​The Priest's New House

Religious organizations should show less faith in giving clergy unfettered control of church funds.

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​An audit alleges that an Okemos, Mich. priest embezzled $5.4 million from his church over 26 years, the Detroit News reports. Rev. Jon Wehrle will go on trial next week to face six embezzlement charges. Prosecutors accuse him of stealing from St. Martha's Church to pay for the construction of a $3 million mansion in 2007. The audit further alleges that Wehrle spent church funds on a previous house, tuition and medical bills for his adopted children, and to pay bills, taxes, and insurance expenses.

Lessons Learned

The case against the clergyman in this story is only now going to trial, but one can discern that so much money going missing is primarily attributable to a toxic combination of a highly manipulative fraudster and ineffective oversight. Few controls existed over the way in which Wehrle handled church money. He was able to write checks to himself without receipts and regularly take entire Sunday collections, while the Catholic Diocese of Lansing, Mich. failed to ask any serious questions for many years.

So, how can churches reduce fraud risk? Fundamentally, operating a church needs to be thought of as running a business. Churches need effective oversight and financial controls, qualified accounting and financial personnel, and regular reviews to ensure things are working as intended. More specifically, here are four areas for attention:

  1. Ensure that appropriate oversight and supervision is in place. Church leaders are responsible for managing operations and practices. Whether that oversight is of employees or volunteers, it is critical to have good supervision of those who deal with church funds. The natural leadership tendency is to empower people with the freedom to work independently, but there always should be some form of accountability, or check and balance, for that freedom.

    A finance committee also should review financial documents and transactions regularly, as well as ask questions of all clergy, employees, and volunteers. If it is difficult to get a financial summary from a person who handles money, it is likely a red flag. Allowing a church official to use significant amounts of money for personal purposes is another warning sign.
     
  2. Actively manage the church governance and workforce to protect the institution from fraud risks. It is sensible to perform background checks periodically on all church staff and employees. Such checks should not be limited to just when individuals are first hired, because circumstances can change.

    In addition, people who have access to church funds should be subjected to particular scrutiny, including lifestyle changes. While this practice may seem invasive, it can provide information that ultimately protects the church. Wehrle had a construction industry background, which reasonably would make him an attractive person to help the diocese with its building projects. However, that should not have prevented scrutiny of his activities.

    The diocese should regularly rotate church officials and employees in their roles — particularly those who approve transactions and handle money. No one should stay in the role indefinitely, and the use of multiple, unrelated people will make it more difficult to steal.

    Given the apparent absence of effective oversight by the diocese, both the diocese and St. Martha's Church should renew the leaders who are responsible for that oversight. Even in a church environment of faith and trust, it would be wise to encourage everyone to pay attention to fraud red flags and report suspected behavior. For example, the one church secretary employee who appears to have known about Wehrle's allegedly inappropriate use of church checks for personal use should have shared her concerns.
     
  3. Establish and monitor basic accounting, payroll, and finance functions, including controls over delegations of authority for financial transactions. Of particular importance is a requirement that there be dual signatures on checks for larger dollar amounts. For example, the diocese could require that any check for more than $500 be signed by two people, and that the two authorized signors of large checks should be the individual in charge of finance and accounting and a diocese or board member. Furthermore, the member chosen to co-sign large checks should not be the same board member selected to review bank statements. The diocese should never have allowed Wehrle such latitude in handling church funds.

    Moreover, the broader church hierarchy failed to follow up on several unusual financial arrangements, including Wehrle's claim that the diocese had agreed to allow him to live in private homes, rather than a rectory. Also, the diocese did not independently verify the church's financial statements, which may have revealed the fraud at an earlier stage. Regular audits — more often than just when there is a change in parish leadership — are needed.
     
  4. Control access to bank statements and other financial information. Wehrle had direct and sole access to bank accounts — such as access to blank check stock, check-signing authorization, and reconciling the bank statement — to initially receive and open the monthly bank statements, and he successfully prevented anyone else from having access. This is one of the easiest ways for fraud to go undiscovered. The diocese should change the mailing address on all bank statements to the address of a trusted individual such as a senior financial officer or member of the oversight body.
Art Stewart
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About the Author

 

 

Art StewartArt Stewart<p>​Art Stewart is an independent management consultant with more than 35 years of experience in internal audit, financial management, performance measurement, governance, and strategic policy planning.​​​</p>https://iaonline.theiia.org/authors/Pages/Art-Stewart.aspx

 

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