Forensics Journal - Stevenson University 2013 | Page 38
FORENSICS JOURNAL
set the ethical tone in any organization. Religious leaders are usually
well respected by their congregations. They typically spend a great
deal of their time around the organizations and therefore are available
to make financial decisions at a moment’s notice. This situation can
inadvertently lead to one person exercising increasing control over the
finances. Thus, a key element in the 360º Internal Control Model
is the creation and implementation of an active and ethical Board of
Directors.
related-party transactions must be fully disclosed, verified that the
transactions are at fair market value, approved by the Board, and
upheld by a vote of the membership.
The sixth task is to ensure the organization has sound human resource
practices. Most organizations want to hire ethical people. However,
over time people can become corrupt. The challenge for a church is
to hire ethical people and establish a working environment bound
by ethics and integrity. The size and longevity of a fraud is directly
related to the staff member’s tenure. Religious organizations must
establish best practices in their staffing lifecycles to include hiring,
retention, and termination of staff members. The hiring process
should be used to screen out potential employees who might pose a
greater risk for financial fraud. Four basic employment screens are
beneficial: criminal background checks, public records searches, verifications of qualifications, and honesty tests. During the staff members’
tenures, the church should have an enforced leave policy, annual performance evaluations, compensation adjustments, a grievance process,
professional development opportunities, and exit interviews.
The second task requires the Board to assume financial oversight
duties. Their role is comprised of many different functions to include
personnel oversight (hiring, firing, payroll, volunteer hours), governance and bylaws, public relations, facilities management, audits,
and fiscal management. While all of these functions are required for
routine operation, fiscal management influences the risks associated
with fraud thus it creates a fiduciary duty for the B