Q&A: Confronting a Suspected Embezzler

How should I respond to a suspected case of embezzlement?

We’ve had the same church bookkeeper for ten years. Now, I suspect she’s been embezzling church funds. When I confronted her, she adamantly denied any wrongdoing. I’m pretty certain she’s guilty. What steps can I take to establish her guilt?

Church leaders often are unsure how to address suspected cases of embezzlement. The suspected embezzler is almost always a trusted member or employee, and church leaders are reluctant to accuse such a person without irrefutable evidence of guilt. Seldom does such evidence exist. If the evidence clearly indicates that a particular member or employee has embezzled church funds, but this person denies any wrongdoing, inform him or her that the church may be forced to turn the matter over to the police for investigation and prosecution.

Embezzlers never report their illegally obtained “income” on their tax returns. Nor do they suspect that failure to do so may subject them to criminal tax evasion charges! In fact, in some cases it is actually more likely that the IRS will prosecute the embezzler for tax evasion than the local prosecutor will prosecute for the crime of embezzlement.

Many church leaders have found that turning the investigation over to a CPA firm is much more acceptable than conducting the investigation internally. The CPA firm is completely objective, and ordinarily will not know the suspected embezzler. Further, few church members will object to the church hiring a CPA firm to detect wrongdoing and help establish a sound system of internal control.

Another option is to retain a “certified fraud examiner.” A CFE is a CPA who has had specialized training in the detection of fraud and embezzlement.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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