As a nation, uncontrolled spending at the personal level has led us into financial crisis in the past several years. Churches are not immune to detrimental attitudes and practices of the nation. Additionally, churches are particularly vulnerable to potential fraudsters. In his book, Weeds in the Garden, Verne Hargrave discusses the church’s finances, its attitude and responsibilities towards them, as well as steps it can take to manage them in an intelligent and responsible manner.

Verne writes,

“A church should develop a rational plan to expend its resources, giving equal weight to accountability and ministry effectiveness. This is not only good stewardship; it is also good fraud protection…

Fraud prevention over cash disbursements follows the same cardinal principle used in managing cash receipts. Money, or access to it, should never be in the possession of one individual, regardless of the brevity of time. The only difference between these two areas of fraud prevention is the direction; outflow as compared with inflow.

Every church should perform a periodic fraud assessment of its cash disbursements with the objective of identifying and strengthening weak spots. Weak spots consist of any place along the church’s cash ‘outflow’ path (disbursements) where one individual can help himself to the church’s money.”

Has your church performed a Fraud Risk Assessment lately, or ever? Can your church’s contributors rest at ease that their sacrificial giving is being spent wisely and is not lost to theft?

–Justin Baldwin, CPA is a Senior Auditor specializing in church accounting with PSK LLP.