By Cynthia Gordon-Floyd, C.P.A., Contributing Writer
The Importance of Reporting Financial Crime Within the Church
By Cynthia Gordon-Floyd, C.P.A., Contributing Writer
In a recent article, “Reporting Financial Crime as a Matter of Stewardship,” attorney and C.P.A. Richard Hammar discusses why we should report a financial crime.
A study of 706 church leaders’ financial misconduct found that one-third of them had experienced fraud and 70% of those chose not to report the incident to the authorities. The following reasons were provided for not reporting the incident:
- They recovered the money without needing legal action.
- They pursued restoration and forgave the perpetrator.
- They wanted to protect the perpetrator and the reputation of the church.
- Legal action was contradictory to their beliefs.
The Bible teaches us that we should not deal with our legal matters in a secular court of law. However, without disputing the clear direction of the Word of God, it is still important for us to apply the value of the laws and God-given rights that protect citizens and support proper restoration.
When we choose not to report criminal matters within the church, several ramifications prohibit proper restoration. First, the actual amount of the loss is usually far greater than the perpetrator admits. Professionals can investigate properly and determine the actual loss. Second, if there is no public record of the occurrence, it may subject another church to the same offender as there would be no record to show on a background check. Additionally, most embezzlers are also guilty of tax evasion, as they do not report the amount misappropriated as income. This indiscretion provides another level of crime not dealt with properly. Finally, even if the church chooses to forgive the matter, the church should provide a 1099 to the individual for the loss, so they are forced to pay income taxes on the amount taken.
Forgiveness and grace always have their place. However, negating the law and not allowing proper discipline to occur interferes with proper restoration for all involved. There is no Biblical reason for the church to cover up a crime; in fact, it can be a wonderful opportunity to show the importance of proper stewardship over their funding, as well as a chance for the public to witness the biblical restoration for the offender.
If we tolerate a lax internal control environment, we should not continue to be shocked and dismayed when our lack of oversight results in major loss and devastating life disruptions for the innocent. Accountability is our responsibility and our reasonable service.
Cynthia Gordon-Floyd is a certified public accountant and founder of Willing Steward Ministries, L.L.C. Willing Steward Ministries (www.willingsteward.com) is a financial consulting and accounting firm for churches and other faith-based non-profits, specializing in Bible-focused financial practices, pastoral compensation issues, I.R.S. compliance, and other financial needs specific to churches. Cynthia is a graduate of Lake Forest College and holds her M.B.A. in Accounting from DePaul University, and is an A.I.C.P.A. certified non-profit accountant. She is a Steward and the Financial Secretary at the First A.M.E. Church of Manassas in Manassas, Virginia.
