Fable of internal controls in a local church.
UPDATE: Offer will expire on December 31, 2011.
I stopped the free book offer at the end of 2011. This short fable is the basis for the cartoons you see on this blog. The book is now available at Amazon in Kindle format for $0.99. Click here.
Update: This book is now available on Amazon for $USD 0.99. Free offer will expire on December 31, 2011.
The first feature cartoon from Once Upon Internal Control. In this visit to Southside Community Church, we listen in to discussion of to creative controls over cash and how to maintain security of the offering until it is counted by the count team.
[youtube http://www.youtube.com/watch?v=1qeibzgSemY]
The exit interview with the reporter in cartoon 4 is based on this text from the book Once Upon Internal Control:
After some pleasantries, the pastor let the reporter look through any of the documentation she wished. For his air travel, the billing detail on the credit card statements showed the departure and destination locations. It was very easy to determine how far in advance the tickets were purchased. From that information, it was obvious to the reporter that all of the travel was at coach rates. From the hotel receipts and expense reports, the reporter could tell that the rooms were economical and the meals were modestly priced. The expense reports—always such a nuisance to fill out, but required by church policy—listed the purpose of each trip, travel arrangements, hotel accommodations, and with whom the pastor ate. With all these details, each trip was easily put into context.
The pastor and bookkeeper were in the room but only had to answer a few questions. After looking through the documentation, it became clear to the reporter that her source was not believable. With the accusations thoroughly disproved, the reporter left satisfied. The next article in the paper about the church described a new mission outreach to the community.
Exit interview with the reporter. Cartoon where she reports the stories were fabricated is here:
[youtube http://www.youtube.com/watch?v=TM3sw38G0cg]
earlier cartoons:
Here is the full text of my article, Essentials of Internal Control, appearing in Church Management News from Bank of the West. The online article is here.
The article discusses three key ideas:
Essentials of Internal Control
By James L. Ulvog, CPA
The business administrator of a nearby church has been formally charged with embezzling close to $1 million over four years, according to a recent newspaper article. Few details are publicly available. I have friends who worship there, so this hits close to home. I grieve for my friends, the congregation, believers whose faith has been shaken, and even the accused man and his family.
Last year, the bookkeeper of a women’s shelter in my area was sentenced to one year in prison for embezzlement. The executive director of the center was quoted in a newspaper article as saying the shelter had to sell one of their several houses in order to keep operating. The director said eighty women and their children were denied services.
I was going to start this article with a rational appeal to logic as the way to encourage more emphasis on internal controls in our churches. Instead, I would like you to ponder the devastation that follows in the wake of a disaster that can arise from a breakdown in internal controls. The previous reports are only two examples. One of the main goals of developing internal control is to prevent these situations. I could tell you of many more tragedies. A few moments of searching the internet will find dozens of stories.
The following text from Once Upon Internal Control is the background for Cartoon #3:
The reporter calls
About a year after the bookkeeper started, a newspaper reporter called to talk to the office manager. The reporter said she had credible information that the pastor was flying first class to his occasional speaking engagements. The reporter had indications from the same source that the pastor was really living it up during those trips. She wanted the church’s reaction to this rumor.
Another cartoon is up. Southside Community Church is blindsided by false accusations when a reporter calls for a comment. Fortunately, they have good procedures and internal controls that prove the accusations are fabricated.
When a reporter calls, good procedures save the day:
[youtube http://www.youtube.com/watch?v=3vyNN9LOeWI]
Previous cartoons:
This cartoon is based on the text from Once Upon Internal Control found here.
The introduction to the story of Southside Community Church can be seen here.
[youtube http://www.youtube.com/watch?v=BA6UHzrG7X8]
following cartoons can be found here:
I wrote an article for Bank of the West called Essentials of Internal Control. It discusses one superb internal control you should be using for cash, explains that trust is not an internal control, and offers a creative idea to improve control over cash.
A one sentence summary of internal control is at the end of this paragraph:
The cartoon on the count procedures is based on the following part of the book Once Upon Internal Control:
Monday mornings were a chatty time in the office. That is when the count teams prepared the deposit. Usually there were a few people sitting around waiting for the full team to arrive. On each team, there was one person who had the combination to the drop safe. Another person on the team had a key that opened up all of the bank deposit bags—those thick canvas bags with a heavy-duty zipper and substantial lock. When either the combination person or the key person was late, the count team would sit around and visit.
The bookkeeper had been around some less-than-ethical parts of the business community. She had seen others play games with the books. She did not think about it very hard, but she did have a vague awareness that the church was serious about all those policies they discussed. She knew it would not be possible to play those games here because the windows of opportunity were closed and locked.
Copyright © 2008 James L. Ulvog