“We have such wonderful staff. They would never do anything.”
“Oh, he’s been a volunteer counter for years. We trust Bill.”
“Our staff is so small. Thankfully, Jill is able to handle everything.”
How many times have you heard statements like these? No matter the person, trust is unfortunately not an internal control. Too many times, fraud occurs with the person most trusted. The person least expected. Internal controls are designed to protect the organization and to prevent and detect fraud.
For purposes of this article, let’s focus on the offertory collection process. As a church or religious organization, contributions are essential. What controls do you have in place to protect these valuable funds? Do the controls protect the assets and people involved? Too often, the count process at churches lacks documentation, has related team members, and leaves the cash with one person at some point in the process.
Here are best practices for offertory controls to consider:
1. Document counting procedures in a manual the volunteers.
Are your procedures in writing? Are they being followed and used for training? Have you reviewed and updated the procedures as changes arise?
2. Create count teams of at least three unrelated people on a rotating schedule.
There should always be two people with the funds at all times and ideally a third person observing or managing. If you have married couples or family members on a count team, the risk of collusion increases.
3. Secure the funds.
Are the funds placed in a safe overnight if they aren’t counted on Sunday? Who has access to the safe and should they? Would you be able to tell if the funds have been tampered with? We suggest using tamper-proof bags for holding the funds until they can be counted.
4. Document each week’s offertory amount and the counters involved on a form.
Ideally, the count team fills out a form with the financial details, signs the form, and agrees the total to the deposited amount.
5. Route contribution statement discrepancies to management.
If there are issues with the contribution statements, we recommend first directing the donor to the pastor and then the accountant. This way, management is aware of the type and frequency of issues as they arise.
As always, setting up and implementing internal controls is a process. Consider the costs and benefits of each control. Also keep in mind internal controls can only be expected to provide reasonable assurance, not absolute assurance, to an entity’s management and board. However, each step taken will improve the security of the offertory and the confidence of your congregation.
About the Author
Hannah Lanser is a supervisor in Wegner CPAs’ assurance department. Hannah is passionate about financial stewardship in churches and religious organizations. She performs audits, reviews, and 990 tax returns. She regularly consults with organizations on internal control processes and financial practices. Hannah annually attends continuing professional education seminars on accounting, auditing, compliance, and tax issues.
