Workshop objectives
• Definition of terms: theft, fraud, and
embezzlement
Preventing Theft in
Your PTA.
• Warning signs of theft, fraud, and
embezzlement
• Ten tips for fraud prevention
• What to do if you suspect theft
Understanding Sound
Financial Practices
Theft in the PTA
• Conducting a financial review
Actual thefts
• Former Westerville PTA President sentenced
for theft (over $24,000) The Columbus
Dispatch, OH (2014)
Cops: Ex-PTA Treasurer stole…
• PTA Treasurer Charges with Grand Theft (over
$23,000) CBS Miami, FL (2012)
$10,000.00
Daily Record, NJ (2007)
Defining theft, fraud and embezzlement
Theft:
“The action or crime of stealing.”
• Former Menifee PTA treasurer charged with
grand theft (over $17,000) UT San Diego, CA
(2013)
Defining theft, fraud and embezzlement
Theft, fraud, and embezzlement in PTA all
amounts to one thing, stealing money from:
Fraud:
“Wrongful or criminal deception intended to
result in financial or personal gain.”
Embezzlement:
“…Steal or misappropriate (money placed in
one’s trust or under one’s control).”
For our purposes, we will use the terms theft,
fraud, and embezzlement interchangeably.
Your
children
Your PTA
Your
school
Your
community
Your
state
Your
National
PTA
Source: AskOxford.com
1
Defining theft, fraud and embezzlement
Stealing isn’t the only way PTA is cheated of
money…
Withholding dues is another method of
depriving PTA of needed funds at the local, state,
and national levels
The theft triangle
• Loss of members and outreach
• Damaged reputation and relationships
• Loss of advocacy at the local, state, and
national PTA
• Loss of grants
• Most of all, theft hurts PTA’s cause for
children
Warning signs of theft
•
•
•
•
•
•
Opportunity
Motivation
The impact of theft
Delayed reports
Cash receipts
Many corrections to the ledgers
Lifestyle changes
Missing money on Friday, replaced Monday
Board not given access to bank statements
Rationalization
Warning signs of theft (cont.)
The theft triangle
• Signers are related
• Checks made out to “Cash”
• Large checks, pre-signed checks, or bouncing
checks
• Not following internal controls
• Avoid/delay annual financial review
Opportunity
Motivation
Rationalization
2
Tips to prevent theft
•
•
•
•
Annual financial reviews
2 signers (not related)
Monthly reviews of activity
Verify cash logs, provide receipts and bank
deposit slips
• Make bank deposits immediately
• Have at least two members count cash
Tips for reviewing the treasurer’s report
• Review bank statements and current
treasurer’s reports every month.
• Does beginning balance of current report
equal ending balance of previous report?
• Is ending balance shown on report close to the
bank statement balance?
• Are income and expenses of recent events
shown on the treasurer’s report?
• Does beginning balance + income – expenses =
ending balance?
Downside of not reporting/prosecuting
• Sets precedent for additional thefts
• Creates an environment that encourages theft
• Loss of credibility and respect for your PTA
among members, the community, partners,
and donors
• Voids bonding insurance payment if report is
not made
Tips to prevent theft
•
•
•
•
Review accounts payable and vendors
Secure the checks
Don’t pre-sign checks
Look for missing checks or checks made out to
cash
• Track all bills and use original invoices
• Ask for proof of tax, membership, insurance
and other fee payments
• Ask questions when you do not understand
something
Common reasons theft is not reported
Negative
publicity for the
PTA
Concern for
safety if the
offender makes
threats
Legal action by
the offender
To avoid
embarrassing
the offender
and/or
offender’s
children/family
What to do if you suspect theft?
• Conduct a financial review immediately
• Call the region director or WSPTA office
• Document the process
• DO NOT
Seek advice from principal or school district
– Make public or private statements
– Take action without board formal approval
–
3
Will doing a financial review reflect…
Financial Reviews
A lack of trust
or
A sound business practice?
The first step in sound financial practices
Who can conduct a financial review
• Qualified accountant
Financial review preparation
Always have books as current as possible
• Committee of PTA members
–
–
–
–
–
At least 3 members
No check signers for the period being reviewed
No family members of signers (recommendation)
Incoming treasurer
Treasurer should be available by phone
Provide the items listed in Money Matters
Organize items in order they will be needed
during the review
The financial review checklist form is in Money
Matters
Responsibilities for the review
Acting on the report
• Financial review committee
Results and actions reported to the
membership:
• Everything is in order
• Procedural improvements are
recommended
– Investigate/examine the records
– Draw conclusions from the facts
– Present a written report to the board of directors
• Treasurer
– Provide records and serve as a resource
• Board of directors
– Receive the report of the committee
– Act on the report
– Share the report with the general membership
– Board examines findings and implements
changes needed
• Improper administration of PTA funds
– Board must examine findings and act
immediately to fix what is wrong
4
Financial review conclusion
• Financial review is sound business practice
• Financial review may be conducted by a
committee of at least three PTA members or a
qualified accountant
• Financial review committee must prepare a
report for the board
• The board must take action on the report
• The board reports to the membership
If funds are missing
•
•
•
•
Call the WSPTA office and region director
Only the board takes action
Do not seek advice from school
Do not make statements or take action
without approval of board
• Maintain board confidentiality
FAQ regarding insurance
FAQ regarding insurance
What does a fidelity bond policy cover?
When should a PTA update its fidelity bond
policy?
Inform the insurer of any changes (people) during
the year and cover the position, not the person.
Determine if a “blanket” policy would be a better
value.
Protects the cash of the PTA unit against theft,
fraud, and embezzlement
Who should be covered under this policy?
Anyone in your PTA who has access to or handles
money (e.g., treasurer, president, fundraising
chair)
Note: AIM insurance requirement:
The bank statement must be seen by a nonsigner on the account every month and signed
and dated by that person.
Resources
WSPTA staff
Region director
Money Matters
PTA and the Law
www.wastatepta.org
5