Texas Church Is the Victim of $450,000 Fraud: Lessons Learned and Helpful Resources

Nonprofits and churches are full of selfless workers and volunteers, so it is often difficult to imagine the possibility of financial fraud. However, scandals such as the recent fraud surrounding a Texas-based church can serve as a reminder to the reality of fraud, and the importance of implementing preventative measures and policies.

A church bookkeeper was arrested in late 2020 after being indicted with six counts of bank fraud. She reportedly embezzled $450,000 by using church funds to pay personal expenses, such as car loans, vacation bills, credit card debt, and other personal expenses. She acted as bookkeeper for five years and began stealing funds within months of accepting the role. You can learn more about this fraudulent activity here.

In light of this grievous story, churches and ministries should consider and implement procedures to help prevent fraud from occurring. When one individual has control over the entire accounting transaction, fraud is possible. In this instance, it appears there was a significant lack of internal controls, specifically related to segregation of duties. Not only did the individual apparently have full control over transactions but also had the permissions to issue credit cards to herself and family members. If the church would have implemented a process for review and approval of expenses by a second person, this embezzlement could have been avoided or minimized.

In many churches and ministries there is a high-trust culture. It is tempting to defer fraud assessment and mitigation because you trust someone. However, trust is not an internal control. As faithful stewards of Kingdom resources, it is important to implement procedures to protect both the assets of the organization and the employees.

ECFA has several resources available to help churches and ministries of all sizes assess risk, prevent fraud, and establish internal controls. You can find them in the Knowledge Center and as eBooks at www.ecfa.org/resources.

Specifically recommended are these three ECFA eBooks:

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.