In Chapter two of the book Weeds in the Garden, by Verne Hargrave, he discusses three types of fraud: fraudulent financial reporting, corruption and misappropriation of assets.  The most common of which is misappropriation of cash, or theft in the church environment.

“Generally, two terms are used to describe frauds involving an organization’s cash receipts: skimming and larceny.  The difference between the two methods is the timing of the fraud.  The process of stealing money before it is recorded in the accounts of the church is called skimming.  A classic example of church skimming is an usher removing cash from the offering plate on his way to the counting room.  On the other hand, if the usher removes money from the bank bag on his way to the bank, after the funds have been counted and recorded in the church’s records, he has committed larceny.  Cash larceny tends to be a little more difficult because it usually requires “record doctoring” in order for the thief to cover his tracks.  Because most churches tend to look closely over the Sunday offerings, thieves’ favorite targets for this type of behavior tend to be other revenue sources, such as food service cash boxes, weekday drop-off and mail receipts, and fund raising cash managed by volunteers.”

Midweek receipts are the most vulnerable to theft in most organizations.  Many times as an auditor I have seen “Timmy’s Camp Money” or “Cash from Bake Sale” sitting on a financial administrator’s desk tempting any passerby.  In keeping with Matthew 26:41, we know that the spirit is willing, but the flesh is weak when faced with temptation.  So let’s be careful to use controls like a lockbox where church members and staff may drop the cash into a locked depository that can later be opened and accounted for by the administrator.  Otherwise your cash might just walk away and you may never even know.

Are there any practices in your Church that might be vulnerable to theft?

Check out the Weeds in the Garden website.

–Daniel Lienemann, CPA is a Senior Auditor specializing in church accounting at PSK LLP.