1 of 2

More than half of church splits are caused by financial concerns.

I'm not certain who came up with that statistic or what research it's based on, but my observation as a church-management specialist for the last 12 years is: I believe it!

I'm convinced that those splits aren't based on financial problems, though, as much as they are on questions and concerns about money.

In the construction business, electrical lines that carry higher voltage get more insulation. The wisdom of that can be applied to church management: the areas that tend to be disputed most in churches should get extra attention. When it comes to church finances, though, when should a church ask for help? And when should it consider calling in a certified public accountant?

A number of events could trigger the need for a CPA at your church. Some of them:

1. A staffing change. When a key management person at church changes, whether a senior pastor or business administrator, many churches ask for an audit. The CPA who does the audit will help establish the financial condition of the church at the time of transition. If questions come up later about the new management, the audit will help identify whether problems occurred under the new administration or a prior one. An audit will help protect people on a ministry team from unfair accusations.

2. Applying for a building or capital-improvement loan. Many banks and lending institutions require an audit before they'll even consider funding a church's capital project. They'll also want to see the financial analysis stated in a standardized way so they can do a proper ratio analysis in determining whether the loan is a good risk. An audit establishes where the church is at financially and shows whether there are proper controls in place to help prevent fraud or embezzlement.

3. Suspicion of fraud or embezzlement. We hate to think this could happen in a church, but it does. Churches are made up of regular folks, and regular folks sometimes get caught up in the wrong things. Richard Hammar, a leading authority on church financial and legal issues, says that if church leaders are suspicious of embezzlement in their ranks, a CPA can be of invaluable assistance in confirming whether or not there was embezzlement.

In a situation that my company was recently called in to check out, an administrator had been let go under suspicion of embezzlement. That person began to work with another church, again overseeing financial transactions. When leaders at the first church heard about the situation, they decided they needed to find out more about their financial situation in case they needed to warn the other church.

"This is not an easy task, but a church will have a much better chance of getting to the bottom of the situation with the assistance of a CPA," Hammar says.

4. Commitment to financial accountability. Churches preach about integrity and accountability, and many work hard to manage their finances appropriately. Yet a surprisingly high percentage of churches don't do all that's required in financial management.

next page... |  1 of 2

share this page