Guarding Against Church Embezzlement

This growing trend is not just affecting “big” churches. Just last year a “small” church in my community was reportedly embezzled out of more than $60,000 by their church secretary.

"One thing we are seeing on the uptick is embezzlement," says Frank Sommerville, an attorney in Texas specializing in nonprofits and churches. "When you have higher unemployment, you need to be thinking about security from embezzlement."

The majority of these church embezzlement crimes were carried out by people that the church felt like they could trust...people who had worked for their churches 5 years or more. Some of those involved in embezzling from their church stated that they didn’t really think of it as stealing as they intended on paying it back.

"Regrettably, financial misconduct tends to be more predominant in economic downtimes," says David Middlebrook, another Texas-based attorney specializing in church law.

Fraud experts often refer to three embezzlement risks: opportunity, need, and organizational ethos. Opportunity often is made easier by non-existent or poorly managed financial controls.

Here are a few measures you can put in place to help limit the opportunities:

• Require at least 2 signatures on all church expenditures. Even if you pay bills online, you should verify the payment by 2 signatures on the paper print-out.

• The church secretary should not be one the check signers, if they receive and deposit church offerings.

• At least 2 unrelated individuals should count the church offerings and the church should rotate the money counters periodically.

• The church treasurer should not receive or count the church’s income, but can be available to assist counters.

• Track giving patterns. Has the loose currency decreased or increased? Has income increased or decreased? Some churches even send marked currency through the system to make sure offerings are received fully.

• An annual financial review of church records should be conducted by the church’s finance committee or appointed committee. An internal audit is necessary to ensure church funds are spent according to the wishes of the church. If they discover a problem the committee should contact and outside auditor or CPA to complete the investigation.
  
  
• more internal controls

Return to home page from church embezzlement