Opening mail and copying checks: important internal controls

Churches are often relaxed about a very important fraud-prevention duty – opening mail and copying checks. To help eliminate temptation and any opportunity for misappropriation, procedures must be in place for handling checks and mail that contains checks. It is best to have one person, such as an administrative assistant or receptionist, open all the mail,  copy the checks received, and restrictively endorse those checks.  They can also prepare the deposit slip and ultimately make the deposit, if that helps. That person would have no further duties regarding checks received via mail. Specifically, the following duties must be kept separate:

–         Maintaining the cash receipts journal

–         Posting journal entries to the general ledger

–         Reconciling the bank account

–         Investigating discrepancies related to cash

Another duty of the administrative assistant or receptionist is receiving cash donations from mid-week walk-ins. For receipt of such donations, we recommend putting the money in an envelope and putting the envelope in a drop safe. The person receiving the cash should note the date, amount and his or her name on a log sheet.   If cash/currency (not checks) is received, a receipt book should be maintained with a copy to the donor being required. Cash must be protected at all times.

An alternative to completely separate duties is to have two people present for the opening of mail and copying of checks. However, these two people should rotate duties so that collusion is not a likely possibility.

Additionally, the person who investigates discrepancies related to cash should be someone not connected to the day-to-day cash/check receipt and bank account responsibility.