Risk Control-Separation of Duties

Separation (or segregation) of duties is a key internal control and the foundation of an effective risk management strategy. In simple terms, separation of duties just means that a single person doesn’t have the ability to commit a fraud and cover it up. It also helps to catch errors- which is the more likely scenario in relation to church operations.

Let’s be real, though, establishing separation of duties is often easier said than done in the church world- particularly for smaller staffed churches. Add to that the “ick” factor of even thinking someone, a Christian who you worship and serve with, would ever do such a thing as steal from the church, and it becomes really easy to just let yourself become complacent. We aren’t called to be complacent, though. We are called to be good stewards of God’s resources. The bottom line is that we are a fallen people saved by the amazing grace of Jesus, living in a fallen world. Absolutely anyone could fall into temptation. It’s a hard truth to accept, but we must if we are going to faithfully serve God as stewards. We want to always abstain from even the appearance of the possibility of financial wrongdoing as we are instructed in 1 Thessalonians 5:22,

Abstain from all appearance of evil.(KJV)

Ideally, the person(s) who accepts physical funds would not have access to the systems that record and track the funds. The person who prepares the physical deposit should not be the person who takes the deposit to the bank. The stark reality is that most churches simply cannot staff enough people to adequately separate those duties. That is the dilemma many churches face.

So, what do you do if you just don’t have the staff to separate financial duties?

If you find your church in such a circumstance, we recommend establishing a system of reporting that mimics the accountability and control of an effective separation of duties structure. Your system should be detailed enough to cover all the basis without becoming overly cumbersome to maintain easily. The solution might look like this:

1) Tithes and offerings are taken up by a team of ushers unrelated to each other. The money is counted immediately by the head usher and at least 1, but preferably 2 additional ushers.

2) In the presence of the other ushers, the head usher records the numbers on a count report, places the money in a sealed bank bag, and the bag in a locked safe.

3) The head usher signs the count report and submits it to the church administrator.

4) The church administrator removes the bank bag from the safe, enters the individual donations into the church management software, enters the deposits into the financial management software, prepares the physical deposit and takes the deposit to the bank.

5) The Church Administrator submits a report packet that includes reports from every stage of the process to the Senior Pastor or his designee for review. The packet should include the count report prepared by the ushers, the batch report from the church management system, the deposit report from the financial software, a copy of the deposit slip, and the deposit receipt received from the bank. The bottom-line total should match on each report.

The simple act of adding a layer of accountability through reporting when you can’t do it through an actual separation of duties structure helps protect ministries, staff and volunteers while ensuring that even the appearance of evil is avoided. The reward is found in the next two verses of that passage in 1 Thessalonians:

_And the very God of peace sanctify you wholly; and I pray God your whole spirit and soul and body be preserved blameless unto the coming of our Lord Jesus Christ. Faithful is He that calleth you; He also will do it. _I Thessalonians 5:23-24 (KJV)