Misappropriation of Funds – The Simple Fix (Part 2)

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Now that the subject has been broached, let’s discuss how to keep it from happening at your church or organization.

Insurance statistics tell us that missing funds generally involve:

  • A female, age 40 or older
  • A church member
  • The only person to account for designated funds or other accounts
  • The person who reconciles the bank statement
  • The same person who counts money and makes the deposit
  • One of the persons above who can sign checks (one signature required)

The old saying, “an ounce of prevention is worth a pound of cure,” is certainly applicable here. In almost every case of missing funds, a “Four-Tiered” accounting procedure would have prevented an event that has devastated many families and congregations.

I have helped hundreds of churches and their staff understand and apply the “Four-Tiered” accounting policy/procedure. The flow of accounting is really quite simple in its design. The procedure looks like this:

  1. Counting Group … counts money, makes deposits slips, keeps envelopes
  2. Deposit Group … takes deposits to the bank
  3. Financial Secretary … writes checks (checks take two signatures) and prepares monthly report
  4. Church Treasurer … oversees and ensures the entire process worked properly; he/she never touches any of the funds

The simple genius of this approach is three-fold. First, each group or person fulfills their task and theirs alone! Second, each step adds another layer of accountability. Third, it is highly unlikely to get multiple people to collude to do wrong. I can offer other pertinent ministry recommendations following the implementation of the “4 –tiered” procedure.

I have helped many churches implement these policies and procedures. Sadly enough, churches continue to function without proper accounting controls. A Director of Missions recently said to me, “some of my churches are actually regressing. They know their staff should keep a log for ministry related travel but they have reverted to paying a lump sum each month.” He is concerned, that at some point, churches/staff are going to pay a price for not complying with IRS regulations!

Without applying proper policies, congregations put themselves in jeopardy. The Lord’s Church, above all other organizations, should set the standard for excellence and compliance with IRS tax laws.

If you would like more information or help applying these, or other policies and procedures, email michael@mstewart.org or call me at 318.623.5466.