Brotherhood Mutual has been tracking the rising trend of embezzlement within churches for a few years. Their latest report states that church fraud expected to hit $68 billion during the first six months of 2019. Compare that with the total missions expenditures, which was running about $60 billion for the same period. However, the trending church fraud amount only included reported cases. Most church embezzlements go unreported.
Your church’s policies, or better said lack of policies, might temp employees to steal from the church’s funds.
I believe that all churches should establish policies and set an environment where employees’ integrity is protected. So, here are a few suggestions to get you thinking about adopting integrity protecting policies.
• More than one person should have access to your accounting program. o If only one person enters all transactions, creates all reports, and never allows even an internal audit, there is no assurance that mistakes and possible misuse of church funds are occurring.
• In Accounts Payable o Practice separation of duties by having one person enter invoices, another person review, and post transactions to the general ledger (using accrual accounting). Then have a selected person to prepare a list of bills to be paid, approved by another, and processed by someone other than the person who originally entered the invoice.
• Accounts Receivable o Practice separation of duties by having one person enter bills/charges. Use a different person to collect and record payments, and then a different person to finalize the posting to the general ledger.
• Track all financial activity within your accounting package o Do not allow tracking some activities, such as restricted gifts, in a spreadsheet that is never directly updated in your accounting package.
• Use multiple people when counting cash offerings o Use a different team to verify and complete depositing of funds o Rotate counters regularly
• Install video cameras in the bookstore and coffee bar. o Not to catch shoplifters, or spy on your employee/volunteer, but to validate their honesty.
• Create and follow a Separation of Duties guidelines manual o You can use the ideas above to get you started.
Below are links to some resources that you might find helpful.
Are Churches Somewhat Responsible for Bookkeeper Embezzlement?
The Church Network
Protect Ministry Finances from Embezzlement
Church Fraud 110 million
Ten Practices that Safeguard Against Church Embezzlement
Product Owner Financials and Arena