Part 8 of our ongoing Fraud in the Church series. PSK in cooperation with the National Association of Church Business Administration (NACBA) conducted a survey to determine the extent to which churches are attempting to address the problem of church fraud. We asked them to respond to this statement:
Our church reconciles payroll quarterly reports with the payroll journals and general ledger.
Almost 25% of our respondents do not perform this relatively simple task. I can show you plenty of news reports of churches who wish they had! Occasionally, I need to point out the obvious; thieves do not like to get caught! To remain successful at this, they have to hide in the tall weeds. This means they are going to target the big numbers in a church’s financial statements. And the biggest of the big numbers is payroll cost.
Typically, payroll makes up 50% of a church’s operating budget.
For example, if a church has a one million dollar budget, a thief can easily find cover among $500K of tall weeds!
To avoid being the victim, churches should take care to:
- Know who their employees are
- Know how much their employees are paid
- Periodically review activity in the payroll general ledger accounts
- Compare payroll reports with budget totals.
