BETHEL LUTHERAN CHURCH AND SCHOOL

AUDIT REPORT – November 2, 2002

The Bethel Audit Committee, Suzanne Wolf, Euo Menezes and Dave Larsen, with the help of Joan Christensen and Carol Mahoney, has completed the internal audit of Bethel's financial statements, processes and procedures for FY02 (7/1/01 to 6/30/02).

The Profit and Loss Statement is summarized as follows:

CHURCH SCHOOL

Total Income $914,427 $1,787,131

Total Expenses 887,805 1,763,180

Net Income (Loss) $26,622 $23,951

At year-end, the unrestricted cash available for the Church was $79,045 and was $23,951 for the School.

CAPITAL EXPENDITURES

There were no capital expenditures for FY02 for the Church or the School.

BENEVOLENCES

Bethel contributed $112,174 during FY02 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 for September 11 Disaster Relief, to support ELCA missionaries Eric and Beth Hanson and to support Lutheran Community Church in Watsonville as part of our Mission Partner Agreement with that congregation. In total, over 30 organizations received contributions from Bethel.

LOAN SUMMARY

As of 6/30/02 Bethel's total interest bearing debt was $497,680:

AAL, Sanctuary Loan $ 379,930 @7.125%

Cupertino Nat'l Bank, Zoar 123,750 @5.75% variable

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.

* 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 FY02.

Submitted by:

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David Larsen Eusebio Menezes Suzanne Wolf