Operations 104
Class 6—Fraud
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Guest Lecturer
Stan is a Principal with CapinCrouse, serving as the National Director
of Outsourced Financial Services and as a member of the firm’s
national consulting services team. He has over 20 years in ministry
operations, public accounting, government accounting, and
missionary work. He has been the COO for a large financial ministry.
This leadership experience provided him the opportunity to oversee
the day-to-day operations and sustainability of the ministry, which
encompassed human resources, technology, sales and marketing,
global presence, volunteer involvement, and funding.
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Class 6—Fraud
No one wants to hear the words, “Pastor, I have to
tell you about fraud that we discovered in our
church.” Yet, hundreds of churches discover each
year that someone has pilfered the collection plate,
the offering boxes, checks for events, falsified
invoices, created dummy bank accounts, and
many more creative ways to steal money. Do an
internet search and you will discover that millions
of dollars go missing each year from local
churches. This class will delve into real-life
examples of fraud. Then we will study the tactics
that you can enact to prevent fraud in your church.
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Internal Control Risks and
Responses for Churches
XPastor Certification Course
March 2014
PRESENTED BY:
Stan Reiff, CPA
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Overview
•Purpose and objectives of internal controls
•Control problems in the church
•Fraud triangle
•Risk assessment
•Internal control systems
•Internal control practices
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Purpose and Objectives
•Protect employees
•Protect the assets and reputation of the church
•Provide reliable financial information
•Detect dishonest acts
•Detect honest errors
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Control Problems in the Church
•Separation of duties
• Authorization of transactions
• Recording of transactions
• Custody of assets
•Organizational structure
• Job descriptions
• Volunteers need supervision and structure
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Control Problems in the Church, cont.
•Qualified Personnel
• Pity hiring/retention
• Churches are a different kind of accounting
• Pay structure
• Training
•Accounting procedures manual
•Limited time and staff
•Lack of monitoring
•Trust
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Internal Controls Systems
•Be reasonable
•Review each significant area
• Cash receipts (contributions and others)
• Cash disbursements
• Payroll
•Consider the separation of duties for each area
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Fraud Triangle
•Incentive
•Opportunity
•Rationalization
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Risk Assessment
•Control environment
•Risk assessment
•Control activities
•Information and communication
•Monitoring
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Control Environment
•Sets the tone of the organization
•Is the foundation of internal control
•Management’s philosophy and operating style
•Ethical values and competence
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Risk Assessment
Identification and analysis of relevant
risks to achievement of the objectives
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Control Activities
• Policies and procedures that help ensure
management directives are carried out
• Include approvals, authorizations,
verifications, reconciliations, security of
assets, segregation of duties
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Information and Communication
• Pertinent information must be identified,
captured, and communicated
• Information systems produce reports
(operational and financial)
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Monitoring
Internal control systems need to be
monitored – a process that assesses
the quality of the system’s
performance over time
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Control Practices
General
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Control Practices
Board Governance
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Control Practices
Cash Receipts
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Control Practices
Cash Disbursements
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Control Practices
Payroll
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Control Practices
Reconciliations
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Resources
Essential Guide to Church Finance published by
Christianity Today 2009
Church and Nonprofit Tax and Financial Guide
published by Zondervan 2010
www.ecfa.org
www.nacba.net
www.christianitytoday.com/yc
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Thank You for Attending Today!!!
Stan Reiff, CPA
sreiff@capincrouse.com
(678) 521-0182
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