Formal Church Fraud Risk Programs – Fraud in the Church – Survey Results part 2

Part 2 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 has established a formal program for managing fraud risk.

Almost 63% of our respondents reported that they have not conducted a fraud risk assessment or implemented an ongoing formal church fraud prevention program. Unfortunately, my guess is that the national average is much higher. It is hard to pinpoint what might be the cause of this rather high percentage but two reasons are prominent:

  • The workload of most church business administrators (CBA) has them stretched to the limit.  There is barely time to get all of the routine tasks completed on a timely basis much less take on additional projects.
  • When they do try to implement a church fraud risk program, many CBAs end up as the Lone Ranger. In many, if not most churches, fraud prevention is a very difficult proposition to sell. The biggest hurdle? The mistaken belief that “it can never happen here.”

It is not enough to simply be aware of the threat of fraud or go through the motions of fraud prevention. Ministries that don’t commit themselves to a strong fraud prevention and detection program will likely end up as victims.

A few key ingredients of a formal church fraud risk program include:

  • Education of church employees, volunteers and members of the risks of fraud.
  • Conducting an initial “brain storming” session whose purpose is to identify potential fraud portals.
  • Assigning ownership of fraud prevention processes to key church leaders and employees.
  • Implementing a periodic review of transactions.
  • Periodic review and assessment of the church’s systems.
  • Implementation of an anonymous whistleblower hotline. (More about this in a subsequent post)

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