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Financial misappropriations, internal control, and Pentecostal Churches in

Nigeria

Article · December 2022

DOI: 10.31248/RJBEM2022.075

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 Research Journal of Business and Economic Management
Volume 5(2), pages 23-31, December 2022
Article Number: 7E06D6311
ISSN: 2756-6676
https://doi.org/10.31248/RJBEM2022.075
https://integrityresjournals.org/journal/RJBEM
Full Length Research

Financial misappropriations, internal control, and

Pentecostal Churches in Nigeria
FABOYEDE, O. Samuel1*, OGUNNIYI, Olajumoke R.1, ATANDA, Olabamiji1, ADESINA,
Kehinde2 and BEN-CALEB, Egbide3
1Department of Business Administration, Faculty of Social and Management Sciences, KolaDaisi University, Ibadan,
Oyo State, Nigeria.
2Department of Accounting, College of Business and Social Sciences, Covenant University, Ota, Ogun State, Nigeria.
3Department of Accounting and Finance, College of Business and Social Sciences, Landmark University, Omuaran,

Kwara State, Nigeria.

*Correspondence author. Email: [email protected]; Tel: +234 8068496186.

Copyright © 2022 Faboyede et al. This article remains permanently open access under the terms of the Creative Commons Attribution License 4.0,
which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Received 24th April 2022; Accepted 30th October 2022

ABSTRACT: The spate of financial misappropriations and reckless spending of funds belonging to religious organizations
in Nigeria has attained worrisome heights. Fraud can occur in any organization, but Churches are extremely susceptible
due to their trusting nature. This research seeks to find out the existence or otherwise of internal controls in sacred
organizations. The research employs survey and literature review methodologies in evaluating the soundness or
inadequacy of the internal control systems of Pentecostal Churches in Nigeria and at the global level. The research finds
out that strong internal control systems were not in existence in these Churches. There was also no positive correlation
between the trust reposed in Church officers and lower operating costs as officers could leverage on their trusted positions
to exploit. The paper, therefore, suggests that good corporate governance should be extended to non-profit making
organizations for more accountability, probity, and transparency.

Keywords: Churches, corporate governance, financial misappropriations, internal controls, Nigeria.

INTRODUCTION

One of the challenges critical to any organization, be it posited that such Churches are using unwholesome
profit or not-for-profit organization, is survival. In Nigeria means, which have great moral implications, to take
and other parts of the world, people have witnessed the advantage of their members. These reports are quite
distress and sudden collapse of organizations which had unfortunate and have put into question the existence of
resulted in huge financial loss. This experience has sound internal control systems in religious organizations
brought to fore the relevance of effective and strong (Bowrin, 2004). Many of the Churches in Nigeria are being
internal control systems with a view to bringing soundness run by the promoters, most especially, the small and
to the operations of such organizations. medium size ones, as their personal estates and as such
In Nigeria, there has been a plethora of allegations of mismanagement is inevitable. One of the causes of these
fund misappropriations, theft and fraud scandals ravaging irregularities had been linked to poor internal control
religious organizations, most especially, among the systems. Therefore, the deep understanding of the
Pentecostal Churches. Oloidi (2014) maintained that many concept of internal control is important for developing and
Pentecostal Churches in Nigeria are set up mainly for understanding its effect on the performance of these
financial gains without any sound spiritual backing. He organizations.
24 Res. J. Bus. Econ. Manag.

Internal control has been defined as the system of internal Ekanem and Ekefre (2013) posited that the decay in social
administrative and financial discipline designed by values and morals is exacerbated by the prosperity gospel
management, together with corrective actions, in ensuring engineered by Pentecostalism in Nigeria. It is worse that
that the goals and purpose of the organization are even within the Church, only the rich are always being
achieved (Cahill, 2006). Many frauds and financial recognized and cared for by some self-acclaimed leaders.
irregularities have passed through the church systems The requirement imposed by the Financial Reporting
unnoticed. According to Spitzer (2005), the Council (FRC) on not-for-profit organizations in order to
implementation of strong and proper internal controls ensure accountability and probity through the Statement of
leads to effective and efficient operations of the Accounting Standards (SAS) 32 has made it unconditional
organization. It is therefore required of every church leader for Churches to embrace internal control. The SAS 32
to ensure that the assets of the organization as well as the stipulates, amongst others, that financial statements for
safety of the lives of members are protected. not-for-profit organizations shall include: Statement of
The fundamental purpose of internal control includes Accounting Policies; Statement of Financial Position;
fraud and error prevention, detection, and correction Statement of Activities (income and expenditure);
(Kieso, 2010). This is vital for non-profit organizations, Statement of Changes in Net Assets; Statement of Cash
which depend on public trust more than any other flows; Notes on Accounts and Five-year Financial
organizations (Wilhelm, 2006), and more importantly the Summary. The FRC advised promoters of not-for-profit
churches, which rely on members’ benevolence, trust and organizations who were not aware of the new accounting
faith (Mulder, 1999). regime to ensure compliance by fine-tuning their financial
reporting and corporate governance structure.
This paper seeks to scientifically find out whether
Statement of problem Churches, most especially, Pentecostals, are using
internal controls in the area of finance to safeguard assets
Laughlin (1988) maintained that the Church of England and prevent losses arising from financial theft, fraud, and
sees accounting as secular exercise which should not misappropriations, and to establish the extent to which
interfere with the divine assignment. As earlier stated, the these internal control systems are effective.
concept of internal control is to ensure soundness in the
operation of any organization. In the Pentecostal
Churches, many of the leaders believed that the main Research questions
purpose of internal control is to detect and prevent fraud
and that its implementation is disreputable to their status In carrying out this research work, the following questions
of trust. The Church occupies a position whereby it could have been borne in mind:
dictate the pace or set the standard for secular or
corporate organizations to follow. The question that readily 1. To what extent have the existence and independence
comes to mind is why are Churches not imbibing the of internal control functions in the Nigerian Pentecostal
principles of internal control in their operations, most Churches been achieved?
especially in the areas of finance? One of the challenges 2. How adequate and effective are the internal control
in Churches is that standard and professional methods of systems of Pentecostal Churches operating in Nigeria
accounting records are not in place. This is based on the in detecting frauds, errors and mistakes?
premise that Church leaders and workers are holy, faithful 3. What are the changes or improvements brought about
and trustworthy people who cannot engage in any act of on the operational efficiency of the Churches?
indiscipline or financial mismanagement. But recent
happenings and recorded cases of frauds have proved
that premise wrong. Objectives
The Church has recorded some financial
misappropriations as follows: Christ Embassy fraud scam The main objective of this research work is to find out the
N39m (2002), N10m (2003) and $96,607 (2009); Yoido existence and adequacy of systems of internal control in
Full Gospel Church, in Seoul, South Korea, $12m (2014); dealing with the leaders, members, and workers of the
Nigeria Benny Hinn Ministry Crusade $4m (2005) (Igwe, Churches in financial matters. The following specific
2007). The board of trustees of Christ Embassy Church objectives guided this work are:
was incriminated for shoddy management of the church’s
account, arbitrary and curious payments, failure to comply 1. To find out the existence and independence of internal
with its grant-making policy, inadequate recording of its control functions in the Nigerian Pentecostal churches;
decision making processes and serious misconduct and/or 2. To examine the adequacy or otherwise of the internal
mismanagement in the charity’s administration (Ibekwe, control systems in mitigating the incidence of frauds,
2019). errors and mistakes;
 Faboyede et al. 25

3. To determine the effectiveness of internal control ment of effective and efficient operations, reliable financial
systems on the operational efficiency of Pentecostal reporting and compliance with laws and regulations.
Churches. Internal control is not just a single activity but a series of
activities put together by management.
According to Myers (2012), if money is expended for
REVIEW OF RELEVANT LITERATURE only Church business, it is also an important part of a
financial system, both for administrative and tax purposes.
Committee of Sponsoring Organizations of the Treadway The objective is to verify that money is not being allotted
Commission (COSO) (2009) defined internal control as a fraudulently. John (2011) said that the current environment
process designed by the management both at the strategic is ripe for scandal and Church leaders need to be wise by
and operational levels to provide reasonable assurance in completing forms and filing records. This will go a long way
the attainment of the set objectives in the area of to assist a Church in case of an investigation by tax
operational efficiency and effectiveness, reliability of authorities.
financial reporting, and compliance with applicable rules, Laughlin (1988) argued that the Church of England
laws and regulations. regards accounting as an activity that should not interfere
Internal control system can be described as the whole with the more important spiritual endeavours of the
system of control, financial and otherwise established by Church. They are allowed to exist to assist the created
management in order to carry on the business of the internal resourcing units, but their role is clearly limited.
enterprises in an orderly and efficient manner. It involves Thus, parish accounting systems are rudimentary,
the control environment and control procedure, all the precisely because they actually have no part to play in this
policies and procedures adopted by the directors and clearly demarcated spiritual units. As suggested by
management of an entity to assist in achieving their Laughlin (1988), conflicts may exist between the sacred
objectives, including adherence to internal policies, the belief systems within Churches and the secular role of
safe-guarding of assets, the prevention and detection of accounting. Internal control is likely to be viewed as
fraud and error as well as the completeness and accuracy secular rather than sacred, and as a result, considered
of records, with the timely preparation of reliable financial irrelevant and unnecessary. Persson and Tabellini (2000)
information (Benjamin, 2001). reported that although Church financial disclosures are
An internal control system consists of five interrelated relatively infrequent and not uniform across Churches, this
components that provide the foundation for fraud deficit does not appear to alter the confidence of Church
detection. Internal control is a process, effected by an members that their contributions are being used
entity’s board of directors, management and other appropriately.
personnel, designed to provide reasonable assurance Shaibu (2013) also suggested that frequent
regarding the achievement of objectives in the following reconciliation of bank statements related to offerings must
categories: effectiveness and efficiency of operations, be instituted to avoid any vacuum created for people to
reliability of financial reporting, and compliance with take undue advantage to pilfer Church offerings and the
applicable laws and regulations (COSO, 2019). need to have a purchase order that should be used to
Internal control as a management tool is very vital for the control Church purchases and advance payments to
survival or otherwise of both the profit and non-profit ensure transparency.
organizations. According to Wilhelm (2006), internal Ahiabor and Mensah (2013) posited that Churches in
control is especially important for Churches which rely on Ghana have some form of internal control systems present
public trust more than other organizations. The non- and that there is a significant relationship between internal
existent or weak internal controls could lead to asset control and the finances of the Churches or organizations.
misappropriations, corruption, organizational fraud and Although, they did not narrow down the result of their
fraudulent financial statement (Miller, 2005). Churches research to a specific denomination (whether Orthodox or
which are categorized as non-profit organizations do not Pentecostal), it appears that the result cannot be the same
and are not expected to issue shares, neither are their for all Churches globally, most especially, the Pentecostal
missions to maximize profit. As the corporate bodies are Churches in Nigeria.
accountable to shareholders, the Churches are expected
to be accountable to members of the Churches who
provided the money and materials in the effective running Theoretical framework
of their activities. The unending reports on
mismanagement of Church funds have put a demand on This research is built on and perceived from the standpoint
the functionality of the system of internal control in religious of stewardship theory as well as agency theory.
organizations (Bowrin, 2004). Petrovits (2011) defined Stewardship theory states that managers, left on their own,
internal control as the process put in place by management will indeed act as responsible stewards of the assets they
to provide reasonable assurance regarding the achieve- control. This theory is an alternative view of agency theory,
26 Res. J. Bus. Econ. Manag.

in which managers are assumed to act in their own self- for months or even years (AG Financial, 2021).
interests at the expense of shareholders. The scriptures If the banking industry which is the most regulated
also emphasize in 1 Corinthians 4:2 that stewards are industry globally could still be bedeviled with incidences of
required to be found faithful. frauds unabated, then, not-for-profit organizations and
Stewardship theory relies on a model of man that most importantly, Pentecostal Churches which are not
describes people as self-actualizing and other-serving strictly regulated in Nigeria cannot be exempted. Reports
rather than self-interested and self-serving. It assumes in both print and electronic media as well as research
that when people hold these attitudes, they will subsume works on frauds in Churches are on the increase.
personal interests to those of the principal by placing In 2013, the Economic and Financial Crimes
higher utility on organizational goals than on individual Commission, EFCC, arrested five members, including
goals. Because the goals of individuals are presumed to three pastors, of Redeemed Christian Church in Abuja,
already be aligned with those of owners and/or the following a petition of diversion of funds totaling N600m
organization, stewardship theory assumes that the use of paid by Church members for a housing scheme (Nnamdi,
formal controls such as monitoring and incentive 2013).
compensation systems are unnecessary and potentially According to Averill (2015), a long-time pastor of the
counterproductive. Greater Cornerstone Baptist Church in Tulsa, Oklahoma,
By contrast, agency theory assumes individuals are self- Willard Leonard Jones, was sentenced to 37 months in
interested and will behave opportunistically when their prison for embezzling close to $1 million from a community
interests diverge from those of principals. However, since center he helped to establish to aid the Church’s struggling
researchers recognize that opportunism does not always neighborhood.
follow from conflicts of interest, they propose stewardship Iheanacho (2010), in her research work on the
theory as an alternative to overcome the limitations of Contemporary Nigerian Christianity posited that apart from
agency theory. fraudulent ministering, Churches have cases of
Be that as it may, it has been contended that embezzlement and misappropriation of funds. Such
stewardship theory’s model of man does not realistically fraudulent cases affect public perception of the Church in
depict the way individuals think and behave; its contradiction to the basic teachings of the institution, and
assumptions regarding goals do not fully capture the its founders. For instance, the Saint Andrew’s Anglican
multiple, heterogeneous, and conflicting goals of Church Diobu, Port Harcourt, had for long been closed,
organizational stakeholders; and its dismissal of following frequent fraud related controversies within its
monitoring and incentives overlooks the value of these fold. She concluded by saying that this is an open
mechanisms for communication and motivation. Thus, it challenge to 21st century Christianity in Nigeria.
has been argued that rather than treating stewardship Greg (2013), in an overview of religious financial fraud,
theory as an alternative to agency theory, it would be better referred to the work of Barrett and Johnson in the
to consider how the two theories can be combined, using reference book “World Christian Trends”. It was reported
a more realistic set of assumptions. that, “probably 80% of all fraud cases are kept private or
It is better to treat the two theories as two parts of the swept under the carpet, but each year, a rash of mega
same whole rather than as opposites. In this respect, thefts (over $1 million each) is uncovered and publicized
agency theory and stewardship theory are viewed as two in the secular media”. The following is a small sample of
ends of a continuum. It is good to note that self-interest religious financial scandals from around the world:
and other-interest coexist and influence the behavior of
every individual to varying degrees depending upon 1. Brazil: Bishop Edir Macedo, head of the Universal
personality and circumstances, and that the assumptions Church of the Kingdom of God, and 9 of his associates
and mechanisms of agency and stewardship theories are were charged with embezzling more than $2 billion.
both important for organizational governance (Chrisman, 2. Canada: Televangelists Ron and Reynold Mainse
2019). allegedly recruited investors in a Ponzi scheme.
3. China: A whistleblower goes to jail for speaking out
after donations for earthquake victims were stolen.
Empirical literature data 4. Italy: Police confiscated 23 million euros in a Vatican
bank account as part of an investigation into money
Fraud can occur at any organization, but churches are laundering.
extremely susceptible due to their trusting nature. Church 5. Ukraine: Pastor Sunday Adelaja was charged with
leaders are responsible to God and to their congregation fraud in promoting a business venture to his
to safeguard the ministry's assets. Unfortunately, churches congregation that lost $100 million.
experience fraud to nearly the same extent that secular 6. United Kingdom: Church treasurer Derek Klein
organizations do. For these reasons, the potential for fraud embezzled funds to pay for a stamp collection.
must be taken seriously as the challenge can go undetected 7. United States: T rent Huddleston, former senior
 Faboyede et al. 27

accountant at Oral Roberts University, alleges that conclusions on the matter.

more than $1 billion was the money laundered The choice of Abeokuta Local Government Area was
annually by members of the Oral Roberts University borne out of the need to apply the convenience random
board. sampling principle. The financial activities of the ten
8. United Kingdom/Nigeria: A popular case of a Pentecostal Churches selected for the study are similar to
Pentecostal Church where it was allegedly found that and very largely sufficiently representative of what is
the Church leader was diverting the Church money to obtainable in other Pentecostal Churches. Also, the
personal covert under the heading of charity donation greater number of the selected Churches have their
(Global News, 2015). headquarters and zonal offices in Abeokuta. In view of the
9. The UK Charity Commission has indicted the Christ concise nature and number of questionnaire administered
Embassy church’s board of trustees of a wide range of questions, a 100% success was recorded in the
fraudulent practices including illegally paying more responses.
than N827 million (£1,767,250) to entities and
organizations it shares close relationships with
(Ibekwe, 2019). Data analyses

In Nigeria, there were cases of stolen money paid into Data analyses have been done using the quantitative
Churches’ accounts as tithes and offerings or fraudulently technique. This technique makes use of hypothesis
taken from members. Some of these cases are as listed analysis and correlation analysis. Hypothesis analysis is a
thus: statistical test method that uses sample data to test a
hypothesis. It seeks to validate an assumption and
1. Ex-bank PHB boss who paid the sum of N45million to determine if it is factual by exploring the null hypothesis
a Church as tithes from stolen money through a bank and the alternative hypothesis. Correlation analysis is also
transfer from Bank PHB Mortgage Limited accounts used to test the relationship between the two variables –
(Ogunbumi, 2012). ‘the implementation of internal control results in lower cost’
2. According to Banjo (2014), Economic and Financial and ‘all officers on financial matters are trusted people
Crime Commission (EFCC) arrested an Abuja civil whose judgments were sanctioned without any doubt’.
servant who paid N60m tithe to RCCG Church for Correlation analysis measures the strength of the linear
workplace fraud. relationship between two variables and compute their
3. Ikeji (2014) reported the suspension of the General association. The result shows -1.01, meaning that the
Superintendent of Assemblies of God Church from the relationship is negatively correlated. The implication is that
Church over allegations of misconduct, irrespective of the degree of trust reposed on the
highhandedness, and financial misappropriation in the managers of funds, this did not guarantee or lead to lower
administration of the Church. costs (Maryville University, 2022; QuestionPro, 2022).
4. Sahara Reporters (2015) reported how the General
Overseer of Presence Redemption Ministries
defrauded his members to the tune of N5m. RESULTS AND DISCUSSION

All these revelations therefore point to the fact that sound The first research question seeks to find out the existence
or effective internal control systems are lacking, or otherwise of internal control in the day to day financial
inoperational, or weak. There is flagrant non-compliance activities of the Pentecostal Churches. It is expected that
in the day to day operations of the Churches, especially, the 21st century Pentecostal Churches should have
among the Pentecostals (Shaibu, 2013; Irvine, 2005; guiding policy on financial matters, proper recording of
Federal Bureau of Investigation (FBI) (2015). financial transactions and detail maintenance of members
registered, most especially, major financiers. The majority
of the respondents, representing 49%, maintained that
METHODOLOGY internal control system was not in existence (Table 1).
The second research question tests the adequacy and
This research work uses survey method administered effectiveness of internal control system in detecting frauds,
through a structured and closed ended questionnaire to errors and mistake. The dimensions of importance of this
collect data. The researchers printed and distributed one are varied: whether necessary authorizations are obtained
hundred (100) copies of questionnaire to ten (10) before incurring any expense and the extent to which
Pentecostal churches within Abeokuta South Local financial impropriety is being curbed. The result shows
Government Area of Ogun State, Nigeria. The research that, though, there was no any incidence of financial
also adopts literature review approach to gather indiscipline as indicated by 78% of respondents, expenses
information from the earlier researchers and their were incurred without the authorization of the control
28 Res. J. Bus. Econ. Manag.

Table 1. The extent to which the existence and independence of internal control have been achieved.

SN Statement SA A U D SD Total
All financial transactions are being carried out in line with the policy of our
1. 25 56 1 14 4 100
church.
All financial transactions (cash inflow & outflow, income & expenditure) are
2. recorded in the relevant books of account and supported with relevant 5 50 7 21 17 100
documentation.
Our church keeps records of each member of the church (financial and non-
3. - - 9 22 69 100
financial records) and we update regularly.
Overall 10 35 6 19 30 100
SA = Strongly Agreed; A = Agreed; U = Undecided; D = Disagreed; SD = Strongly Disagreed.

Table 2. The adequacy and effectiveness of internal control in detecting frauds, errors and mistakes.

SN Statement SA A U D SD Total
Our members have been previously invited by Economic Financial Crime
1. Commission (EFCC) or any other law enforcement agency for financial - 3 - 36 61 100
misconduct or impropriety.
The Control Officer/Internal Audit Unit approves all expenses before any
2. 7 11 21 4 57 100
transaction is consummated.
All our officers and workers are trusted and as such, their judgments in all
3. 13 38 41 8 100
financial matters are sanctioned without any query or doubt.
Some of the leaders of my church have been sanctioned, expelled or
4. 14 9 7 63 7 100
dismissed on the account of fraud or reckless spending.
There are current provable cases of financial impropriety against the
5. - 2 - 77 21 100
leadership or members of our church.
There have been repeated cases of stealing and fraudulent practices among
6. - - 3 75 22 100
the leaders or workers or members of our church.
Overall 6 11 5 49 29 100
SA = Strongly Agreed; A = Agreed; U = Undecided; D = Disagreed; SD = Strongly Disagreed.

officers (Table 2). The implication is that the control officers trusted and exalted positions to plunder the finance of the
only engaged in post audit exercises. This supports the organizations without being checked.
opinion of Greg (2013) that cases of fraud in Pentecostal It could be inferred from the above that internal control
Churches are being swept under carpet. has not been given its rightful place in financial matters in
The third research question inquired from the Pentecostal Churches. The importance of internal control
respondents, the changes or improvements which have to any organization cannot be overemphasized as it gives
resulted from the implementation of internal control room for checks and balances and ultimately guarantees
measures on the financial operations of Pentecostal good corporate governance. With the requirements or
Churches. The significance of this test is to gauge the demand from the not-for-profit organizations, which
accountability and probity of the managers of funds. include Churches, by the Financial Reporting Council of
Although, it is believed that internal control reduces cost, Nigeria as contained in the SAS 32, it is ideal for Churches,
the majority of respondents, representing 62%, were of the most especially, the Pentecostal Churches, to implement
opinion that internal control is anti-Pentecostal (Table 3). proper internal control systems.
This supports the opinion of Laughlin (1988) that internal One of the areas where the internal control system
control is secular and should not interfere with divine would be much needed is in the area of updating the
assignment. details of their members, most especially, the major
The outcome of the correlation analysis carried out financiers, members of management team of corporate
shows a negative result of -1.01 (Table 4), implying that organizations, and politically exposed individuals, in
irrespective of the degree of trust reposed on the monitoring their financial commitments to the Church. This
managers of funds, this did not guarantee or lead to lower is referred to as ‘Know Your Members (KYM)’ and ‘Know
costs. The officers could therefore leverage on their Your Members’ Business (KYMB)’. This will help in guiding
 Faboyede et al. 29

Table 3. The changes or improvements in internal control effected on the financial efficiency of Pentecostal Churches.

SN Statement SA A U D SD Total
Strict adherence to expense policy is secular in nature and as such, slows
1. 22 27 6 32 13 100
down the operations of the church.
The implementation of internal control system has resulted into lower cost,
2. 11 35 14 27 13 100
accountability and probity in my local church.
All financial matters relating to income & expenditure are made available to the
3. general members of my church (through the church bulletin or notice board) on - - - 48 52 100
weekly or monthly or yearly basis.
Overall 11 21 6 36 26 100
SA = Strongly Agreed; A = Agreed; U = Undecided; D = Disagreed; SD = Strongly Disagreed.

Table 4. Correlation analysis.

X Y XY X2 Y2
1 4 6 24 16 36
2 3 5 15 9 25
3 6 4 24 36 16
4 5 5 25 25 25
5 4 4 16 16 16
6 6 7 42 36 49
7 5 5 25 25 25
8 3 5 15 9 25
9 6 4 24 36 16
10 4 6 24 16 36
46 51 234 224 269
n(ΣXY) – (ΣX)( ΣY)/ √[(n(ΣX2)-(ΣX)2)(n(ΣY2)-(ΣY)2
= 10(224)-(46)(51)/ √[10(224-46.46)(10(269-51.51
= -1.01.

against litigations, check the excesses of top the control officers. There was the prevalence of the
management, and prevent the name of God from being mindset that internal control is a secular concern. There
ridiculed. was also no positive correlation between the trust reposed
The implementation of sound internal control systems in Pentecostal Church officers and lower operation costs
will also enable Churches to distinguish the income as officers could leverage on their trusted positions to
generated from spiritual activities from those generated exploit the finance of the Churches without being checked.
from business activities. The Pentecostal Church is The issue of internal controls in Pentecostal Churches
expected to take a lead in transparency, accountability and should not only be directed at the Church workers alone
probity. Poor or non-existent internal controls will but extended to cover every stakeholder. To this end, the
endanger the effectiveness of Church workers, thus following important recommendations are being proffered:
exposing them to unethical and sharp practices. Knowing
why internal control fails and how to prevent the failure of 1. As KYC and KYCB (Know Your Customer and Know
internal control will help churches and charities to operate Your Customer’s Business) are applicable to the
in the optimal environment for succeeding in their mission Deposit Money Banks (DMBs), the same principles
(AG Financial, 2021; Table Stewards, 2022). should be extended to the Pentecostal Church. Every
Pentecostal Church should know and have the details
of information of every member. These details should
Conclusion and Recommendations include biometric data, occupation or profession,
sources of income, residential addresses, phone
On the overall, the research shows that the existence of numbers, and every other information that could assist
internal control systems were very poor and weak in the the Church or law enforcement agencies in
management of Pentecostal Churches, not only in Nigeria maintaining cordial relationship devoid of any sharp or
but globally. Internal control systems were not in existence fraudulent practice.
and expenses were incurred without the authorization of 2. In order to strengthen the effectiveness of the internal
30 Res. J. Bus. Econ. Manag.

control system in Pentecostal Churches, there is need Church to external audit and the final audited account
to put in place a robust accounting system that will be made available to every registered member of the
ensure proper documentation, recording, Church. This will not only encourage the members of
authorization, approval and timely reconciliation of the Church but also spur them to give their best to the
transactions. This will, in essence, permit reasonable service of God and humanity. In addition, every other
assurance that transactions are being carried out in income outside the normal offering should be
strict compliance with the financial policies of the receipted.
institution. There must also be checks and balances 8. The training of all staff should be taken into
on core areas of a Pentecostal Church’s activities consideration. Regular in-house and external training
which include offerings, tithes, vow and pledge of workers will strengthen the soundness of the
collections, lodgments, transfers, postings, and internal control of the Pentecostal Churches, most
withdrawals of cash. especially, in view of the requirements of the Financial
3. It is equally important for every Pentecostal Church to Reporting Council of Nigeria.
have a prepared manual for procedures or an outline 9. Frequent and timely reconciliation of bank statements
of internal controls that will assist in the training of new relating to offerings will be very necessary in order to
staff, volunteers, finance committee members, and avoid any opportunity for people to take undue
clergy men on their deliverables, in order to uphold the advantage to pilfer. The use of purchase order forms
sanctity or integrity of the organization and trust being should be put in place to control Pentecostal Church
reposed on them by the congregation and all the purchases and advanced payments. This will ensure
stakeholders. transparency. It will also bring to birth good corporate
4. The Pentecostal Church, as a representative of God, governance that will enable the management or those
should put in place effective and sound corporate charged with such responsibility to review and control
governance mechanisms. One of the principles of the Pentecostal Church finances.
effective corporate governance is effective internal
control system. The key roles of internal control are to
correct, detect and prevent frauds or any form of CONFLICT OF INTEREST
irregularity.
5. The role of Internal Auditor should not be merged with The authors declare that they have no conflicts of interest.
that of the leader of the Pentecostal Church. Every
Pentecostal Church should have independent internal
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