Why does church embezzlement appear to be so prevalent? In this article we will look at church finances and embezzlement and how to stop it from happening within your church. Managing church finances with integrity isn’t difficult for churches that have sound financial controls in place.

A recent News Report out of Buffalo, New York, highlights the case of 43-year-old Lisa Prynn-Noble, who is accused of embezzling $465,000 from Saint Amelia Church while serving as its business manager.

By implementing controls that focus on transparency and accountability, churches can prevent these damaging financial crimes from occurring. Benjamin Franklin’s famous saying, “An ounce of prevention is worth a pound of cure,” reflects the wisdom of investing a small amount of time and resources early, in order to save a lot of time and money in the long run. Franklin’s advice underscores the importance of proactively addressing problems before they escalate, emphasizing the value of prevention over costly reactive solutions.

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Church Finances and Embezzlement

Implementing sound financial control policy is good management and establishes accountability while safeguarding those overseeing church funds. The policy goal is to minimize the opportunity and temptation to misuse church funds while protecting those in money handling roles. By adhering to established policy and procedures, financial controls shield the church from potential financial losses and mitigate any suspicion of wrongdoing among money handlers.

These controls are designed with checks and balances to detect any deviations from established procedures. Their purpose is to minimize the chance of misconduct or criminal behavior taking hold. Every fraud investigator knows that financial crimes occur to both monies going out of accounts (Credit/Debit Cards, Checking, Savings, Investments, Checks, Petty Cash) and monies going into the accounts (Cash Offerings, Tithing, Donations, Bank Deposits), so strong financial controls must be in place to  observe all moving components.   

Financial Controls

The biggest financial losses experienced by churches stem from embezzlement schemes. That’s why it’s crucial to have protective measures in place to safeguard the integrity and security of assets. Below are access control measures for managing church financial accounts (Bank Accounts – Checking/Savings/Investment, Credit Cards):

1. Limit Administrative Privileges: Only a select few individuals should have Admin level privileges for managing the financial accounts. Regularly review administrative access to ensure only authorized personnel have these permissions.
2. Role-Based Access: Implement role-based access controls to ensure that individuals only have access to accounts and information necessary for their specific duties.
3. Secure User Authentication: Require strong and secure user authentication methods, such as unique usernames and complex passwords, to access financial accounts. Require regular password updates and implement multi-factor authentication (MFA) whenever possible to add an extra layer of security.
4. Audit Trails: Enable audit trail features provided by banking and financial software to track and monitor account activity. Maintain detailed logs of account transactions, login attempts, and any changes made to account settings or permissions.
5. Regular Reviews and Reconciliations: Conduct regular reviews and reconciliations of financial accounts to detect unauthorized or suspicious activity. Compare account statements and transaction records to ensure accuracy and identify any discrepancies.
6. Segregation of Duties: Implement segregation of duties to prevent any single individual from having sole control over key financial processes. For example, separate the responsibilities of initiating transactions, approving transactions, and reconciling accounts among different individuals.
7. Annual Audit: All financial accounts should be audited annually by a professional CPA unaffiliated with the church finance office.
8. Security Awareness Training: Provide regular training and education to staff and volunteers involved in managing church finances to raise awareness about security best practices, common threats, and how to recognize potential risks or scams.

By implementing these financial controls, churches can enhance the security and integrity of their financial accounts, reduce the risk of embezzlement, fraud, or misuse, and maintain the trust and confidence of their members and donors.

Credit Card Policy

Fraud and embezzlement run rampant around the use of church bank cards, especially when a corresponding check or balance is tasked to the same person the card is issued too. The person assigned a card should never be the person responsible for reconciling the credit card and/or bank statements.

A credit card policy provides church employees with a clear understanding of what the church credit card can and cannot be used for. It explains the terms of use, employee responsibilities, expectations, and consequences for misuse. The focal point of the policy is to protect the church, not the employee, from inappropriate use and to make sure employee repercussions are clear.

A credit card policy should include:

• Cardholder responsibility.
• Purchasing limits/limitations.
• Process for submitting receipts and corresponding documentation.
• Consequences of misuse.
• Employee Credit Card Agreement

Employee Credit Card Agreement

The credit card policy serves a dual purpose by including an Employee Credit Card Agreement within the policy. This section of the policy explains that the credit card belongs to the church, and they will process and investigate charges to ensure policy compliance. The policy outlines the employees’ responsibilities and the consequences of card misuse and requires their signature as proof of understanding and agreement to the policy.

This is an example of implementing controls that focus on transparency and accountability. The employee will receive a copy of the Credit Card Policy/Employee Credit Card Agreement, and another copy will be placed in the employee’s personnel file. The employee can refer to their copy often to ensure compliance with the policy.  

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Examples of Employee Credit Card Responsibilities:  

• Protect it to the best of your ability. Do not leave it unattended or give it to unauthorized people (friends, family, colleagues) even just to hold.
• Report it stolen or lost as soon as possible. If, for example, your personal items are stolen and your church card is taken, you need to file a police report and call the church Finance department immediately.
• Use it only for approved reasons. Follow the instructions in this policy and the employee card agreement, and do not use the card for personal or unauthorized expenses, even if you intend to compensate the charges later.
• Never withdraw cash using the church credit card. Cash withdrawals are not allowed and will violate this policy.

Examples of Credit Card Controls:

• Set dollar amount limits.
• Require receipts (IRS Requirement).
• Establish Terms of Use (Can only be used for church business expenses).

In the Background Investigation world there is a saying, “The Best Predictor of Future Behavior Is … Past Behavior.” If Saint Amelia Church in Buffalo, New York would’ve conducted a thorough background investigation with criminal checks on Lisa Prynn-Noble, a Business Manager applicant, they just might have learned of her multiple prior arrests for stealing money from previous employers, including time served in State Prison. Noble’s criminal activities have led to significant financial hard-times and employment losses for Saint Amelia Church, highlighting the importance of sound financial access control policy.

related CONTENT

• Access Control in a Church Safety Plan
• Cybersecurity Risks for Churches (Part 2)
• Children’s Ministry Best Practices

Summary

While it’s natural to believe that fraud and embezzlement could never happen within your church, the reality is no church is immune. Churches who have financial controls in place help to eliminate the temptation and opportunity for these types of crime to take root and grow. Investing time and resources now to establish financial controls will help prevent the negative consequences experienced by so many other church communities.

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AUTHOR

Michael Elerick is the President of Public Safety Training LLC. A career law enforcement professional, he retired as a Special Operations Commander and SWAT Commander. From 2010 to 2020, Michael was the Executive Director of the Public Safety Training Institute. With over 30 years of experience as a Risk Manager and expert in security and tactical operations, he brings deep insight into protecting faith-based communities.

Michael is the author of Church Safety & Security 101, Emergency Preparedness for Church Volunteers, Church Safety Team Development, Church Emergency Operations Plan (EOP), among other works.

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