FRAUD (continued)

“Internal theft of church funds remains a pervasive and largely unaddressed problem in churches.” Richard Hammar

One expert in church fraud explains that three things are present in most cases: a perceived opportunity, financial pressure, and rationalization.  The number one sign to look for is the lifestyle of the person.  If they seem to be living a lifestyle beyond what they earn, this could be a red flag.  In forty-two percent of fraud cases, the guilty party was living beyond their means.   Twenty-six percent were struggling financially.  It should go without saying that putting someone who is struggling with money issues or has had a recent financial hardship in charge of church funds is not a good idea.

Other red flags are someone who refuses to take time off, refuses help or complains that they are underpaid.

Since a leading cause of fraud is the lack of segregation of duties, whenever possible, have separate people count the money, pay bills/sign checks, and reconcile the accounts.  At the very least, someone not involved in the handling of cash should review the bank statement each month.  As Ronald Reagan once said “Trust, buy verify”.

Finally, no one should ever count money without someone else being present.