Inter-Church Organization Inc.

“Megan abner & natalie orme are family members of the hosea family”

“In january 2017, we discovered a diversion of assets by the existing executive director (non-board member- paid full time position). This person was removed from the premises by the local police on february 13, 2017. The embezzlement we completely documented was from years 2014, 2015 and 2016. The following narrative attempts to document the high-level theft. These total $29,300. However, we feel the fraud exceeded $100,000. The individual was embezzling funds from the payroll system, accounts payable process, fictious accounting coding for incentive income. Unfortunately, the board feels that these violations had been going on for over 15 years but discovered in january 2017. Payroll system: the employee had sole control of the in-house intuit payroll system. We discovered she had habitually "grossed up" for all applicable taxes on her annual bonus payment. This exceeded $9,000 for years 2014 and 2015. Additional payroll related issues were unauthorized 2015 christmas bonuses grossed up and paid to her and the three other employees exceeding $3000. Account payable: the employee submitted inflated cell phone reimbursement amounts on a monthly basis. This occurred from 2011 through her termination in 2017. This exceeded $2500. Accounting codes: the employee, via the board's approval, was paid an annual incentive bonus on the total grants she obtained. This began at 5% in 2006 and was 7% prior to her termination. In addition to the "grossing up" taxation discovered in the payroll system, we also discovered she was falsifying the accounting code for the quickbooks data entry. We used different codes to categized the income/revenue coming into the organization. Example: individual contributions are a 4110, churches are 4120, companies are 4130, foundations are 4165 and grants are 4400. In her deception, she would code donations from companies and foundations as grants. This was then keyed into the quickbooks. At the end of our year, the accounting system reporting would have the correct donation totals in aggregate but skewed by category. The inflated grants number was what the employee's incentive bonus was based upon. For years ending 2014 and 2015, the grants totals were inflated $107,000 and $101,000 respectfully. The deliberate mis-coding equaled an overstatement of $208,000. This was multiplied by the agreed 7%. The inflated amount and grossed up taxation paid to her was $9700 (7500 fictious coding/2200 taxation) and $14,100 (7000 fictious coding/7100 taxation) respectfully. Unfortunately, we discovered evidence that this mis-coding had begun as far back as 2008. Corrective action taken: 1. Payroll system shut down. Board outsourced all payroll functions to a provider. (sept 2017) 2. In-house quickbooks accounting system shut down. Board outsourced all accounting functions to a cpa firm (sept 2017) 3. All contribution coding has 4 eyes review. (feb 2017) 4. All account payable invoices must have approval for personal reimbursable expenses. (feb 2017) 5. Asset management outsourced to etrade investment management (sept 2017) 6. Prior board president, vice president and treasurer replaced effective july 2017 7. New experience executive director hired. (aug 2017) i submit this diversion of assets with a heavy heart. I was the person who discovered the tangled web of deception, mis-management and fraud. Prior to retirement, i had years of experience with internal banking processing/control/reconciliation from my employment at pnc bank and procter & gamble. Please direct any questions to me. In closing, our board secretary and i spent countless hours resurrecting this organization always keeping the ultimate goal in mind our mission.”

“Document reviewed by officers first, then presented to board for review”

“All board members sign a conflict of interest document annually”

“Salaries reviewed annually at the board meeting in january. Compensation is determined by peer organizations of similar size/scope. Job performance is a key factor as well”

“Documents are available to the public upon request”