By Alli Newsom, Communications Director for the New Mexico Conference

Few pastors, finance committee chairs, or church leaders expect to encounter financial misconduct within their congregation. Yet embezzlement and misuse of funds occur more often than many realize. When such situations arise, churches often struggle with how to respond.

The reasons are understandable. Church leaders may feel embarrassed that warning signs were missed. Often the individual involved is a trusted employee, volunteer, or long-time member whose actions seem completely out of character. As Christians, we are called to offer grace and compassion, but compassion must be balanced with accountability and a commitment to faithful stewardship.

The funds entrusted to the church represent sacrificial gifts offered in support of God’s mission and ministry. Church leaders have both a spiritual and fiduciary responsibility to ensure those gifts are managed with care, transparency, and integrity.

How Financial Misconduct Can Occur

Financial misconduct rarely happens because church leaders are negligent or uncaring. More often, it develops when too much financial responsibility rests with a single individual and appropriate internal controls are absent.

In one instance, a finance committee member became concerned about irregularities in the church’s financial records. While the bookkeeper was away, the committee member reviewed credit card statements and identified several questionable transactions. As is often the case, when concerns were raised, the finance committee members refused to accuse the beloved bookkeeper of any wrongdoing. It seemed inconceivable that a long-time staff member would steal from the church.  The whistleblower finally contacted the conference treasurer, prompting a more comprehensive review of the church’s finances.  Outside auditors confirmed unauthorized credit card purchases and payroll irregularities in three churches where the bookkeeper was working.

While the findings were difficult for the congregations involved, the experience underscored the importance of regular oversight, transparent reporting, and shared responsibility for financial management. Situations like this remind us that effective financial controls are not signs of mistrust. Rather, they protect the church, its leaders, its staff, and its volunteers.

Best Practices for Every Congregation

Regardless of size, every church can take practical steps to strengthen financial accountability.

1. Share Access and Oversight

No single individual should have sole control over financial records. Multiple authorized people should have access to income and expenditure reports and be able to review them regularly.

2. Separate Financial Responsibilities

Whenever possible, the person who prepares checks should not be the person who signs them. If at all possible, do not reimburse a credit card expense without a receipt or other documentation.  Invoices, receipts, or vouchers, should accompany every expenditure.

3. Use Multiple Counters for Offerings

At least two unrelated individuals should count and verify offerings together, with appropriate documentation and secure procedures for depositing funds.

4. Review Payroll Carefully

Payroll responsibilities should be reviewed by more than one person. Regular verification helps ensure employees are compensated accurately and that payroll taxes, pension contributions, and required filings are submitted properly.

5. Utilize Appropriate Financial Software

Accounting software such as QuickBooks or other church financial management systems can improve recordkeeping, reporting, and accountability.

6. Provide Regular Financial Reports

Monthly financial reports should be shared with the pastor, finance committee, and church council or administrative board. Transparency supports informed decision-making and strengthens trust throughout the congregation.

7. Conduct Annual Audits

The United Methodist Church recommends annual financial audits for every local church. An audit does not imply suspicion; rather, it is a healthy practice that verifies procedures, identifies weaknesses, and strengthens financial stewardship. Internal audits will serve in churches with limited funds.

The Pastor’s Role

Some pastors prefer not to know the identities of individual donors, seeking to avoid even the appearance of favoritism. While that concern is understandable, pastors should still receive regular financial reports and maintain an appropriate understanding of the congregation’s overall financial health. Doing so enables more effective leadership and planning while preserving confidentiality regarding individual giving records.

Stewardship as a Shared Ministry

Most individuals who serve in church financial roles do so with honesty and dedication. Nevertheless, strong financial controls are essential because they protect everyone involved. Clear policies and shared accountability help prevent both intentional misconduct and unintentional errors.

Even in the smallest congregation, a collaborative approach involving church staff, finance leaders, counters, and volunteers can provide appropriate accountability. Together, they help ensure that the gifts entrusted to the church are used faithfully, transparently, and for the work of making disciples and transforming communities in the name of Christ.

Editor’s Note: This article is based on conversations with church leaders across the New Mexico Conference regarding instances of financial misconduct and weaknesses in financial oversight. Because these situations are typically handled with appropriate discretion, they are not widely known. However, they are not problems confined to distant churches or other annual conferences. They do occur within our own congregations, making it essential that we give careful attention to sound financial practices and accountability.

We encourage local churches to call the Conference Treasurer/Statistician, Griselda Sandoval regarding financial policies, audits, and internal controls: 505-255-8786, ext 103 or gsandoval@nmconfum.com. 

There is a Conference webpage dedicated to internal controls: https://www.nmconfum.com/internal-controls-for-churches/