Preventing fraud at the local-church level
July 12, 2018 / By Conference Council on Finance and Administration
When you have your annual local church audit done, does your auditor make suggestions about policies or procedures? Have you wondered why this is? Many churches (and small businesses too!) have too few people involved in their financial systems. The suggestions aren’t made because we distrust your people but because we do trust them and want them to be protected as well, from someone else causing harm or even suspecting harm.
Church Finance Today’s monthly newsletter for June 2018 (Senior Editor: Richard R. Hammar, J.D., LL.M., CPA, published by Christianity Today) has an article about this issue.
Are Your financial systems susceptible to fraud (Adapted from Essential Guide to Money for Church Boards)?
The following are indications that your financial systems are at risk:
- One person counts and/or collects church offerings.
- There is no regular turnover or rotation in those persons who count church offerings.
- Offering counts are submitted to the person who deposits the offering.
- No one regularly reconciles bank deposit slips with offering counts, or the person who does so is the same person who deposits the offerings.
- Only one signature is required to write a check.
- Members who contribute cash do not use envelopes.
- Accurate contribution receipts, i.e. giving statements, are not issued to members, or they are issued but members are not encouraged to report discrepancies to the church board.
- Offerings are not deposited immediately.
- Monthly bank statements are not reviewed, or they are reviewed by the same person who deposits the offerings.
- Offerings fluctuate significantly.
Consider all of these systems when evaluationg your finacial risk. This will help you to understand why an auditor may offer you suggested changes in your systems and procedures.