Tuesday, January 04, 2011

A Guide to Internal Controls

The first thing every church leader needs to understand (and believe) is that their church is not immune to financial misconduct. The "We don't need to worry about that here" mentality is the reason why so many churches become victims of embezzlement. Even if your church isn't being victimized (that you know of), implementing a system of internal controls will ensure that your finances aren't at risk in the future.

Richard Hammar offers these examples of how embezzlement occurs in his book Pastor, Church & Law, Vol. 2: Church Administration and Property:

Example. A pastor had the sole authority to write checks on the church's checking account. He used church funds to pay for several personal expenses, amounting to thousands of dollars each year, until his actions were discovered.

Example. A church left its Sunday offering, along with the official count, in a safe in the church office until Monday. On Monday morning a church employee deposited the offering. The employee ignored the official counts, and deposited the offering less loose coins and currency (which she retained). The deposits were never checked against the offering counts.

To avoid these scenarios, here are a few basic principles for implementing internal controls:

To read the full article, click here.

What safeguards has your church implemented to protect those handling money even from the appearance of misconduct? How adequate are these safeguards?

No comments: