Why the pastor gets the statement first

The Case

The church secretary was trusted – too much. She took care of the bills and the paperwork, and all was well. At least that’s what they thought.

One day, the postman arrived while the secretary was out. Normally, the postman gave the mail to the secretary. But the pastor happened to be in the office, so he got the mail instead.

The pastor was puzzled to find a statement for a credit card that was supposed to have been canceled some years earlier. He opened the statement and was surprised to find a variety of Amazon purchases. He was more surprised when he looked into earlier statements. And it got worse when he looked into the church accounts.

It turns out that a building fund checking account that was supposed to have been closed was being used to cover the credit card bills. Over the course of six years, the secretary embezzled about $68,000 from the church. She pled guilty to felony charges and was sentenced to weekend labor, probation, and $300-a-month restitution for a looong time. Link Link2

Analysis

It’s a recipe for disaster when someone has access to both the assets and the books. Here, the secretary had access to the assets in the form of a credit card and the checkbook. She also had access to the books: she was responsible for reconciling the bank statements. Because there was nobody checking her work, she saw a way to take the money and cover it up. It worked until by chance (OK, by God’s providence), the pastor just happened to open the mail.

How To Prevent This At Your Church

  • Segregate duties: have one person keep the books and someone ELSE write the checks. The bookkeeper can certainly instruct the other person to ‘pay the following people’. But the bookkeeper should NOT have a church credit card or have access to the checks.
  • Be cautious in issuing credit cards. Consider using refillable debit cards. You can load them with a bit over the amount that you expect the holder to spend.
  • Have all statements mailed to the pastor or other senior staff member. Let them do a ‘smell check’ on the statements before passing them on to the bookkeeper for processing.
  • Consider running a credit check on your finance staff if it is legal in your state. If they are under severe financial pressure, find different tasks for them. It is NOT a kindness to tempt someone.
  • Verify that all supposedly-closed bank accounts and credit cards are indeed closed or canceled.