Embezzlement And Being Prepared…
We all hope we are never victims of theft!
Many years ago, we lived in Boston and our apartment was robbed. Besides all the forms you have to fill out with the Police Department, it is far from a fun feeling. I do wonder, though, whatever happened to my very expensive camera which today would be an antique relic.
Synagogues and churches are not immune from financial crimes, particularly embezzlement, just because they are religious institutions that operate with a higher moral and ethical lens.
We all would like to think that synagogue staff and board members will always do the right thing and never be tempted to violate this sacred trust to take care of the community’s money. Bad stuff does happen:
-The chief financial officer of a church embezzled $850,000 creating false board resolutions using the electronic signatures of church officers.
-An Executive Director of a synagogue in La Jolla, CA pled guilty to embezzling more than $500,000 over a six-year period.
-And it is not just staff. A member of the board of a synagogue in Southbury, CT who went on to become Vice President of the board and then President, was convicted of embezzling $600,000 from her synagogue over a number of years.
Synagogue leaders and staff can’t have the attitude that “it will never happen here”. There needs to be financial controls regarding the treatment of all monies the synagogue receives as well as spends. Conducting an annual or periodic audit is a first step. Establishing such controls is when the help of a Certified Public Accountant could be critical.
Implementing and adhering to internal financial controls is not a time to be concerned about hurting anyone’s feelings, staff or board members, that they are not to be trusted. On the contrary! To borrow from Richard Hammar, a noted authority on church finance and related legal issues, the synagogue, “more than any other institution in society, should set the standard for financial accountability. After all, its programs and activities are rooted in religion, and it is funded with donations (including dues) from persons who rightfully assume that their contributions are being used for religious purposes”. Synagogues have a sacred responsibility to promote financial accountability.
While it is important to consult with a CPA regarding all of the necessary internal financial controls, I would like to mention two that seem pretty basic. The first is to require two signatures for all checks above a certain amount. At organizations and synagogues where this policy is utilized, the amounts most often are $2500 or $5,000.
The second control is a review of monthly bank statements by people besides those who have check signing authority. Makes sense, right?
Should embezzlement happen, do you inform the congregation, and how to you go about it? I have written about the importance of financial transparency and this issue certainly falls under this heading. It is not an issue you want to hide. You want congregants to hear about or read about an incident that happened at the synagogue from the synagogue’s leadership. Not from the local newspaper or community gossip.
When an employee has been terminated and/or there are legal proceedings going on, it is important to consult with an attorney regarding what you are sharing with the synagogue membership. You just want to share factual information and not express any opinions. Whatever you share in writing should be reviewed by an attorney.