Segregation of Duties, part 4

Part 4 of our series on Segregation of Duties. In our recent Fraud Survey, we asked churches to respond to these statements:

“Our church does not allow an individual who serves on the count team, is involved in check preparation, or is involved in general ledger and financial statement presentation to participate in the bank reconciliation process.”

“Someone other than the preparer reviews the completed bank reconciliations.”

Survey results – Around 65% of our respondents reported implementation of these controls.  And that is good because…

KEY: The bank reconciliation is the Grand Central Station of your church’s financial process.

Bank Reconciliation

All of a church’s financial activity should flow through the bank reconciliation.  If a person has complete control over the bank accounts and accounting processes, AND is given the task of bank account reconciliation, the church has created a HUGE faucet.  No, it’s probably closer to a fire hydrant!

KEY: The most effective step that can be taken to alleviate poor segregation of duties is to have someone outside the day to day accounting processes reconcile the bank account.

DOUBLE KEY: This should be much more than just balancing the accounts.  This review should include a close inspection of cancelled checks, deposit slips, etc., and looking closely at payees, endorsements and check signers for abnormalities.

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