Fraud prevention in churches isn't an easy subject to bring up. The topic naturally creates tension, pushing up emotion levels with staff, lay leaders, and volunteers. And for good reason: One significant prevention tactic requires two people—not one—to handle the money collected at services. So, tactfully explaining to a sole financial worker or volunteer why more people are needed can be awkward. And in some cases, finding available staff or volunteers, and matching schedules to handle financial duties, may not be easy, further complicating the process and creating frustrations all around.
This topic struck a chord last summer when Vonna Laue, one of our Editorial Advisors, listed the top three reasons fraud happens in church. Many readers responded in the comment section. One church secretary described the weight of being the only person working on the church's finances and her hopes that her pastor would someday agree to put more safeguards in place. Another church staff member took measures into her own hands to protect herself: "I insist on a minimum segregation of duties. I write checks but don't sign and I have a volunteer who does the bank reconciliation. I'm regularly surprised by folks who say, ‘Don't they trust you?'" Others described how safeguards help prevent false accusations.
Concerns regarding fraud in churches persist, partly because they continue to happen. News reports involving churches around the country regularly surface. Fraud magazine recently surveyed church leaders who provide financial oversight in 132 churches. Among them, 13.4 percent have "experienced a fraud in their organizations within the previous five years."
This fear of fraud can have the positive effects of prompting preventive action. It also can prompt knee-jerk responses. A pastor of a North Dakota church said he was worried about fraud, and any potential accusations directed at him, and turned the task of preventing it over to the church secretary to address, according to the Detroit-Lakes Tribune. He then found out that the church's secretary admitted to stealing more than $160,000.
The ideal response for churches is a clear plan long before any sign of trouble, one patiently developed and cognizant of the time needed for people to learn and implement. Developing and participating in financial safeguards may seem like an overwhelming task to someone who hasn't worked with finances or math much before, but some safeguards can be as simple as double-checking, reviewing records, counting money, or simply enlisting the help of another trusted individual to work alongside them.
For a more detailed explanation of this threat and ways to try to prevent it, check out ChurchSafety.com's downloadable resource Internal Controls for Safe Churches.
This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."
Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.