Financial Best Practices are NOT Just for Treasurers
By Lisa Knox
If you have been involved with a PTO or booster club for any given amount of time, chances are you’ve heard us talk about “good internal controls,” “proper accounting procedures,” “proper cash handling,” “financial oversight,” and a myriad of other similar terms. And you’ll hear us continue to talk about that regularly. There is a reason for that. Nationwide, instances of suspected fraud and misappropriation of funds in PTO and boosters organizations has been on the rise. And, unfortunately, CSB member groups are not exempt from such claims. In fact, each year, the CSB is involved in investigating one or more reports of suspected fraud or misappropriation. There have been claims ranging from unbudgeted or unapproved expenditures, to theft via debit card misuse, to theft via undocumented cash withdrawals. In some cases, the investigations have led to the filing of reports with law enforcement agencies.
So what can your group do to protect itself? Begin by watching for these Financial Red Flags:
* The Treasurer does not complete a bank reconciliation every month, which is reviewed by a non-signer on the bank account.
* Bank statements/reports not seen by treasurer, president, other signers on the account (if applicable), and board members on a monthly basis.
* Fundraiser deposits that include only checks and no cash.
* Financial reports not given at executive or regular meetings.
* Beginning balance on financial reports doesn’t agree with last reported ending balance.
* Financial reports do not show each deposit, each check written, figures do not balance/total.
* Money being counted by only one person.
* Missing checks or deposits.
* Checks made out to family members.
* Cash withdrawals.
* Checks made out to "Cash".
* Debit card transactions at businesses not applicable to normal for PTO/booster business.
* Two or more signers on the bank account related, married, or residing in the same household.
* Receipts not being given for money received.
* Invoices/Receipts missing from documentation.
* Budget not approved by membership.
* Fundraising activities not approved by membership.
* Amount of profit doesn’t agree with amount in contract signed with fundraising company.
* Less money deposited for fundraiser than paid to company for product received.
* Bills are received for items not in budget or approved by membership.
* PTO/Booster Club members profit monetarily from any fundraiser.
With awareness of these red flags and all board member eyes on the lookout for weak practices like these, you position yourselves nicely to ensure best practices ARE in place to avoid falling victim to fraud and misappropriation of funds.
