Forensics Journal - Stevenson University 2013 | Page 37

STEVENSON UNIVERSITY

Accounting Controls for Nonprofit Religious
Groups
Robert Willey
religious organization will purchase goods or services to be used in
routine operations. The conversion cycle encompasses manufacturing activity, which is not applicable to this discussion. The financing cycle in a business can encompass complex structures such as
securitizations, initial public offerings, and acquisitions however
most religious organizations limit their financing cycles to short-term
investments and loans for building projects. The fixed-asset cycle
defines the method used to acquire and dispose chairs, desks, copiers,
audio-visual equipment, and other supplies. Each cycle is subject to
very specific types of fraud schemes.

INTRODUCTION
In 2005, American charities took in $260 billion in cash donations
with religious groups receiving the greatest portion at $93.5 billion
(Barrett, Johnson, and Crossing, 2005, p.29) It is estimated that
in 2010, religious leaders will commit $34 million in fraud (Barna
Group). To complicate the fraud issue, 80 percent of fraud cases are
not investigated by law enforcement. In most cases, religious organizations preferred to avoid public media attention (Barrett et. al.,
2001). Thus, it is difficult to establish the extent of current fraud in a
quantitative amount. However, it is apparent that fraud is a problem
in the Christian church and needs to be addressed.

To assist in the classification of these fraud schemes, the Association
of Certified Fraud Examiners (ACFE) developed the fraud tree. The
fraud tree has three main branches: Corruption, Asset Misappropriation, and Fraudulent Statements. In the 2006 Report to the Nation,
the ACFE found that Asset Misappropriation was the most frequent
form of fraud scheme which utilized cash as the prime objective of the
fraud closely followed by corruption. (Association of Certified