Q: We've had the same bookkeeper for ten years. Now, I suspect she's been embezzling church funds. When I confronted her, she adamantly denied any wrongdoing. I'm pretty certain she's guilty. What steps can I take to establish her guilt?
A: Church leaders often are unsure how to address suspected cases of embezzlement. The suspected embezzler is almost always a trusted member or employee, and church leaders are reluctant to accuse such a person without irrefutable evidence of guilt. Seldom does such evidence exist. If the evidence clearly indicates that a particular member or employee has embezzled church funds, but this person denies any wrongdoing, inform him or her that the church may be forced to turn the matter over to the police for investigation and prosecution.
Embezzlers never report their illegally obtained "income" on their tax returns. Nor do they suspect that failure to do so may subject them to criminal tax evasion charges! In fact, in some cases it is actually more likely that the IRS will prosecute the embezzler for tax evasion than the local prosecutor will prosecute for the crime of embezzlement.
Many church leaders have found that turning the investigation over to a CPA firm is much more acceptable than conducting the investigation internally. The CPA firm is completely objective, and ordinarily will not know the suspected embezzler. Further, few church members will object to the church hiring a CPA firm to detect wrongdoing and help establish a sound system of internal control.
Another option is to retain a "certified fraud examiner." A CFE is a CPA who has had specialized training in the detection of fraud and embezzlement.
If the suspected embezzler does not confess, or if embezzlement is suspected but it is not clear who is guilty, church leaders must consider turning the matter over to the police or local prosecutor. This is a very difficult decision, since it may result in the prosecution and incarceration of a member of the congregation.
If the embezzler confesses, proceed with caution before you forgive and forget. It often is astonishing how quickly church members will rally in support of the embezzler once he or she confesses—no matter how much money was stolen from the church. This is especially true when the embezzler used the embezzled funds for a "noble" purpose, such as medical bills for a sick child. Remember, though, a serious crime has been committed. The embezzler has breached a sacred trust.
Church leaders owe a fiduciary obligation to the church and are stewards of the church's resources. Viewing the offender with mercy does not necessarily mean that the debt must be forgiven and a criminal act ignored. Churches are public charities that exist to serve religious purposes, and they are funded entirely out of charitable contributions from persons who justifiably assume that their contributions will be used to further the church's mission. These purposes may not be served when a church forgives and ignores cases of embezzlement.
Church Law & Tax Report is a monthly print newsletter published by Christianity Today International. For more information, visit ChurchLawToday.com/contact.php.
This feature is designed to provide accurate and authoritative information in regard to the subject matter covered. Christianity Today International is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.
Copyright © 2008 by the author or Christianity Today/Your Church magazine.
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