Influence of Leadership Positions on Internal Controls and Reported Fraud In Religious Organizations

摘要

This study examines the extent to which particular leadership positions and governance bodies within churches are associated with the presence of internal controls and/or the absence of fraud. Our study is motivated by Marquet's (2011) chronicle of 21 high-profile church embezzlements in the first half of 2011; Ventura and Daniel's (2010) finding that church members tend to trust their leaders in spite of the absence of internal controls; and discoveries by Booth (1993) and Conway (1999) that clergy tend to be ill-disposed to utilize secular accounting and internal control practices. We surveyed 131 individuals who were responsible for financial management within their respective churches. The survey was conducted through in-person, structured interviews. After removing duplicate interviews, we analyzed a sample of 129 responses. The subjects were affiliated with churches that varied widely in size, age, and denomination. Our results indicate that the leadership position most closely associated with the presence of internal controls in the church is a financial expert on the board of directors. Consistent with the findings of Booth (1993) and Conway (1999), paid clergy tend to traverse in the opposite direction. We fail to find any indication that presence of the leadership positions or governance bodies we examined are associated with a reduced incidence of reported fraud. These results suggest that future research should go beyond simply looking for internal controls in churches and should establish whether there are characteristics or viable practices of churches (internal controls or otherwise) that can indeed reduce the incidence of fraud.