Trap #3 Operating with little or no accounting controls

Because of staff size many churches have poor segregation of tasks

 

Next to the absence of well-defined, written accounting and management policies, the most common weakness we have noticed in churches is the lack of adequate segregation of duties.  In other words, the accounting tasks are not spread out among enough individuals.  This is usually due to budget constraints, as churches tend to fund ministries first, then whatever is left is applied to administration.  Whenever possible, accounting tasks, particularly those involving cash transactions, should be divided between several individuals to limit the possibility or even the appearance of the misuse of funds.  There are two main purposes for developing a strong segregation of tasks:

First, strengthening the accounting control system protects the Church from the misuse of funds and loss of assets. 

KEY: Second, proper segregation of duties protects Church staff and volunteers from unwarranted charges of impropriety.  In my opinion, this is the most important reason for spreading the work around as many people as possible.  We must never forget that in volunteer organizations, the appearance of improprieties can cause as much or more harm than actual occurrences of theft or embezzlement. 

All churches should investigate ways to protect itself and its staff by finding methods to segregate as many of the accounting duties as possible.  Here are some of the weaknesses we have seen in segregation of duties:

Often a church’s offering count teams are made up of the same individuals who perform the task week in and week out.  Action Step: Make an effort to enlist as many people as possible to serve as tellers.  Also, include a planned rotation of the counters 

Many churches on Sunday mornings, store their offerings overnight in a safe that does not require dual access.  Action Step: When money remains on Church premises for over twenty-four hours, use a safe that requires the participation of two individuals to unlock.  (A less expensive way to do this is use lockable or tamperproof bank bags and assign separate custodianship of the bags and access to the safe)   

By far the most common weakness is the habit many churches fall into of allowing the church financial secretary/bookkeeper to be involved in every aspect of the accounting process, particularly those involving cash.  Action Step: The church bank account is the “Grand Central Station” of a church’s business activity. One of the most effective steps that can be taken to provide segregation of duties is to remove the bank reconciliation task from the bookkeeping department and assign the work to another employee or volunteer.

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