While we’d like to think no one would steal from our churches, that’s not the case. Story after story proves that all people, even church leaders and staff, are susceptible to the sin of greed. According to Brotherhood Mutual, church financial fraud is expected to reach the $80 billion mark by 2025. Though these are unfortunate numbers to read, there are lessons to be learned here on how to protect your church from financial fraud.
These simple prevention tips will help you and your staff members combat money mismanagement as you strive to be excellent stewards of the church.
Tip #1 - Hire a Professional
Don’t rely on a church member who is “good with numbers” to come in and handle the church’s finances. Find someone with an accounting degree and several years of experience, such as a CPA, or outsource your accounting altogether.
For smaller congregations, consider outsourcing or finding a retired/semi-retired CPA who could work part-time for the church. Here are a few additional reasons why hiring a professional is beneficial for churches.
Tip #2 - Segregation of Duties
“Segregation of Duties” involves making sure multiple people are involved and knowledgeable of church finances.
A few examples include:
· Ensuring at least two to three people are in the room at all times to count offerings.
· Making sure the person who reconciles the monthly bank statement doesn’t have the authority to sign checks.
· Disallowing the person who approves a Purchase Request from being able to add a new vendor in the church’s accounting software, enter an invoice, print a check, and sign that check.
Tip #3 - Delegation of Authority
This relates to who has the authority to sign off on specific types of purchases as well as purchases of certain dollar amounts. It’s essential to determine who will be granted this authority and the permission limits for those working with church funds. For example, if an employee has a church credit or debit card, set limits on how much they can charge to a card within a single purchase and within a month.
Also, establish who must sign checks over a specified amount and determine when two signatures are required for a purchase. When policies and procedures are put into place, it’s much easier to catch — and prevent — financial abuse.
Tip #4 - Conduct an Audit
Hire a firm or CPA who is wholly unaffiliated with the church to conduct an audit of the church’s financials. It’s a good idea to do this on an annual basis for your church’s annual report. By hiring a professional with no skin in the game, you’re preventing anyone involved in potential fraud from hiding their activities.
Being prepared for fraud doesn’t mean you have someone on your team who’s capable of it. But in case there is, isn’t it wise to prevent them? In this broken world of ours, money fraud is just too common an occurrence to not be prepared for the worst. These tips are simple and crucial steps to preventing yo