Congregations are especially susceptible to theft, embezzlement, and fraud. We foster an environment that encourages trust and vulnerability in other aspects of congregational life. We are often so desperate for volunteers we don’t ask for the kind of skills or accountability that we should to meet our fiduciary responsibilities. And we often inherit systems, habits, and volunteers that would be hard to change without a good reason.

General Financial Fraud Prevention Tactics

Here are some recommended practices and policies that every congregation should have in place:

• Put the congregation’s financial policies and procedures in writing. Keep expectations consistent and clear.
• Train those responsible for financial matters, and have them sign off on the written policy to prevent any plea of ignorance from a dishonest employee or volunteer.
• Conduct annual background checks and run annual credit reports on those who have access to church funds.
• Require at least two unrelated people to account for all cash and checks received during services and/or fund raisers.
• Separate bookkeeping responsibilities among different people so as to safeguard against embezzlement.
• Require annual reviews or audits.
• Hold people with access to financial documents to a covenant which clearly outlines that they will be removed from the position if the covenant is broken.

Recommended Financial Policies

• The person opening the mail should be independent of the accounting records.
• Whoever reconciles the bank statement should not be an authorized check signer on the account.
• All bank reconciliations should be signed by preparer and reviewer.
• Require written consent of two individuals to approve the transfer of sums over a predetermined amount into or out of all accounts, including line-of-credit draws.
• A designated finance lay leader should compare the bank statement to the weekly count sheets.
• Bank reconciliations should be approved by someone not authorized to sign checks or make the deposit, and it should be done promptly. It is important to look for check numbers out of sequence.
• Payroll records should be maintained separately to be able to trace payments back to the records, without the records being readily available to members without the need to know. Additionally, if using a payroll system, spot check the data being submitted to them against your internal time sheets.
• Have a Credit Card Policy and approval process for purchases. Include in this policy that credit cards may not be used for personal expenses.
• Deposits should be made as soon as possible. Place deposits in a locked bank bag, and place into a safe if you can’t make the deposit immediately. Use of a night depository is recommended if bank is closed.
• Stow petty cash in a safe. Establish a procedure for its use and disbursement, minimizing access and treating it like a bank account, with regular audits and reports.
• All paid bills should be filed by vendor or by month by fiscal year.
• These three reports should be required to be produced and evaluated monthly for Board/Finance committee meetings
  • income statement
  • balance sheet
  • statement of cash flows.