The ‘Do-Everything’ Financial Person

The ‘Do-Everything’ Financial Person

October 2, 2019 Uncategorized 0

A Lutheran church in Nebraska was thrilled to have an accountant volunteer to be the church financial secretary and keep their books. Two years – and $109,000 later – they realized that this might not have been a good idea.

The Case

Michael Pommer, 45, of Wakefield, Nebraska, was arrested on October 22, 2018, facing 15 counts of theft by unlawful taking. As a CPA, he knew his way around financial matters, and he took over as the church financial secretary and accountant. As such, he kept the books and had access to the bank accounts.

He was accused of making 15 transfers to the IRS, to American Express, and to his own bank account. The church lost $109,727 over a two year period.

He reimbursed the church for $114,570, and was found guilty in a plea deal for one count. He was sentenced to 90 days in jail and 18 months probation, and was fined $5000.

Analysis

Mr. Pommer took advantage to two gaping holes in church financial procedures. First, he had access to the money and had the ability to cover his tracks: bank account access and bookkeeping need to be separated (done by two unrelated people). See our essay on Separation of Duties – it’s written for the smallest of churches, and we have it down to three people for all of the financial procedures (well, except for taking up the collection… but we tried!).

The other procedural hole is that nobody was keeping an eye on the statements or reconciliation. The statements came in, he processed them, and everyone was happy to have him doing all of the financial work. After two years, the pastor finally looked at one of the statements – and found trouble. Challenged, Pommer admitted guilt and promised to pay the church back.

How To Prevent This At Your Church

Separate duties: have one person keep the books, and give someone ELSE the ability to get into the bank accounts, write checks, and count cash. The person keeping the books should NEVER have access to assets.
Have the bank (and credit card) statements mailed to the pastor or some other senior church person. This person can review the statements for any odd entries, such as cash out, checks to unknown vendors, ATM cash disbursements, and inappropriate card transactions. (Victoria’s Secret and liquor store transactions are a clue to some sort of problem.)

Best Choice?

Consider our church audit service – it’s easy and surprisingly affordable. We help find holes in financial procedures and tell you how to plug them.

  • Your church’s chief money person answers a bunch of questions online
  • He or she fields questions out to others as needed;
  • All the answers are reviewed by the church staff, elders, and deacons (and corrected as necessary);
  • We produce a book showing what is being done well and what could be improved.
  • The book also includes a ‘best practices’ section and a plan to do it all with the minimum number of people;
  • We print copies of the book for the pastor and each board member, and meet by video conference to discuss implementation.

Start answering questions now!