Amongst the many dangers is that some motivations would be hidden from view in the workplace. Some of them, such as drinking or narcotics, would eventually show side effects in the workplace. Those factors could create visibility that would raise questions which in turn could in turn possibly result in discovery of the fraud. If that is the motivation, the plan could self-destruct fairly quickly.
Internal control
An example of fraud motivation that took sixty seconds to find
It is very sad to read about the tragedies that take place. Immediately after posting the previous discussion of the motivation side of the fraud triangle, went to a blog I frequent. Have now added it to the blogroll on the right. Here is the article . It clearly illustrates the motivation factor. (more…)
Motivation – the second side of the fraud triangle
Motivation is typically described as the pressure or incentive to commit fraud. When great pressure is brought to bear, people will do things you would have never thought possible. We used to illustrate this with someone who has a drinking problem or a gambling problem. Those illustrations of pressure don’t paint a good enough picture because you can’t drink enough (and still function) to create pressure to steal enough money to cause a severe problem. Let’s expand the picture. Long before someone with a drug problem deteriorates to the point of non-functioning, they can appear to function normally on the outside but have a need for so much money that the only way they could possibly feed their addiction is to steal from the ministry. (more…)
Opportunity for fraud – how does it surface?
Having the door wide open is one way to describe the concept of opportunity to commit fraud – there is nothing stopping you from getting your hands on the money and getting it out of the organization.
How does a person realize there is opportunity to do something wrong? (more…)
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. (more…)
Fraud happens when the ‘fraud triangle’ is present
This will be the first in a series of on what accountants call the fraud triangle.
Just a few comments before we begin. These posts will be written in a more casual style that you would usually see from an accountant. They will definitely be more casual than you have seen in my published resources, which you can find here. (more…)
Why bother with internal controls? Living above reproach
In his first letter to Timothy, St. Paul outlines many criteria for selecting an elder, including that “the overseer must be above reproach” (1 Timothy 3:2). The overseer—a deacon, elder, or pastor—should not do things that would cause blame or scandal or provide others justification for making accusations. In my conversations around the church and ministry world, I frequently hear the phrase “living above reproach” from leaders. Many people use this concept as a guide for everyday behavior. It provides a superb framework for evaluating decisions: “Will this action give others grounds for making an accusation against me?” (more…)
“Weeds in the Garden – the growing danger of fraud taking root in the Church”
Weeds in the Garden – the growing danger of fraud taking root in the Church
Verne Hargrave, CPA, CFE
ISBN 0-9705433-9-5
From the preface of the book: “The purpose of this short book is to help break {the logjam caused by the long list of reasons that prevent local churches from} taking anti-fraud steps. As you make your way through its pages, please keep three things in mind. First, it was {the author’s} intent to keep the book short. (more…)
Why bother with internal controls? Love your neighbor
One of the key concepts for internal control is called segregation of duties. The basic concept is to split up financial tasks so that one person cannot do something improper and also hide it. I will explain this in much more detail on this blog.
Internal controls are usually described from the perspective of the organization, but let’s look at it from the perspective of a staff person. (more…)
Why bother with internal controls? Stewardship
From a very basic perspective, the reason any governing board puts controls in place is so the board can be sure that the programs and activities they wish to implement are actually implemented. Put a different way, this means the board needs to make sure that resources entrusted to them are used as intended. We have a framework for this concept: It is called stewardship (more…)
Why bother with internal controls? Accountability
Why bother with internal controls? Accountability
For members of a local church, the idea of being accountable to others is not a new concept. It is second nature that when you are running a program, you are accountable to the elders, (more…)
Dual control over church offering
One of the most difficult areas for a church to maintain good internal controls is for the offering between the time the ushers collect it and the counters start their count. It is hard to keep controls over the uncounted offering. That is also one of the riskiest areas for a local church.
If you want to look at just one area where there is high risk in your church, check out your procedures for controlling the offering.
Not to worry, there will be a lot of discussion on point in this blog.
Test for ethical behavior – what will this look like on the front page of the newspaper?
You have probably heard this story before, but I will mention it again. When you are pondering how to handle a situation, think about how it would look on the front page of the newspaper. Do you want to see this policy, decision, or personnel action on the front page of the Wall Street Journal®? How about the lead article in the local section of the Los Angeles Times®? The front page of your local paper? (more…)