20 Tips For Fraud Prevention For Churches/Non-Profit Organizations


1. Make sure all bills have a purchase order and signed by the person who authorized the purchase. This ensures that no purchases are made for personal use by unauthorized individuals.

2. Limit the number of people who can authorize purchases and establish a maximum amount that can be authorized by each authorized individual.

3. Maintain control over the on-hand stock of blank checks.

4. Always use sequentially numbered checks and periodically review the numbers to see that none are missing. Check the computer records for continuity of the numbers.

5. The pastor and/or board members should periodically review all paid bills and canceled checks.

6. Do not use signature stamps. Anyone can use a stamp to sign checks. Make sure the authorized person signs the checks only when written. Do not sign blank checks.

7. If you are signing checks to an unfamiliar company, call the company to make sure it is legitimate.

8. Make all disbursements by check. Do not take money from the offerings to pay any bills. Do not pay personal bills from any church account.

9. Have bank statements checked on a monthly basis by the properly authorized person. This should be a person other than the one who pays the bills and reconciles the bank statement.

10. Be sure all bank accounts are reconciled monthly by someone other than the person keeping the books. The pastor should review them upon completion.

11. Make certain that guidelines are followed concerning reimbursement of expenses to any individual. Reimbursement request sheet should be completed with all documentation attached to verify the validity of the expense.

12. If the church has a petty cash box, conduct occasional audits of the petty cash.

13. To improve controls over cash, have someone other than the bookkeeper open the income envelopes and complete the deposit slips. The deposit slips should be kept and compared to the bank statements at the end of each month.

14. Make deposits as quickly as possible. Do not leave money lying around for a lengthy period of time.

15. All permanent records should be kept on church premises. Be careful of allowing money and records to be removed off premises.

16. Periodically review the payroll register for accuracy of wage rates and hours worked and to verify that no fictitious or terminated employee{s} is included.

17. If the church withholds payroll taxes, make sure that all tax deposits are made timely at the local bank. Keep all tax deposit receipts to verified having been made.

18. Advise donors to use contribution envelopes regularly. Keep all contribution envelopes for the required period of time.

19. Distribute quarterly contribution statements so that if a problem has occurred, it can be detected quickly.

20. Avoid using people to handle money or checking accounts who are experiencing financial difficulty in their own lives.