Opportunity– one side of the fraud triangle

Opportunity is the first side of the fraud triangle we will discuss.  This is when there is a situation that would allow a person to do something wrong.  These are the weaknesses and procedures to correct them that we usually talk about.  Places where someone could get their hands on money and get it out the door.  For example, having the bookkeeper sign checks.  Not reconciling the bank accounts on a timely basis, or perhaps not reconciling them at all.  Not having anyone look at the credit memorandums that are issued.  Not paying attention to the accounts receivable that have been written off.  Leaving the Sunday offering in a place where one person could get into the offering by themselves without anyone knowing they had accessed the offering.  With new bill paying services offered by many banks, having the bookkeeper initiate electronic bill payments is another opportunity.  All of these are examples of how money could go missing.

Other opportunities?  Not keeping track of how many computers you have.  Never checking to see if all your computers and A/V equipment is still around.  Not getting competitive bids for supplies or equipment.  Buying janitorial supplies exclusively from that “great deal” your custodian found.  Pulling cash out of the collections from a special event to pay for costs of the special event.  These, along with a long list of other situations are opportunities to commit fraud.

We could characterize all of these illustrations as weaknesses in the internal control procedures.  These are the kinds of things you will usually hear CPAs discussing.  We will discuss later how ministries can minimize opportunities or at least put boundaries around the opportunities.

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