Thursday, September 12, 2013

Embezzlement not uncommon, but proactive steps can help prevent


After pleading guilty to stealing thousands of dollars from Columbia Baptist Association, Tonya Renee Woodward said “the devil made her do it,” according to Houston County District Attorney Doug Valeska.

Woodward, the association’s former financial secretary, was arrested in October 2012 and pleaded guilty Aug. 28 to 10 felony second-degree theft charges, then later was served with a four-count felony indictment alleging she stole more than $130,000 from Columbia Association.

She faces sentencing Oct. 16, according to Associated Baptist Press.

Actions like Woodward’s are not uncommon in religious life, according to Ministry Protection, a department of the Florida Conference of the United Methodist Church. Almost every other week, a church of some denomination has funds embezzled from it.

How does something like this happen?

One factor seems to be consistent, according to Ministry Protection — the person who embezzled was someone the church trusted.

Lee Wright, coordinator of church compensation services for the Alabama Baptist State Board of Missions, said churches can take proactive steps to reduce their risk of having it happen to them.

One of those steps is to use the “fraud triangle” to identify potential areas of concern, he said. The fraud triangle addresses three characteristics of potential embezzlers — pressure, rationalization and opportunity.

Pressure involves “a person consistently living well above their means or a person suddenly hit with large, unexpected bills,” Wright said.

This scenario can lead to rationalization — “most embezzlers intend to pay the money back and consider it borrowing,” he said.

Opportunity completes the triangle if there is a lack of internal controls and supervision in place, Wright said.

“The key is proper separation of duties — good internal controls,” he said.

Having two or more people involved in financial processes “will greatly reduce the possibility” of embezzlement, Wright said. “Having a different person from the check writer open and reconcile the bank statement each month is one key step that would practically eliminate embezzlement.”

And having two signers on each check — neither of them the financial secretary — can also keep one person from having too much control over the funds, according to Ministry Protection.

Two unrelated people also should be the ones to receive the offerings, Ministry Protection said, and rotating money counters and tellers can put yet another safeguard in place.

Another way to have more eyes on the church’s financial activity is to keep as few bank accounts as possible, Wright said. “The general fund is usually examined closely, but other accounts may not be. Having separate bank accounts such as youth ministry, music ministry, senior adult ministry, etc., can be a dangerous practice.”

Before anyone is allowed to handle the church’s finances, he or she should be screened with a background check, Wright said. “Churches should bond those who handle money or checks or have the insurance for this purpose through their property and casualty policy.”

Several other measures could be taken so that the financial records of the church are kept public, according to Ministry Protection:

The church should appoint a committee to conduct a yearly financial review. If problems are found, the committee should consult an outside auditor to help complete the review.

Receipts and expenditures should be disclosed to the church each year.

Permanent records of all bookkeeping should be kept at the church. If the church treasurer receives any church income, he or she should record it in a ledger stored publicly. The treasurer should also never take the money home with him or her to deposit.

No comments:

Post a Comment