Thoughts Behind Why Embezzlement Happens
Church: A Hospital for Sinners, not a Museum for Saints.
Most small churches depend on willing members, who likely already have a full schedule, to take on various church functions. If you are lucky their “church job” is only their second or third priority and not further down the list. Often, these persons are not familiar with the special bookkeeping required for church and perhaps are even naïve about financial controls – I mean they are a member of the church, they must be trustworthy. Right? This frame of mind places churches in the most vulnerable category for theft, embezzlement and fraud.
Did you know it is estimated that over 25% of families have no money set aside for emergencies and almost half would not be able to cover an unexpected expense of $500.¹
“The Fraud Triangle”² describes three components that often come together facilitating a trusted individual to commit fraud:
- Pressure: sudden financial crisis, overwhelming debt, addiction, or simply greed
- Opportunity: the position of trust within the organization leads to lack of proper audit or supervision or procedures
- Rationalization: the process of a “sinner” justifying the action through a filter of a defective moral compass and the perceived pressures described above.
The church is certainly in the position to address #1 and #3 above and has the responsibility to lessen significantly the second component, opportunity, by having written policies and procedures regarding financial stewardship, a formal system for bookkeeping and appropriate supervision and audit by another member on a regular basis.
What position has your church put your treasurer or admin in? Have you provided them the tools to properly and formally record church financial information with transparency and oversight? Contact GoodBooks today if you would like to talk.