| Internal controls are the first line of defense against accounting fraud and provide churches protections commonly seen in for-profit businesses. The strength of internal control policies and practices significantly determines this fraud vulnerability and has a causal link to the likelihood of future losses. No external entity enforces an autonomous church's internal control policy, so local leaders must drive the implementation of internal controls of the individual churches. This non-experimental, quantitative, correlational study of Churches of Christ was conducted to examine the relationships between the annual budget size, leadership CPA licensure, and nepotism potentiality on the degree of internal control implementation. An online survey was distributed to 2,757 Church of Christ church business administrators in seven states. The data collection resulted in a final sample of 122 (N = 122) surveys. The two methods used for statistical analysis in this study were one-way ANOVAs and a normal correlation test. The findings provided statistical support that churches with small budget sizes had fewer internal controls in place than churches with large budget sizes, and churches with no CPA leaders had fewer internal controls in place than churches with either a CPA elder or a CPA deacon/treasurer. While a weak and negative correlation was detected, statistical support did not exist for the relationship between nepotism potentiality and the degree of internal control implementation. The Churches of Christ had been a largely overlooked population in previous studies. Recommendations for practice included, but were not limited to, incorporating an audit, finance, and contribution counting committee into church internal controls, as well as utilizing a CPA to develop and maintain these systems. Recommendations for future research included, but were not limited to, an examination of the impact of social loafing in church leadership scenarios and a repetition study using the interview method for data collection. |
