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Painful steps

By Richard L. Shields

We’ve just discovered our church has been embezzled of at least $13,000–maybe more," the pastor said as he shut the door and slumped into his chair. "All savings gone."

With increasing frequency, churches across America are becoming targets for financial mismanagement. However, the Scriptures clearly show this is not new. The apostle Paul was aware of the possibilities of financial impropriety in the Early Church and gave a model for the proper administration of funds that transcends time–it is still valid for the church in the 1990s:

"We want to avoid any criticism of the way we administer this liberal gift. For we are taking pains to do what is right, not only in the eyes of the Lord but also in the eyes of men" (2 Corinthians 8:20,21, NIV).

One of the practices advocated in this context encourages the overview of financial matters by more than one individual. While "this liberal gift" was en route to Corinth, "the brother who is praised by all the churches for his service to the gospel" (verse 18) was chosen to accompany Paul and Titus and oversee the gift’s distribution.

I shared this portion of Scripture with the pastor, board, and staff during the days which followed their discovery of embezzlement. During our administrative review, improper practices which made the church susceptible to embezzlement were uncovered and alternative measures for future safeguards were recommended.

This church’s assistant treasurer served as both the check writer (bursar) and check signer, a practice that offered little or no opportunity for review.

The first recommendation was to remove the bursar’s authorization to sign checks alone on the church’s accounts and establish a system that required dual signatures. Members of the deacon board were authorized as check cosigners. They were encouraged to ask questions first and sign checks later.

An audit revealed yet another inappropriate practice. Members of the congregation often requested reimbursement on purchased items for various church departments. Thousands of dollars had been reimbursed without proper receipts. This practice potentially made the member liable for taxes on the unsubstantiated amounts. In the event of an IRS audit, the individual might also be subject to interest and penalty payments for unreported income. Members were informed that future reimbursements would not be made without proper receipts.

The fourth area, and potentially the most likely for abuse, was counting the offerings. In this church the treasurer and his wife were the only people who regularly counted the offerings, and it was usually done at their home. "If others were allowed to know who gave what amount," they rationalized, "it might cause some members to be treated preferentially."

The strongest recommendation was for this practice to stop immediately and that teams of no less than two unrelated deacons be assigned to count the offerings on a rotating basis. Offerings would no longer be removed from the church premises until a full accounting had been made, documented, and a deposit slip prepared. Checks and/or envelopes could be photocopied for posting to donors’ records by the treasurer or an assistant at a later date.

Other recommendations included regular audits by an independent accounting firm, the use of check requisitions and purchase orders, and a more accessible system of the accounts payable and paid invoices for the pastor, treasurer, and bursar.

At the end of the ordeal, only the amount to which the assistant treasurer confessed was determined to have been embezzled. In addition, the church was able to recover its losses from the repentant member. A prescribed course of church discipline was instituted. The member is now on track to being fully restored to the fellowship. More importantly, the experience reinforced the importance of following the scriptural model used by the first-century church for proper financial administration.