The most common reason given why churches do not take fraud or embezzlement seriously is the almost universal belief that such things cannot take place in a “Christian” environment.  Nothing could be further from the truth.  In the Gospel of John the Apostle makes the following observation about one of his associates in ministry: “He [Judas Iscariot] did not say this because he cared about the poor but because he was a thief; as keeper of the money bag, he used to help himself to what was put into it.” (John 12:6)  If it can happen in Jesus’ immediate circle, it can happen in any church, anywhere, and any time.  But, if that is not enough to convince you, we will provide updated reports of the unfortunate churches who are hit by fraud.

It starts at the top…

http://www.wkowtv.com/Global/story.asp?S=11683444

If only this church had:
Developed a strong organizational structure insuring what is commonly called good “tone at the top.”  In the Alaskan dog races a common phrase is “if the lead dog won’t go, the sled won’t go.”   Except in extremely small churches, the pastor should never be involved in the handling of funds.

You are never too old…

http://www.mlive.com/news/detroit/index.ssf/2009/12/eighth_commandment_fail_71-yea.html

If only this church had:
A longer waiting period before allowing volunteers to engage in church financial activities.  Also, a formal screening and financial background check of all financial volunteers might have been helpful.  And the standard protection; a church’s money should never, never, never be in the complete control of one individual.

Speaking of control…

http://www.fox28.com/Global/story.asp?S=11700926

If only this church had:
Not “given control of church finances” to their bookkeeper.  No one, regardless of talent or perceived integrity should be given complete control of a church’s financial activity.  Financial tasks should be spread among as many people as possible.

Oh the tangled web we weave…

http://hamptonroads.com/2009/12/former-suffolk-attorney-sentenced-embezzling

If only this church had:
Had a formal process for monitoring its bank activity.  One of the more sophisticated methods of stealing from churches is the creation of dummy bank accounts which are used to siphon funds.  Crafty thieves can weave a very tangled web of intrigue by using phony or dormant accounts.  This is another example why a balance sheet is so important.

PSK LLP has provided this article as a resource to help churches prevent fraud.
We can help you with your specific needs by calling us at 817.664-3000 (Toll Free: 800.424.5790)
or email Verne at verne@pskcpa.com