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Ten Ways to Prevent Embezzlement of Church Funds

The church must guard itself and help protect the church treasurer and other financial leaders from even a hint that embezzlement of church funds is possible.

Almost every other week I receive a message of another church that has had funds embezzled from God's House. The reasons are as varied as the person who has stolen from the church. Sometimes, the person steals because of a financial crisis in his own life or in the lives of immediate family members. On the other hand, the person might be stealing just for the fun of it.

It does not seem to matter what the age of the person who is embezzling money. I have had experience with teenagers to senior adults being involved in this crime. One factor seems to be constant in all the cases; church members were surprised that the person embezzled the funds because the church trusted the person.

There are several things every church needs to do to help prevent this terrible crime from happening to their church. The church must guard itself and help protect the church treasurer and other financial leaders from even a hint that embezzlement of church funds is possible.

1. An annual financial review of church records needs to conducted by the church finance committee or appointed ad hoc committee.

The internal review is necessary to ensure that all church funds are spent according to the wishes of the church. If the financial review committee discovers a problem with the financial records, then the committee should contact an outside auditor to complete the investigation. If the outside auditor discovers embezzlement has occurred, then the local police authorities should be contacted for proper action.

2. Full disclosure of all church receipts and expenditures including love offerings should be reported to the congregation annually.

The detailed financial report should comply with IRS record-keeping guidelines.

3. The church should require two signatures on checks for all church expenditures.

On-line bill payments should be verified by two signatures on the paper print-out. A check signer should never sign a blank check. Finally, the church financial secretary should not be one of the check signers. In many churches, the financial secretary receives and deposits part of the church's income. This would be a conflict of interest if she spent the money, too.

4. The church treasurer should not receive or count the church's income.

However, if the church treasurer occasionally receives church income, then the treasurer should record the income in a ledger that is available for public inspection. The church treasurer should never take the church's offering home with him or deposit the church's offering. This is the responsibility of other financial leaders.

5. The church should use sealed bank security bags for church offerings.

Sunday morning worship service and Sunday School offerings should be taken to the bank immediately following the morning service.

6. At least two unrelated individuals should receive the church offering during the worship services and Sunday School.

If possible, these individual should rotate with other individuals in their responsibilities.

7. Likewise, church should rotate the money counters or tellers.

As a general rule, the treasurer should not count the money but she can be available to assist the counters or tellers.

8. Church offerings of currency should be counted and recorded on bank deposit receipts.

The currency should be listed as dollars, quarters, dimes, nickels, and pennies on the deposit slip. The deposit slips should be kept as part of the church's financial recordkeeping.

9. A copy of the church financial records should be kept at the church.

The church treasurer can process the recordkeeping at home, but the permanent records should be kept at the church. Also, contribution credit statements should be made available to everyone who has given to the church.

10. The church should track giving patterns over time.

Questions should be asked such as has the loose currency decreased or increased? Has income suddenly increased or decreased? Some churches even send marked currency through the system to make sure the offerings are received fully.

The church treasurer should take the lead in recommending these suggestions to help protect his name and reputation plus help prevent embezzlement of church funds. Likewise, the church financial leadership needs to listen and act upon the responsible suggestions made by the church treasurer. If a church thinks it is beyond this serious crime happening to them, then they are sadly mistaken.

Dr. Keith T Hamilton, CFP®, AFC®, CRPC®, is founder of MyFinancialSupport, a ministry to help churches with financial matters.