over 30 organizations received contributions from Bethel.

LOAN SUMMARY

As of 6/30/04 Bethel's total interest bearing debt was $737,423, our primary mortgage through Thrivent Financial @6%.

THE FOLLOWING WAS ACCOMPLISHED AND/OR REVIEWED BY THE AUDIT COMMITTEE:

* Reviewed and closed out audit recommendations from earlier fiscal years.

* Audit bank statement reconciliations.

* Review payroll records comparing gross to expensed.

* Confirm canceled checks and sample authorization, receipts, clearing and procedures.

* Review general ledger for correct allocations.

* Review all voided checks and checks greater than 6 months old.

* Capitalize any new buildings, furnishings, equipment and major leasehold improvements and repairs.

* Reviewed Visual Connection Project expenditures.

* Review the Youth Ministry checking account.

* Review all restricted funds.

* Review tithing disbursements and procedures.

* Review offering count/deposit procedures.

* Review contracts, leases, mortgages, notes and titles.

* Make year-end adjusting entries and close the books for FY04.

Findings and Recommendations have been submitted to the church council.

Submitted by:

Susan Horvath David Lofgren Patrick Ross