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​The Keeper of the Money Bag

Churches often suffer from an overly trusting culture, lack of financial transparency, and inattention to internal control.

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​Christianity’s inaugural treasurer, Judas Iscariot, was a known fraudster: “As keeper of the money bag, he used to help himself to what was put into it” (John 12:6, NIV). 

They don’t pay you enough for this, Ananias,” complained Sapphira resentfully. Earlier, the family had been to the weekly church service where Sapphira’s father was a pastor. But since it was the first Sunday of the month, Sapphira’s husband and church treasurer Ananias spent the afternoon locked in his home office to pay last month’s invoices, reconcile the bank statement, and update the accounts. 

“It’s the Lord’s work, Sapphy,” Ananias replied as he shut the door. 

Sundays were hectic. Morning Sunday school was followed by the main service, occasional communal lunches, and frequent pastoral activities. Then there were mid-week Bible studies, committee meetings, camps, and regional conferences. The family delighted in the social interactions. 

The church was governed by a committee of mostly retired, volunteer elders to maintain the status quo, welcome new members, deal with occasional improprieties, and quell any issues that might rock the boat. Some families had belonged for generations, resulting in a warm culture of friendship, intimacy, and trust. 

For only a modest honorarium, the “treasurership” was onerous, and Ananias had been doing it for a decade. While most donations were processed electronically, many still donated cash. Ananias was responsible for counting and banking the weekly cash collections, reimbursing members for petty cash expenses, paying a small cadre of cleaners, stewarding the church’s investments, and reporting to quarterly meetings of church elders. Ananias also was responsible for arranging maintenance on church buildings, ad hoc fundraising, and periodic sermons to encourage tithing. Additionally, he sometimes acted as estate executor, which usually resulted in bequests further boosting church funds. 

Because few of the elders were financially trained, an occasional bank statement and expenditure pie chart from Ananias was usually enough to satisfy any curiosity about church finances. 

Secretly, Ananias agreed with his wife that the honorarium was insufficient compensation for his considerable efforts. But he had found ways to make that right. Since only he was responsible for collecting and banking Sunday cash offerings minus expense reimbursements, if he deducted his own cut from the amount banked, who would notice? Similarly, fundraising, investment returns, and haphazard charitable donations could be diverted into his own account. Cash flows were sufficiently convoluted so that he, as sole signatory, could shift money between various funds in the rare event someone asked about church expenditures or investment balances. 

Ananias knew churches enjoyed exemption from publicly disclosing financial statements, engaging auditors, or submitting the annual IRS Form 990 financial governance declarations required of other not-for-profits. It was as if the government, like the church, itself, wishfully believed the clergy and treasurers were infallible. In case these rules were to change, Ananias ensured the amounts banked matched the net collections in the accounts. 

Besides diverting church funds, Ananias also paid exaggerated timesheet hours to his favorite part-time cleaner, Sindy, who he had recruited from the congregation and with whom he was having an affair. Whenever capital works had to be done, he used related-party contractors to organize a few additional repairs on his or Sindy’s homes and bundle those costs into the church’s invoice. And his ad hoc roles as executor of deceased members’ estates provided more skimming opportunities due to the inherent opacity around funds received and disbursed. 

​Lessons Learned

To help churches stay on the straight and narrow, auditors should investigate and report on typical church governance shortcomings: 

  • Missing policies around expected conduct, conflicts of interest, and whistleblowing. 
  • All-powerful treasurers with unlimited financial authority and unsegregated duties around cash-handling and payments. 
  • Nonexistent reporting of income, expenditure, and financial balances to elders and members. 
  • No financially qualified members on the committee of elders to assess income and expenditure reasonableness and ask appropriate governance questions. 
  • Insufficient audit surveillance. 

Ananias’ deal with the devil unscrambled when newly qualified internal auditor Martina defied the odds and was elected to the committee. 

Although controversy was usually avoided, Martina persisted in asking for greater transparency through financial statements for the quarterly committee and the annual member meetings. Martina noticed the treasurer’s financial duties were unsegregated and basic governance was nonexistent. 

Over time, Martina masterminded the committee’s implementation of governance policies, segregation of income, payment procedures, payroll duties, and limits on the treasurer’s account authorities. Increasingly perceptive questions peeled away Ananias’s well-disguised frauds, and he was replaced with a new treasurer who engaged a forensic auditor to uncover the full extent of the losses — more than $1 million over a decade. Ananias’ fall from grace was swift. 

But, this is an unlikely ending in a church context. 

Nepotism is common in churches because leadership is often intertwined through longstanding relationships. Therefore, churches may find it difficult to admit, even less to expose, guilt. To do so could result in everlasting embarrassment and a congregation exodus. The more serious the wrongdoing, the greater the temptation to cover it up. 

A more likely ending is that before answers to Martina’s questions could be obtained, she was asked to relinquish the committee role for an urgent Sunday school teaching vacancy. Equilibrium was thus restored, and Martina’s reformation halted. Turning a blind eye to the treasurer’s indulgence was the lesser evil compared to the reputational risk of bringing impropriety to light. 


For the reasons outlined earlier, church sector data is hard to come by. According to 2020 research by Statista, 33% of U.S. citizens attend church, synagogue, mosque, or temple weekly or almost every week, or around 100 million people nationwide. Attendee donations range from pennies up to about 10% of after-tax wages. 

Of course, not all attendees earn the average after-tax wage of $50,000 per annum, but these statistics would suggest the sector as a whole receives annual contributions approximating 100 million attendees x 10% in work x $50,000 average pay x estimated 2% donations ≈ $10 billion income per annum. Extrapolate this across the rest of the world, then multiply across the centuries of church history — plus irregular and material bequests from deceased estates — and the scale of church wealth, and potential for fraud, comes into view. 

Churches serve an important role in members’ family and social lives, as well as in education, pastoral care, and charity in the wider community. But the lack of governance, transparency, and internal audit in the church sector suggest the lesson of Judas Iscariot’s fraud is yet to be learned.

Christopher Kelly
Jerold L. Ipsen
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About the Authors



Christopher KellyChristopher Kelly<p>​​Christopher Kelly, DProf, FCA​, PFIIA, is a partner at internal audit consulting firm Kelly & Yang in Melbourne, Australia.</p>



Jerold L. IpsenJerold L. Ipsen<p>​Jerold L. Ipsen, CFE, is an associate at Kelly & Yang in Los Angeles.<br></p>


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