Too Much Trust?

Can there be too much trust? 

In regards to the oversight of a church's finances, we think the answer is yes. 

While trust is a wonderful trait and something that can take years to build, unverified trust can be devastating for local churches in relation to their financial transactions. Any organization that has financial transactions occurring within a high trust environment needs to understand the risk areas and actively mitigate threats. The goal should be to protect the individual members involved in financial affairs as well as secure the financial assets of the church. 

Dr. Donald Cressey, a prominent criminologist developed the Fraud Triangle. The frequently cited hypothesis in his book Other People’s Money: A Study in the Social Psychology of Embezzlement was: 

“Trusted persons become trust violators when they conceive of themselves as having a financial problem which is non-shareable, are aware this problem can be secretly resolved by violation of the position of financial trust, and are able to apply to their own conduct in that situation verbalizations which enable them to adjust their conceptions of themselves as trusted persons with their conceptions of themselves as users of the entrusted funds or property.”

This can be boiled down into the three commonly referenced sides of the triangle: Opportunity, Pressure and Rationalization. While the majority of people do not seek out ways to commit fraud or steal, it can be challenging if all three sides of the triangle are present. For example, the opportunity may exist if there is a lack of oversight and accountability, or easy access to financial resources. Next, add some external pressure such as an acute financial need like a family medical bill or the necessity to meet a goal in order to get a bonus. Lastly, let’s assume there is a feeling, or rationalization, that “I deserve some perks for being a loyal employee” and a genuine desire “to pay this back.” Taken in totality, this is a toxic combination and the church is not immune to these realities. The bible is clear on the reality of sin. 

While each church or organization may face different risks and circumstances it is imperative that those entrusted with oversight have a solid understanding of the conditions where fraud can be perpetrated. For example:

• Do you have at least two non-related individuals count physical checks and cash? 

• Is there proper oversight over the payroll register to avoid fictitious employees? 

• Is there adequate segregation of duties for approving invoices, signing checks, and reconciling bank statements? 

In this ongoing series on protecting your ministries’ resources, the Auxilio team will aim to provide helpful insights to mitigate risk and increase transparency. 

Here are some additional resources: 

Association of Certified Fraud Examiners - Fraud 101

Evangelical Council for Financial Accountability - Fraud in Ministries: Real Examples and Red Flags

CapinCrouse - Fraud Happened. Now What? - CapinCrouse LLP