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How Secure Is Your Church's Current System?

Take this quiz to find out.
posted 5/25/2010

Try also: Embezzlement, Fraud, Money, Trust

How Secure Is Your Church’s Current System?

The following are 18 internal controls that should be used by every church. They are presented here in the form of a test of your church’s current system of internal control. The list is not exhaustive; other practices may be suitable in individual circumstances. For example, larger churches need to employ additional controls appropriate for comparably sized commercial enterprises.

Keep in mind that it takes only one “no” response to show vulnerability. But because the list is not exhaustive (there are probably a 1,000-plus controls we could examine), 18 “yes” responses do not mean complete guaranteed protection. These controls are reasonable for all churches, large and small, to help reduce the risk of embezzlement and the generation of unreliable financial reports. Additional internal controls are included in the book, Essencial Guide to Church Finances.

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1
Are facilities locked when not in use?

2
Does the church have a written, up-to-date accounting procedures manual?

3
Are the accounting records and the underlying internal controls audited annually?

4
Are new accounting personnel screened?

5
Are the accounting records safeguarded at all times?

6
Is the handling of the offerings always controlled by at least two people?

7
Is cash counted in a secure area?

8
Is all cash received deposited in the bank?

9
Is cash safeguarded in a safe, lock box, or similar protective container when at the church?

10
Are incoming mail, in-office, and electronic contributions handled by people who are not responsible for the accounting records?

11
Do members receive periodic (perhaps quarterly) notices of their contributions from the internal audit committee?

12
Are members instructed to report any irregularities or errors in their notices of contributions to the internal audit committee?

13
Are invoices for goods and services approved before payment is made?

14
Do all check signers inspect all supporting documents before signing?

15
Is preparing a check to “Cash" prohibited?

16
Is a petty cash fund used for minor disbursements of cash?

17
Are procedures in place to control the use of church credit cards?

18
Are reconciliation of all bank accounts prepared monthly by a person who is not involved in writing checks or handling cash?

Now that you have reviewed these 18 internal controls, you are in a position to evaluate your church’s overall system of controls. Don’t fret if you failed to answer all questions “Yes”; all is not hopeless. First, your church is not alone in discovering gaps in internal controls. Second, you now have sufficient information to make positive changes in your church.
 

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Displaying 1–5 of 6 comments

Charles Currier(Registered User)

January 12, 2012  8:19pm

Very interesting survey. Our Church have proceedures that cover most of the items. I will request the Finance Committee evaulate our present methods. Fortunately we have never had any fraud or theft in the over 100 years of our church existance.

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Heather Tempas(Registered User)

November 07, 2011  7:48pm

We had a good procedure in place, but our late Executive Pastor tightened it up even more. Everything we do is to protect not only tithes and offerings, but every person's reputation and itegrity as well.

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Tricia Oates

November 07, 2011  3:16pm

We recently found out that our Pastor has made unauthorized purchases. 1. CREDIT CARD On a store credit card he made two purchases. Because of this action the card exceeds the credit limit. We don't know how or when he got the card. The church sec. went to charge the weekly bulletin and the card was declined. When we asked the company to send a copy of the transaction is when we found out it was him. We were shocked. 2. STORE PURCHASE The Pastor leased a copy machine without authorization from nobody. He put it in the church name and not his. The leased is for 36 months, as to date the bill has not been paid. Two months was due Nov 1st. When asked why did he do such a thing, he made no comment. Then when asked about the payment, he stated he hasn't receive a bill. How should we proceed? How do we get out of this mess? Now his mission is we all make mistakes, we all are practicing to getting it right we are pressing toward the mark. How do you say this is enough?

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Mollie McPherson(Registered User)

October 31, 2011  10:51am

This does make you stop and think about how you want your church assets to be handled. Thank you for letting us have this wonderful resource to use.

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Diane

February 25, 2011  5:48pm

Just found out today that our trusted council member and treasurer, who has held this position since the founding of the church in 2004, has taken all the money from all bank accounts over the past two years. We have $4. Building fund is gone. Savings cushion is gone. Everything. How I wish our council had acted on the items in this list. But we trusted her. Now we are worried for her well-being and her family is on suicide watch. We don't want to take legal action if we can avoid it... besides we know she doesn't have any assets to make restitution anyway. But what CAN we do? Any advice on how to recover - AFTER "leaving the barn door open"?.

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