Basic Financial Controls for Churches

This is my very first post to this website because I think this simple information could help your church to avoid financial calamity.  Below is a list of what I think are some of the most important financial and internal controls your church could have:

1. The Leader Of The Church Should Not Have Financial Authority The reason for this is because, as the leader, this person already has considerable influence over the members of the church.  The leader would easily be able to put his own actions above question by the members, thereby giving himself plenty of cover for committing acts of wrongdoing.  Remember, the leaders of churches are just people, just like the rest of us, and they are subject to temptations and indiscretions.  So, the leader should not have any responsibility to create financial reports, sign checks, count the offering, or any other activity that directly influences the church's finances.  It would be acceptable for the leader to have a debit card for expenses that is associated with a bank account that has small, periodic, pre-approved deposits made just for the purpose of the leader's church related expenses.
2. At Least Two People Should Count Each Offering  No one person should ever be in custody of the church's offerings until the offering has been fully counted, recorded, and each of the counters having initialed off on the deposit slip, and a separate weekly offering ledger sheet.  The offering sheet and deposit, along with the deposit slip, should be placed in the custody of separate individuals.  This will prevent a situation where the person in custody of the actual money could take part of the money out, then alter the count sheet to cover for it.
3. Financial Reports Should Be Given To The Members At Least Semi-Annually  The members of the church are the people financing the church.  They should be informed as to how the church's money is being spent.  A financial report should be prepared and presented to the congregation not less than twice a year, and no more than four times a year.  The members should be able to ask questions of the person who prepared the report, and full answers given in response.  It is important that the congregation not feel that anything is being hidden or done in secret.
4. A Non-Check Signer Should Receive The Bank Statements And Prepare The Financial Reports  The purpose of this control is to keep the person who prepares the financial reports totally independent of authorizing any financial transactions.  This will help keep the financial statements free of questionable expense classifications, and provide the church members with a higher level of confidence in reading the financial reports.  Also, receipt of the bank statements directly from the bank ensures that the financial statement preparer has the very best source of information when preparing the statements.  This control has a double purpose in that when someone other than a check signer receives the bank statement, it ensures that there is always a second set of eyes reviewing transactions of money going out of the church's account.

These are some very basic and fundamental controls that every church should have in place to help prevent financial abuse.  These controls can not prevent all forms of fraud, especially if you have two or more people involved (collusion), but these controls are a great start to keeping your church's finances safe.  Please feel free to leave comments with your ideas for additions to this list.