Part 5 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 uses pre-numbered purchase orders or check requests.
Theft of cash receipts, particularly offerings, garners the most attention by churches in their fraud prevention practices. However, the largest dollar-loss incidents tend to occur in the bill paying arena. In most of the check writing fraud cases I read about I see the same four ingredients which allowed the theft to take place:
- Poor segregation of duties
- Failure to pay attention to the bank reconciliation process
- Poor security over the church’s check stock
- Absence of a formal bill approval and payment system
The starting point of a formal bill payment system is the utilization of preprinted (or computer generated) sequential purchase orders or check requests. The absence of such a system can be the beginning of sorrows for a church.
Approximately 54% of the survey respondents reported not using proper documentation to begin the bill approval process.