What sort of audit is this?

What sort of audit is this?

February 23, 2019 Basics 0

I showed my work to a CPA friend yesterday, and he wrote,

Using the word ‘audit’ concerns me a bit. Do you think that word has a certain connotation that may leave users thinking you are providing a certified audit?

He raised a good point, which needs to be addressed. In fact, though addressing it here is good, it also needs to be addressed on the main website, in the report I produce, and in any marketing material I send out.

No, this is NOT a CPA-certified audit. What we offer is actually better for churches. Here’s why:

A CPA audit is primarily for the use of investors as they consider where to put their money. The CPA, as an outside, disinterested party, examines the finances of a company. He or she confirms that their financial statements indeed reflect accurately the transactions and financial state of the company. The CPA signs off on his or her report, attesting to the quality of the company financial reports.

Fraud Examiner logoI don’t do that. Why? Well, first, I’m a Certified Fraud Examiner, not a CPA! But more than that, churches don’t really need a CPA-attested audit. What they DO need is someone to look at their procedures.

[And just to lay the ‘financial reports’ question to rest: a church ought to be confident that their financial reports accurately portray the financial health of the church. But they can get that assurance – at least to the level they need – by having an outside bookkeeper come in and look over their books. This could be someone from the diocese/denomination, or from a sister church… and their bookkeeper could look into the other church’s books.]

But churches tend towards operating on trust – they size the guy up, and may choose to let him collect the money or count it. Or spend it. The problem with this is that 1) we’re not that good at judging character, and 2) people change. And we’ve read the Book: we know that “The heart is deceitful above all things, and desperately wicked: who can know it?” – Jer 17:9.

Per the Fraud Triangle (pressure/opportunity/rationalization), we will go a long way towards blocking fraud if we remove the opportunity. We should keep from putting our brothers and sisters in situations where they might be tempted to steal from the church. What I do is find holes in your procedures and recommend plugs for those holes.

And he said to his disciples, ‚ÄúTemptations to sin are sure to come, but woe to the one through whom they come!¬† It would be better for him if a millstone were hung around his neck and he were cast into the sea than that he should cause one of these little ones to sin.” Luke 17:1-2

MillstoneLet’s be good to our brothers and sisters, and make it HARD for them to steal from the church. Would they be strong enough to stand under for-reals temptation? Would you? Would I? I sure hope so! I plan to stand, and have built hedges around myself to help. You have to. But… I would prefer not to be put in that situation in the first place.