'Cutpurse Saints'

“None of our members would steal money from the Church’s coffers”. This assertion is commonly associated with churches that by nature are involved in the holy and noble mission of seeking to win souls for Christ and His Kingdom. The leaders are mostly devoted and mission- driven. They operate with the mindset that all those (church members, board members, etc.) aboard the mission ship are working towards the same direction, and they think and feel that there is no need to institute stringent controls to deactivate any temptations for individuals. Within these settings, there are practically no effective controls, and that is when ‘Cutpurse Saints’ enter the scene to take advantage of the church community.

I am not trying to paint a picture (existence of fraud) that does not exist. After all what benefit do I get by painting such an image. I share in the concerns by people who want the right systems to be put in place to sanitize the church environment. For instance, why would an artisan leading church building project get upset because internal auditors called him to explain certain activities and expenses? And you have ‘Saints’ boldly taking sides, literally insisting that he or no church member will  ‘steal’ God’s money. 

Many a time, leaders (Elders, Overseers, Pastors, and Rev. etc.) especially in community churches do not want to lose members therefore they are a bit reluctant in dealing with these Cutpurse Saints. Churches and other similar institutions have been historically vulnerable to different types of fraud.  There are some who believe that there is a connection between the pervasiveness of this problem and the absence of true “ownership”.

I agree that there is a link between churches’ vulnerability to fraud and the absence of ownership. I will attempt to explain this with this concept …. ….  Risk(of fraud)=FxV/C , where F is fraud -defined as a deliberate, improper action which leads to financial loss to an organization, V represents vulnerability -which I explain as degree of exposure to these actions, and C for capacity -that is ability to harness resources to respond to or prevent fraud.

In furtherance to the discussion, I would like to place ‘ownership’ under capacity. However, ‘ownership’ here also means having a vested interest or stake in the church and also church members and leaders owning the process of ensuring improved internal controls in the organization. Whichever way we may pick the meaning of ownership, I believe it has links with vulnerability to fraud.

Let me relate this discussion to the business world… If a board, management or an individual has a stake in a business, they would not want to lose their money, and therefore would ensure (in fact, insist) that right systems (monitoring, accountability, etc.) are put in place to secure their investment and returns.

More so, let me re-echo the words of Malachi as written in Chapter 1:6, “A son honors his father, and a slave his master. If I am a father, where is the honor due me? If I am a master, where is the respect due me? says the Lord Almighty”. By extension, if we deal professionally in corporate World, why should we go about the business of God in an unprofessional manner?  I believe that if members and leaders are given proper orientation or education on the importance of internal controls, and are involved in planning, implementation and review of the controls, they will own the process/product.  This will help sustain the efforts at improving systems and ensuring spiritual growth. In the absence of that the reverse happens, and the church is affected.

With reference to the above concept, I submit that the pervasiveness of fraud happening in Churches and other similar institutions, combined with the level of exposure of these entities, compared with what the entities can do (capacity) determine their chances of suffering...and truly many are suffering!

Let me also draw your attention to some people in the church with dominant leadership/qualities who are entrusted with so much power, and many activities such that they exhibit so much control (because there is weak  ‘ownership’) making it somehow practically impossible to detect any fraudulent acts carried out by them. Some of these people have been serving continuously as Church Accountants for over 10 years.

It is obvious that Fraud has serious consequences on the Church (the assembly of ‘Saints’). Therefore, there is the urgent need for Churches to have well-documented procedures which cover steps that need to be taken to address the fraud and deactivate ‘Cutpurse Saints’.  I propose the following:

Firstly, churches should put in place audit committee and competent internal audit departments to ensure environmental control of fraud and other irregularities. Having these audit entities alone may not help. The church should orient members on the audit roles to disabuse people’s perception of it as witch-hunting exercise. Church leadership should commit to ensuring that auditors are allowed to do their job. Findings shared with the audit committee should be analyzed professionally and recommendations acted upon.

Another step is to carry out risk assessment.  Among others, risk assessment will help identify the risk areas, extent of exposure, and the resources available and or needed to respond to fraudulent acts. For instance, this exercise can look at how cash flows in and out of the church, and how it is documented, the procedure it passes through, etc.

Another way is to look at the control procedures -these are done to address risks identified during the assessment. The church should have control procedures and guidelines for transaction authorization; segregation of duties -where one person is not allowed to raise transaction request and approve it; only authorized persons should have access to data on assets, among others.

Additionally, the church should inform/communicate internal and external issues to members. This could be done by organizing regular business meetings with members at all levels (e.g. church board, general members) to discuss financial reports, making budgets and reports openly available.

Furthermore, the church should put in place monitoring teams responsible for tracking church activities, events and assets.  The teams’ reports should be made available to all so that issues could be discussed dispassionately.

Adding on, it would be worthwhile for non-finance church leaders to improve their financial skills by reading basic financial management guidelines and tutorials. The church can also engage the internal audit unit to organize basic financial literacy for leaders and also the church as a whole.

 That robust internal control is needed to reduce or prevent fraud in the ‘Community of the Saints’ is a truism. However, there would be occasions when these controls would fail to prevent losses via theft, fraud and other irregularities. Yes, robust internal control may be available but what if the Church’s attitude towards fraud is lackadaisical? After all the painstaking efforts carried out by the audit unit, sharing their findings, if the leadership is reluctant in pursuing the recommendations made, no headway would be made.

Therefore, I submit that the church should create, nurture and sustain an ethical culture. This should be led by the leaders and supported by the audit committee and the entire membership.   This will help strengthen the internal control system. I reiterate  that the church (especially leaders ) should help change  the attitude of members towards auditors -as being ‘Police’ who are always embarking on fault-finding exercises. When these are put in place, people’s capacity would be strengthened to resist the temptation to indulge in fraudulent acts, ceteris paribus.

Let us  remember that if Angels were able to indulge in irregularities in ‘Heaven’, how much more on Earth where ‘vultures’ and ‘hyenas’ (Cutpurse Saints) are looking for opportunities to exploit  vulnerable systems.