Handle Cash Wisely to Prevent Fraud

by ECCU

counting money

June 5, 2019

When you read a report that says “ecclesiastical crime” worldwide costs ministries more than all the money given to support foreign missions each year, you have to admit that good stewardship means taking steps to prevent fraud.

The good news is that a lot of hard work has been done to help you know what steps to take. These steps are called internal controls. They’re policies and procedures, checks and balances, and accurate financial records that constitute a comprehensive program to ensure ministry money is properly used and protected.

Whether they’re written down or not, every ministry, including yours, has cash handling policies and procedures. So why are all the ecclesiastical crime? Well, many ministries don’t always follow their procedures. And many ministry leaders believe “our people would never steal money.” This kind of trust may be noble, but it’s naïve.

A better alternative is to adopt a system of controls that remove the temptations that, under the right circumstances, could lead anyone to commit fraud. Here’s a short course on what such a system looks like.

The primary components of a sound cash-handling system are dual custody, separation of duties, and security procedures.

Dual custody means two or more unrelated people are present whenever cash is handled, from the time it’s first collected to when it’s either stored on site or deposited. Always follow this rule—whether cash is being counted for deposit, put into a safe, or sealed in a bank deposit bag. The principle of dual custody can even be applied to the handling of petty cash by assigning one person to oversee it and another to conduct surprise audits on it.

Separation of duties simply means different people handle separate aspects of a transaction, like this:

  • The person who makes deposits doesn’t record accounting entries.
  • The person responsible for petty cash doesn’t approve requests to replenish the petty cash fund.
  • The person who writes checks doesn’t reconcile bank statements.
  • The person who approves expenses doesn’t sign the checks or initiate payment.

If you don’t have enough staff members to follow these checks and balances, bring in volunteers to implement them.

Security procedures for handling cash vary from one ministry to another. Here are some that may be essential for you:

  • Always count cash in a secure area, preferably a locked room.
  • Comply with insurance coverage requirements for cash handling and, when possible, require that cash handlers be bonded.
  • Rotate service on your counting team.
  • Security cameras in counting areas and key places around your facility are great deterrents.
Category: Ministry Matters