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Church Accounting Internal Controls

I just received a link to a news article in the Gaston Gazette from a friend about a couple that embezzled $200,000 from their church.

[quote] Oh, that won’t happen to us, Mrs. Smith has been keeping our books for years and she is such a nice lady.[/quote]

Unfortunately, that’s what this church thought as well.  This nice, unassuming couple met at the church, were married at the church and had been keeping the books for year.  Everyone thought it was fine until they had a large bill to be paid and couldn’t.

[quote]But we have checks and balances to keep that from happening.[/quote]

Do you really?  Are they sufficient and enforced or are they there merely as a security blanket to make you feel protected?

It all started for this couple as a small loan here and there.  At the beginning, they’d borrow money to cover personal shortage and pay it back.  It was a cash flow timing thing.  Eventually though, they started not paying it back in full, or borrowing more.  At some point what was just a small amount gets overwhelming and has now spiraled out of control and is impossible to pay back.

While this is one of the latest article, it is not the first.  We have worked with clients that have very similar stories for us.  I have heard almost this exact story at 3 churches that I can recall immediately.

So that can you do to prevent your church from joining this group of victims?

True separation of duties – Have separate people responsible for different tasks. The person counting the money should not be the one depositing. The person writing the checks should not be the one reconciling the bank statement. Check with your bank and get dual signature checks.

Get Audited – Periodically, every year or every other year have your books audited. Get an independent third party (NOT A CHURCH MEMBER’S COMPANY) perform the audit.

Monthly Reviews – Pastor, there is no reason why you should not know where your church is at financially all the time. Too much for you? Designate someone to review and report to you. Knowing what’s going on will prevent impropriety.

Outsource – Okay, my shameless plug. Outsource your bookkeeping to a professional company. Our Simple Church Accounting System will insure that this doesn’t happen to your church. Each transaction sent through our portal is reviewed and inputted by our staff who has a personal knowledge of your church. We regularly review the accounts of all our clients. If something doesn’t look right, we’ll question it and point it out to you.

Please don’t become a statistic. We live in a fallen world and no one is safe. There may have been a day when churches were an understood safe place, but things have changed and that is no longer the case. Thieves are just as likely to target a church as anyone else. In fact, they may be even more so because of the relative ease with lack of processes in place.

Let us show you how using our Simple Church Accounting System can help your church avoid being a victim of embezzlement. Unfortunately, its not enough to assume you are safe.