In the Face of Fraud, Waste & Mismanagement, Should Revenue Authority Audit Churches?

When you think of embezzlement, do you think of a high-powered thief stealing millions from a multimillion-dollar corporation?

On the contrary, much embezzlement is done simply and on a small scale by trusted employees, and churches can be vulnerable because of the high level of trust of all persons.

It’s no secret that fraud, waste, and mismanagement are endemic in churches.

In fact, the numbers are shocking. It often happens because of inadequate internal controls in a church organization’s accounting system.

So what can we do to prevent such losses?

While no church can completely eliminate the risk, there’s a lot we can do to reduce its likelihood and to reduce losses if an incident does occur.

The Zambian Revenue Authority (ZRA) said it would conduct an audit of all Public Benefit Organisations (PBOs) which includes churches and NGOs to minimize abuse.

ZRA Commissioner General Kingsley Chanda stated that ZRA would inspect premises, projects and interact with underprivileged the PBOs purport to represent and in the process get goods and services tax-free from government, according to The Church Newspaper Zambia.

“We want to know how the Porsche vehicles PBOs have imported tax-free have benefited the poor. We want to physically inspect the premises, projects and interact with underprivileged the PBOs purport to represent and in the process get goods and services tax-free from government,”

said Mr Chanda.

“Some PBOs have imported building material and vehicles that just benefit individuals. Others purport to be running non-profit business when in fact they generate profits through their schools and hospitals. Some import salaula for the “poor” which end up at commercial markets,”

added the Commissioner-General.

The chief tax collector cautioned that only legitimate PBOs would continue after the audit.

All too often, churches feel that fraud prevention strategies either aren’t needed or would suggest distrust.

But like Caesar’s wife, it is important that church business operations be above reproach, and that there are adequate measures in place to protect against unfounded suspicion.

There’s no foolproof way to prevent fraud, but there is a great deal that our churches can do to safeguard the resources entrusted to them.

In big churches, an annual audit of church financials is required by church canon.

In some cases and where authorized by diocesan canons, knowledgable parishioners can perform an audit, but using a certified public accountant (CPA) is preferred.

Unfortunately, many churches don’t understand what an audit is and opt for other, often unapproved, accounting work.

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