Fraud Prevention Checklist for Ministries

Fraud – How to Prevent, Detect, and Correct

We hear about fraud in the news, but we don’t want to consider it as a possibility in our ministry.

While this short summary is not meant to be all-inclusive, it will help you assess your current situation and determine if additional precautions or considerations may be necessary to protect your organization.

Remember! Most fraud is committed by a faithful, long-serving volunteer or staff member.

Basic fraud prevention steps:

____   Ethical “tone at the top”

____   Adequate segregation of duties

____   Involvement of independent CPA or internal audit

____   Proper review of financial information by ministry leaders and board members

____   Conflict of interest policy and annual disclosure

____   Whistleblower reporting policy

____   Cross training of financial duties and mandatory vacations

____   Communication and enforcement of a zero-tolerance fraud policy

Basic checklist of behaviors and actions on the part of a member of the finance team that may serve as warnings of a possible fraud environment:

____   Never takes a vacation

____   Is controlling or does not allow others to help with his or her tasks

____   Has unusual mood swings

____   Has known financial pressures such as spouse job loss

____   Has known personal problems such as divorce or serious medical issue for self or family member

____   Appears to be living beyond his or her means

____   Displays a defensive attitude

____   Vocalizes dissatisfaction with job or pay

____   Is messy/disorganized

____   Does not prepare timely reconciliations or has unusual reconciling items

____   Has insufficient or missing documentation

____   Is delayed in preparing financial statements or other information

____   Reports inaccurate financial information

Basic follow-up steps if fraud is suspected:

____   Don’t overreact or make accusations prematurely

____   Notify the board, legal counsel, and the insurance company

____   Hire an expert to investigate

____   Based on recommendations from experts and legal counsel, determine a course of action

____   Determine how the fraud occurred

____   Update policies and procedures to prevent a similar occurrence in the future



This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.