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Synod offers Opportunity Grants for mission and ministries that benefit more than one entity. Two grants have already been awarded for 2013 totaling $16,000, leaving $26,718 still available for other applicants. >>Application


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In 2013, four Hilda Thompson Medical Ministry Grants were awarded, totalling $19,000. >> Application 


Synod of the Pacific also offers Emerging Needs Grants.  A fund balance of $22,000 is available for grants this year. >>Application


Welcome to Synod of the Pacific

Lessons from a Loss: 3 Ways to Learn

50 Ways to Steal from Your Church

Do you remember the lyrics from Paul Simon’s song, “Fifty Ways to Leave Your Lover”? “Slip out the back, Jack; Make a new plan, Stan; You don’t need to be coy, Roy; Just get yourself free.”  The song came to mind as we reviewed a recent claim because of the variety of methods the church employee had used to steal.

Using multiple means is typical and can occur when there are no financial controls; a long term employee or volunteer is trusted absolutely and is tempted by the lack of supervision. The “forensic accountant” investigating the matter found:

· There was unauthorized payroll of nearly $18,000. This is done commonly by creating phantom employees or so-called independent contractors.  Paystubs should go to a person not processing payroll.

· The employee took wage advances with approval, but never adjusted hours to reflect the advances.

· Checks were misappropriated or issued without authority with charges of nearly $5,800. Checks are serial numbered for a reason. This is why the check writer should not get the bank statement.

· Unauthorized credit card charges near $3,200. Once again, the statement was “managed” by the card holder.

These thefts do not occur at once.  Generally they occur over a long period, over years. Once discovered, they are difficult to trace and amounts are usually large.

We recommend an annual independent audit, and a new treasurer not accept responsibilities until done. We suggest an audit be conducted when there is a change of companies providing Crime Insurance (Employee Dishonesty). There are reporting time limitations in crime insurance that are critically important if coverage is cancelled or interrupted for any reason.

Why Audit??

A common practice is to vest in the church treasurer a great deal of authority and responsibility. After all, Jim is a retired “businessman” and he likes doing this sort of thing. So let Jim do it.

Returning to the “50 ways” theme, another creative way to steal money is to not pay the bills. In a recent case, a treasurer covered thefts by failing to pay insurance premiums, and most critically for Crime Insurance (Employee Dishonesty Coverage). As a consequence of not paying, coverage was cancelled. After a gap in time, coverage was purchased again, but it, too, was cancelled for non-payment. The timing of gaps and cancellations meant that there was no coverage available for other embezzlement losses exceeding $60,000.

An annual independent audit would have found the payment discrepancies. It is likely the loss would never have occurred because of the supervision provided.

While we are on the subject of not paying the bills, another bill that might not be paid to cover a theft is employment taxes (FICA) and similar obligations. This could go undiscovered for some time. We point out with considerable emphasis that church fiduciaries are individually liable for payment of taxes.

The special problem with taxes is that if they were not paid to cover a theft, they are still due, perhaps with penalties and interest. If there is no insurance coverage because of policy cancellation for non-payment you will have two losses, the original theft and the ongoing tax obligation.

Credit Card Fraud

One of the simplest ways to steal money is with the church’s credit card. The most common credit card loss is purchasing goods for the personal benefit of the credit card holder. Typically a church may have several cards in the custody of staff or officers – church administrator, pastor, sexton, etc. The critical error is permitting any of the credit card holders to receive the monthly statement. This permits the card holder to purchase freely while manufacturing false expenses for the records.

Proper separation would require that the monthly statement go unopened to the treasurer, who does not have a church credit card. Each holder must be required to submit an expense report detailing the charges, providing receipts and prior authorization when the amount requires higher approval. The treasurer can then check these documents against the statement.  Remember, the role of the treasurer is not to handle the money, but to manage the money.

At a time when “electronic fund transfer” (EFT) is becoming the norm, where no checks require a signature, a similar procedure is required. We recommend reviewing with your bank how you can  best create adequate controls in this environment.

On our website, under Safety Solutions/ Church Management we provide flow charts describing separation of duties to assist you in protecting your church.


The Steward is a joint effort of:

Carl J. Kotheimer, Director, Loss Control & Claims and

Elizabeth Vance, Marketing & Communications Coordinator

www. InsuranceBoard.org

www.facebook.com/InsuranceBoard