Al Sinclair, Executive Director and former President of New Jersey Youth Soccer, is making an effort during the beginning of 2009 to educate New Jersey clubs on loss prevention. Since this type of information is valuable to all of us, he was kind enough to let The Administrator use one of his articles. Below is invaluable information on preventing club embezzlement that we hope you take time to implement some of the procedures at your own programs.
Over the past few years, a number of our member Clubs have suffered financial loss from having a person embezzle money from the Club treasury. Invariably it was the Club treasurer who was the culprit. One of the common threads in all these losses is that the money was taken over an extended period of time. In one case, this period of time was almost four years.
One of the most important tools that an organization has to prevent loss is to require regular accounting reports from the treasurer. Every time the organization has a formal meeting, the treasurer must provide a complete report of the finances of the organization. This should include a listing of all checks written, and Profit and Loss Statement or equivalent, and a balance sheet. With today’s software available, these reports are easily obtained without significant work.
If your treasurer is not able to provide these reports regularly, you have a problem! Do not allow the situation to continue. The other members of the governing body need to insist on these reports and investigate why the reports are not being submitted.
To be able to embezzle significant funds from an organization, a person must control the checkbook for the Club’s bank account, be the only required signature on the checks, and must get the bank statements from the bank. Therefore, to break this chain, some other person should be involved in the process of writing checks. There are a number of steps you can do to break this chain.
1. Your organization can require that every check have two signatures. We understand that this can be a hassle, getting two signatures on every check. One alternative could be to require two signatures on checks over a specific dollar amount. This would allow a club to write checks for regular operation of the club, but limit the amount of money that could be spent at one time.
2. Separate the checkbook from the person who signs the checks. If you organization is large enough to require the function, have a bookkeeper who reviews bills and prepares the checks for signature by the authorized party.
3. Have the bank statements go to someone else in the organization before given to the treasurer. This is probably the easiest and very effective way to break the chain. If someone else gets the statements, they can review them for suspicious activity. They can look at to whom checks are being written and the amounts of the checks. If your bank allows you to review your account online, this becomes a quick way to make this review
If you suffer a loss, the first thing you need to do is to contact your police department. Please do not allow the person to get away with this embezzlement. We have had clubs reach agreement to let the person pay back the loss to make the matter go away. Invariably, the person does not pay back the money as they don’t have funds to make the repayments. They took the club’s money because they needed money. Where are they going to get sufficient funds to pay back the loss?
A fidelity bond covers each of our member clubs and leagues. If you suffer a loss, this protection will help recover some of the loss. To file a claim, you need to provide NJYS and our insurance carrier with a statement of what happened, the amount of the loss, and a police report. You cannot file a claim without the police report.
Each of our clubs is dealing with significant amount of money over the course of a seasonal year. It presents a tempting resource for someone in need of money. Do not allow your players to be robbed. Implement some controls so that no one can embezzle money from your organization.
Great points Al! If you have a comment click on the header and post below.
~Sam@bluesombrero.com
this is valuable info. I am willing to bet that many non profit organizations do not even think about financial loss prevention. they are usually just happy to find someone who to volunteer to take on the financial duties of the organization. Once that someone is found, the organization let's them handle all the finances, crosses their fingers and hopes they are honest and do a good job.
I know my soccer organization needs to be more proactive about this.
Posted by: docguru | January 12, 2009 at 06:29 AM
timely and important for all to read.
Posted by: m gargano | January 12, 2009 at 06:29 AM