Avoid Being a Victim of Fraud

//Avoid Being a Victim of Fraud

Avoid Being a Victim of Fraud

The amounts of stolen money are hard to believe. $131,000. $35,000. $20,000. These figures, according to police, are how much was embezzled by dishonest parent group volunteers in three separate cases last year. It’s difficult to swallow. But sometimes volunteers – people whom you may have known for years, people you trust – do not always have the best of intentions when it comes to safeguarding your non-profit group’s assets.

“Long after my term as PTA President, I would get these calls from vendors who hadn’t been paid and families who hadn’t received merchandise,” recalls Terry Barr of Redmond, Washington. “I started making phone calls, beginning with the treasurer who was very evasive.”

After further research, Terry learned that the bank account had been closed. The principal was in the dark. And the elementary school, which her children no longer attended, was out $24,000. It’s a story being heard more and more – but there are preventative steps you can take as a PTO leader to avoid becoming a victim of fraud.

Two Heads are Better than One
Always require two signatures on every check and never leave individuals alone with cash. A finance committee, comprised of the president and two board members, should review all transactions and bank statements monthly. A complete audit by a third party, preferably a certified accountant, should be conducted annually.

Deposit Cash Daily
Never leave money unsecured in unlocked containers. Don’t allow volunteers to take cash home. Avoid leaving cash at school overnight no matter how late it is or how tired you are after the event is over. Once money is counted, each person should sign a “funds received” form and put the money in a locked box for the treasurer to deposit within 24 hours. Petty cash should not exceed $100.

Keep it Formal
No payments should be made directly from daily cash receipts. Develop a paper trail by requiring financial requests, vouchers or reimbursement forms before any payment is made to a volunteer or vendor. And remember, two people should always be present whether counting or distributing money. A common approach is to have one person (a secretary for example) prepare the invoice and check request, and two others (president and treasurer) to write and sign the check.

Get Insurance
Even well crafted cash controls cannot protect every non-profit group from theft. By purchasing a fidelity bond, groups insure that if any money is stolen, it will be recovered. Liability insurance to protect officers, board members and other third parties also is a good idea. Any agency can provide this coverage; however, you may want to contact other parent groups in your area for references.

– source AFRDS