Who’s kingdom are pastors building?
An Indianapolis pastor admitted to misusing $500k loaned to local Church for a building project that was never built.
See original story here.
Story obtained from News 6 – The Indy Channel.
An Indianapolis pastor admitted to misusing $500k loaned to local Church for a building project that was never built.
See original story here.
Story obtained from News 6 – The Indy Channel.
Having a church CFO or business administrator that can do everything can be a real blessing. The downside is if there aren’t proper checks and balances in place, he may decide to use that power to defraud the church. Jason Todd Reynolds was a trusted employee for seven years but he ended up buying three cars on the church’s credit card, paid his mortgage with church checks, and just plain wrote checks to himself. A simple review of the bank reconciliation and statements by a board member could have revealed this fiduciary misconduct. Often times church business administrators and CFO’s are looking over your shoulder, but who’s double checking their work at your church?
See original story.
Information obtained from Maryland Community News Online.
With great risk comes great reward, sometimes… Church officials and members of St. Barbara Greek Orthodox Church in Orange, Massachusetts lost big in an investment scheme promising big gains. It can be tempting to investigate alternative investments in our uncertain economic situation, but we recommend exercising extreme care in these decisions. Make sure you have savvy business men and women on your governing board and ensure that your organization enacts an investment policy. Effective investment policies include an outline of the goals and risks tolerances the Church is willing to accept to reach those goals. Let’s all work together to protect the resources the Lord has blessed us with.
Information obtained from Boston Globe.
This trusted, married couple in the Church held the position of Treasurer and Assistant Treasurer with complete discretion of managing Church finances. They were part of the Church for over a decade, surely they weren’t committing any fraud?! In a simple review of the monthly cash reconciliations, these fraudsters would likely have been caught earlier having written a total of 811 checks to themselves over a three year period totaling $366,156. Many times our firm recommends that there be someone independent (like a board member) who reviews the monthly cash reconciliations for any unusual items, such as usual or frequent checks written to employees. Are you prepared for this kind of threat?
See original story here.
Details obtained from www.gastongazette.com
How can a Church do an excellent job of protecting itself, and do so inexpensively? The Church can do much in house to protect the provisions it has received. Let’s think specifically about Cash Receipts:
First, a Church must have written procedures for how money is received and handled. This is the starting place for assessment. Moreover, once compiled, the Church needs to actually follow the procedures! Questions to consider when reviewing your Church’s procedures (or creating them):
Money and Church—the temporal object, money, is a current necessity for the eternal entity, the Church. Money is often a difficult area of discussion for Churches, but it can’t operate without it. The Church’s goal should be to protect its integrity, while at the same time the hearts of the givers. What are you doing to protect the Church the Lord has placed you at?
You can’t always just look at your bank statement for the balance because there are outstanding checks and deposits; looking at the GL doesn’t always capture recurring payments, fees, and other transfers. A thorough bank reconciliation process can go a long way toward detecting fraudulent cash activity and helping your organization know just how much cash is available for operations. The basic process typically includes comparing outstanding items with the next month’s bank statement, ensuring both the book and bank balance agree to the rec, and reviewing the rec for old outstanding items (>90 days) that should probably be written off and potentially reissued.
A second set of eyes is essential. A reviewer can be a business administrator, your Church’s CPA, or you can even ask a savvy volunteer review the bank rec to ensure someone outside the process is able to help keep the train on the tracks. When your Church receives its bank statements, how much time passes before they are reconciled to the general ledger? We recommend that our clients reconcile their cash accounts within ten days of the month end to properly follow up on cancelled checks, unexpected fees, etc. Furthermore, many banks require fraudulent activity to be reported within 24-48 hours, so a daily review of transactions is also recommended. Finally, we recommend a weekly reconciliation of online donations to properly match them to donor records and respective bank deposits.
So what does your process look like? Is it working? What’s the hardest part of reconciling your bank statement? Who reviews your bank reconciliation?
Having a third party review of the reconciliation is a big fraud prevention step and one of our firm’s recommended best practices when it comes to segregation of duties.
Many churches think that an external audit is the best way to prevent fraud from occurring, or at least to detect fraud once it has occurred. I’m an audit partner, so I don’t encourage churches NOT to have financial audits! Financial audits are important and I believe most churches/ministries should have one. But the primary purpose of an audit is not to detect fraud, and there are more effective ways to protect your church from fraudulent activity.
The Association of Certified Fraud Examiners (ACFE) says that a much higher success rate exists for those who take matters in their own hands, doing some of the work themselves, rather than farming out fraud prevention to their auditors.
Management review and internal audit steps account for more fraud detection that anything else! These are steps that church leaders (finance committee, elders, board members, etc.) can perform.
In this blog, over the next couple of months, we’ll discuss a variety of concrete ways you can examine yourselves to see how your church might be susceptible to fraud – and what you can do about it!
And don’t forget our website dedicated to Church Fraud – http://weedsinthegarden.com/
I can answer this question with one word:
EMPLOYEES!
The determination of employee/contractor status revolves around one word:
CONTROL!
The more control a church exercises over an individual the more likely they are an employee. Conversely, the less control exercised over a worker the more likely an independent contractor relationship exists.
So if a church is paying those with the responsibility of guarding their children’s welfare as independent contractors it is as much as admitting the church is exercising little control over its childcare program. Not a good idea…
If our answers only raise more questions (which is typical for CPAs) feel free to post a question on the blog or email me at verne.hargrave@pskcpa.com
Two answers to this question come quickly to mind.
A budget should be used to guide the church through its fiscal year. When things don’t go according to the budget plan, that’s OK. The budget’s role is to tell the church when it is time to make mid-course corrections. It cannot perform its role, if it is monkeyed with repeatedly.
If our answers only raise more questions (which is typical for CPAs) feel free to post a question on the blog or email me at verne.hargrave@pskcpa.com
It’s all up to the donor… If a donor makes no stipulation to set up a separate bank account, then you don’t have to.
In fact, our advice is usually to not set up separate accounts. Here’s why.
If our answers only raise more questions (which is typical for CPAs) feel free to post a question on the blog or email me at verne.hargrave@pskcpa.com
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