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Internal control, B.C. version

As part of his day job, Jim Ulvog advises nonprofits on financial issues, including the need for financial controls to minimize the chance of fraudulent activity (see “The Tragedy of Fraud” post series. In a recent post in his blog Attestation Update, one of Ulvog’s former colleagues brought a 5th century text to Ulvog’s attention. According to the colleague, the quote below is taken from the Fourth Ecumenical Council in 449 A.D.:

As we have learned, in some churches, the bishops administer the material goods of the church without a treasurer; it has seemed right and proper that every church with a bishop should also have a treasurer taken from the clergy who will administer the church’s goods with advice of his own bishop. In this way the administration of the church will not be without checks and balances, the goods of the church will not be dissipated, and the priesthood will be free from all suspicion.

Let’s face it – no matter what type of organization you’re talking about, money is a temptation, and it’s wise to impose some type of control over the handling of money.

Not all nonprofits feel this way, unfortunately. In fact, according to a 2007 Christianity Today article, an entire “we’re not a denomination” denomination holds to a different practice, and cites Biblical authority for justification of its view:

“We take the model from the work that God established in the nation of Israel,” [Chuck] Smith says. “Moses was the leader appointed by God. He took 70 men, and they assisted Moses in overseeing the mundane types of issues that developed within the nation. There was the priesthood under Aaron.” Similarly, he says, “we have assistant pastors, and they look to me as the senior pastor. I’m responsible to the Lord. We have a board of elders. We go over the budget. The people recognize that God has called me to be the leader of this fellowship. We are not led by a board of elders. I feel my primary responsibility is to the Lord. And one day I’m going to answer to him, not to a board of elders.”

Critics say this “Moses model” produces pastors who refuse to let their authority be challenged. Such pastors often resist accountability measures such as financial audits and providing detailed financial statements. Some curious Calvary Chapel attendees, who have sought financial information from their churches, say they were ostracized.

Did the twelve tribes have lax financial controls during their years in the desert? Well, according to this abstract, they certainly established financial controls by the time they settled down:

Abstract: We examine the Hebrew Talmud’s account of internal controls in the ancient Jerusalem Temple (c.823 B.C.E. to 70 C.E.) This far-reaching enterprise involved an extensive system of sacrificial offerings, management of three annual pilgrimages, a court system and maintenance of a priestly class. We outline the annual process of collecting half-shekel and other donations, withdrawals from the Temple treasury and the sale of libations. The Talmud describes numerous internal controls: donations were segregated according to their specific purposes and donation chests were shaped with small openings to prevent theft. When making withdrawals from the Temple treasury, the priest-treasurer was required to wear specific clothing to prevent misappropriation of assets. The Treasury chamber itself had seven seals, requiring the presence of seven different individuals, including the king, in order to open it. The process of selling libations and meal offerings required purchasing and then redeeming different tickets, which were specifically marked to prevent fraud. In explaining the reasoning for this tight system of internal controls, the Talmud reveals that an individual “shall be guiltless before G-D and before Israel” [Numbers 32: 22], so that a sound system of internal controls prevents both theft and any suspicion of theft, thus establishing the fiscal credibility of the Temple institution in the eyes of its congregants. Such an approach indicates that accounting did not represent a profane, secular vocation at odds with the Temple’s mission. To the contrary, a system of accountability formed integral steps in the Temple’s ritual processes.

Now for me personally the Talmud is not an authoritative religious book that governs my life, but it appears that there is some wisdom in its financial control system.

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2 thoughts on “Internal control, B.C. version

  1. Pingback: “Internal control, B.C. version” | Attestation Update - A&A for CPAs

  2. Pingback: Internal control, 14th century version | tymshft

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