PSK CPA

Security Blanket #3- The Loyal Bookkeeper

“Our bookkeeper has been a member and served our church for many years.  We trust him/her completely…”

Church’s Secretary accused of embezzling $1.5 million

Former pastor guilty of stealing from church

Church’s former secretary jailed on fraud charges

Priests get jail for stealing from church

Church secretary accused of stealing thousands

Woman accused of stealing from church

Baptist church secretary was arrested and charged with 17 counts of credit-card fraud…

Church financial secretary steals $216,000—asks for forgiveness

Church secretary admits to stealing $274,000 from congregation

These are all actual headlines from articles about church theft.  I think we’d all agree…this is NOT the publicity that anyone wants, particularly a church.  In most of the church embezzlement cases I have read about, the crime is not perpetrated by a thief who has sought out a soft target.  More often churches are embezzled from by a long-time, dedicated and trusted employee who has been given total access to the church’s financial operations.  In short, it is usually not bad people who steal from churches.  Rather, church embezzlement is committed by good people who find themselves (or their close relatives) in bad situations.

Churches victimized in this way have often not taken into account the first leg of the “fraud triangle” – Pressure. (Rationalization and opportunity are the other two.)  Pressure can be defined as any outside force or set of circumstances that creates a need for cash.  Pressure comes in many forms, including large unexpected medical costs, business reversals, and in far too many cases, addictions.  When faced with these issues, many people of otherwise unquestioned integrity are tempted to “borrow” from their employer to alleviate the pressure.

Churches have limited control over the pressures their employees and volunteers face.  However, they have almost total control over one leg of the triangle – OPPORTUNITY.  By establishing strong financial controls and processes churches can go a long way in removing temptation from its employees. 

If you’d like to hear more about our Internal Control Assessments or one of the many other services we provide, please contact us at (817)664-3000 or email us using our contact form.

Security Blanket #2 – Dual Check Signing

“We require all checks to be signed by two officers of the church”. 

Dual controls, or separation of the accounting duties, are an important brick in the wall of fraud protection.  Requiring dual signatures is often one of the ingredients in providing proper segregation of duties.  But, if this practice is not combined with a few other protective measures it will be no more effective as a lion with no fangs or claws.

True, the knowledge that all checks must be signed by two people will deter most people from taking a chance.  But, if this is the only control in place, it will not be enough to scare off a bold predator.

Let me set a scenario.  Imagine a bookkeeper who has been given the responsibilities to write checks, prepare the general ledger and reconcile the bank account.  If this individual has courage, handwriting skills, and lack of integrity the protection provided by dual signatures will be paper thin.  Ask yourself, how much more difficult would it be to forge two signatures than one?

My point?  Do not rely on dual signatures as your only wall of defense.  Dual signature requirements, standing alone, are no match for a check forger.

Church Fraud Hitting Close To Home

Because of our involvement in fraud prevention we make it a point to keep up with the latest news by periodically searching the web for news stories.  It seems like the pace of fraud occurrence is quickening.

Here are two recent stories of church embezzlement:

• Church employee charged with embezzlement
• Firefighter and church deacon accused of embezzlement

PSK is not involved in any of these situations so I have no idea about anyone’s guilt, innocence or the ultimate outcome of the cases.  But, I am sure of one thing; no church or ministry wants to make these types of headlines.

To avoid this kind of publicity we have been urging, almost pleading with churches to take this situation seriously.  A “clear and present danger” exists and every church should immediately perform an analysis of their current management structures to determine their vulnerabilities to fraud.

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