For close to 20 years I have had the privilege of been close to the management of church and para church organization. Occasionally I hear of an officer who has been trusted with funds and has misappropriated it.

I belong to one of the largest Pentecostal churches in Ghana and for us, they will suspend you and expose you for all kinds of sins but when it comes to the misappropriating of funds, its kept is secret. So I ask myself why they don’t expose these weeds among the flowers. There was one occasion where a pastor was given money to pay an instrumentalist for a crusade, the money never got to the instrumentalist.

I have seen occasions where honoraria supposed to be given to guest speakers never gets to them and no one questions. Even where it’s questioned, the actors are never reprimanded. I have seen issues where church offerings and monies given to treasurers are misappropriated. Cases where a deacon used the church money to buy a land.

Often times, church people can’t bring themselves to believe that their pastor, an elder, deacon a church trustee, long-time member, or the school cook could possibly steal from the church. Normally, it’s one of the most trusted people in the church who’s pilfering from the collection plate, or diverting funds from the church budget or investment accounts to feed their spending habits or pay personal debts.
Research on church fraud shows that $100,000, while significant by most people’s standards, is a very small part of the estimated total amount of fraud committed against the Church each year. According to the Status of Global Mission report from the Center for the Study of Global Christianity, Christians worldwide committed more than $39 billion in church-related financial fraud during the first half of 2014. Compare that to the $35 billion churches spent on worldwide mission work during the same time frame.

Church crime continues to grow—estimated at $110 million each day. Increasing at an annual rate of nearly six percent, researchers expect church financial fraud to reach the $60 billion mark by 2025. That’s still not the whole picture. About 80 percent of all cases of church fraud go unreported and therefore are not included in statistics. Only the big fraud cases, some involving complex schemes perpetrated by well-known Christian individuals and organizations, make the news. However, there is one area where church and ministry organizations should be run like business organizations and that is in the area of internal controls over financial reporting.

Maintaining strong and effective internal controls is critical for all organizations, regardless of for-profit or non-profit status and regardless of size. Unfortunately, financial fraud (i.e. embezzlement, misappropriation of funds, etc.) is a fairly common crime in America and religious organizations are certainly not immune from the occurrence of this crime. There are many reasons for the continued growth of financial fraud. Fraud typically initially takes place due to extreme financial stress on an employee’s life as a result of certain life events (i.e. high amounts of debt, divorce, addictions such as gambling, etc.). However, from my experience the major reason why financial fraud continues to grow is that the perpetrators, even if caught red-handed, are rarely prosecuted. I have personally worked with many organizations who have been victimized by dishonest accounting employees and I have seen only one situation where the employer was actually able to get local law enforcement to vigorously prosecute the offender. In many cases, local law enforcement has “bigger fish to fry” and either requires an impossible amount of documentation of the theft or is simply not interested. The end result usually is that the fraudster is not prosecuted, is not bound to make any form of reparation to the organization and the record of the fraudster in effect remains clean. This invariably allows the fraudster to move on to the next organization to do the same thing again and in many cases, it has emboldened them to commit even greater acts as they feel as if they are bullet proof.

A strong internal control structure has many components, but following are some very effective, low-cost ways that you can strengthen internal controls and keep your organization safe from fraud:

Never allow an individual who has direct access to bank accounts (i.e. access to blank cheque stock, cheque signing authorization, reconciling the bank statement, etc.) to initially receive and open the monthly bank statement(s).
This is one of the easiest ways for fraud to go undiscovered as the images of cheque that were unauthorized or forged are initially being received by the person that committed the act. Even if the bank statement were to be subsequently reviewed by someone else, the individual who received the bank statement could have removed or altered certain cheque images or data to hide transactions. I manage the financial records of a para-church organization. We agreed to sign on to an SMS alert. And we use the team leader phone number for that purpose. Though I have access to the bank statements, he has access to the alerts and any deposit and withdrawal is monitored by him though under my supervision.

The good news is that there is a very easy solution to this problem. Simply change the mailing address on all bank statements to the address of a trusted individual such as a senior pastor, administrative pastor or better yet, a board member or deacon. The key factor here, is the individual that you choose should be someone who does not have any access to the organization’s bank accounts – in effect, the individual should be a neutral third party who is “auditing” the monthly bank statements for irregularities. The designated individual should then look for irregularities such as cheques made payable to unusual or unapproved vendors, unauthorized cheque signors, forged signatures of authorized signors, and payroll checks to unknown employees, payroll checks to employees for the wrong amounts, etc. If you can only implement one step from this article, implementing this step will greatly enhance your organization’s internal controls.

Ideally, all cheques would have dual signatures by authorized cheque signors, but this is just not realistic in a fast-moving, dynamic church or ministry environment. Because in many church administrations most payments are made on impulse and where the other signatory is not around they are forced to use the days offering takings for that purpose. A more realistic policy is to require that any cheques over a certain amount, for example GHS 1,000, be signed by two people. Ideally, the two authorized signors of large cheques should be the individual in charge of finance and accounting and a board member.
Furthermore, the board member chosen to co-sign large cheque should not be the same board member selected to review bank statements as listed in the previous point. I recognize that this is a bit cumbersome and may require a degree of coordination, but that is kind of the point. Large cheques should require a greater degree of thought and consideration before they go out the door.

One of my biggest “pet peeves” as an auditor is when restricted funds are co-mingled with unrestricted funds. Donations that have been designated for a restricted purpose by the donor should never be deposited into a bank account with unrestricted funds. If your church or ministry receives restricted donations, a separate bank account should be maintained specifically for these funds. These donations can then be tracked and payments can be made directly out of this account for the restricted purpose(s). Depositing restricted funds in an account with unrestricted is dangerous as it is far too easy to “forget” that these funds were restricted by the donor for a certain purpose.

The most critical payment that your organization can make on a monthly basis is the payment of payroll taxes to the Ghana Revenue Authority (GRA).
If you want to get into trouble quickly, failing to make a payroll tax deposit or failing to make such payments timely is the best way to do it. The penalties for any mistakes in this area are enormous and the G.R.A. is becoming much less forgiving of errors in this area. There have been a lot of tax audits in all tertiary institution by the G.R.A. and I fear it may be carried out in these churches. This is also an area where the fraudsters that I mentioned earlier love to operate. Rather than remitting the payroll taxes to the tax authorities, a frequent fraud is to instead remit these amounts to a shell company or organization that they have formed. The cheque made payable to “G.R.A.” which they provided to you for signature can easily be changed to GHANA ROOT AGENCY. Your best bet here, especially if your organization is small, is to outsource your payroll to a third party provider or a local accountancy firm where you can be sure that the payroll is being done correctly and that all deposits are being made. The cost for this type of service is minimal as compared to the payroll costs of keeping an employee on. If you decide to have your payroll done in house, make sure that someone is auditing the payroll function to make sure that all payroll tax deposits are being remitted correctly and timely.

From my experience in working with churches and ministries, many seem to greatly underestimate the importance of the accounting and finance function. It is a widespread practice for accounting and finance employees in churches and ministries to be paid far below the market rate for their skills. Further, in is not uncommon for churches to require that all employees also be church members. I have no problem with this requirement per say, but this requirement combined with below market compensation greatly diminishes the pool of qualified, desirable candidates. Accounting is a complex area and while anyone can call themselves an accountant or bookkeeper, very few truly understand the intricacies of balance sheets, income statements and statements of cash flows. Consider increasing compensation levels for key accounting and finance employees and I am confident that your church or ministry will have much better, more qualified candidates from which to select. I can talk of my church, whose administration is categorized into local, district, area and national. The have audit committees at all these levels who goes round to ensure that financial policies of the church is adhered to. If all churches and para-church organizations will have financial policies and have bodies that oversee and supervise the work of one person, fraud will be minimize.

Peter A. Williams is a Tax consultant, a Chartered Accountant, Certified Business Process Outsourcing Master Trainer and an SME systems coach. He blogs on issues heartrending issues on Finance, Management, Fraud, risk, Tax and business process re-engineering. He currently works with Pentecost University College as a Deputy Account Manager and lectures part-time in Quantitative Methods and Advance Taxation. He consults for pro bono. He may be contacted via [email protected] or you can read more articles via

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