Fraud in a homeschool group

HandsWithCash

 

I received a phone call from a homeschool support group leader that broke my heart. She had just learned that her treasurer had embezzled over $10,000 from her group during the past two years. Her tale was heartbreaking as she spoke of what painful lessons she had learned and how to go forward.

The leader saw a few things that tipped her off:

  • The treasurer’s business income had taken a recent financial hit making his personal finances in trouble.
  • No budget was created.
  • The treasurer was not detailed oriented.
  • The treasurer did the bank reconciliation, so no one else saw the bank statements.The checkbooks was kept locked in the treasurer’s business office and frequently inaccessible.
  • The leader had a difficult time getting the treasurer to write checks to members for expenses.
  • The treasurer was married to the vice chair, who was a close friend of the leader, so the leader was reluctant to confront her friends.
  • The board was small and few people were willing to volunteer, making the leader desperate and grateful when anyone said they would serve as treasurer.

Here is what the group is doing now:

  • Consulting with a lawyer about criminal prosecution.
  • Pursuing restitution from the treasurer.
  • Using a bank account with on-line access for visibility.
  • Having someone besides the treasurer do  the bank reconciliation.
  • Creating a budget.
  • Amending bylaws and policies to add accountability. The treasurer will be required to make financial report at every meeting.

I hope you never face a similar situation.

To prevent fraud in your homeschool group, follow the practices mentioned above and in my book Money Mangement for Homeschool Organizations which you can order from the Bookstore page.

I also offer an excerpt from the book, a list of Recommended Financial Practices in the Chapter titled Fraud: It Couldn’t Happen to Us. It’s so important that your homeschool group put in place good financial oversight that I’m offering that part of the book at no charge.

Carol Topp, CPA

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Does 501c3 Status Protect Our Homeschool Leaders?

 

What can you do to protect your homeschool group’s leaders?

Does becoming a 501c3 organization help?

In this short podcast episode (12 minutes)  Carol Topp, the HomeschoolCPA, will explains what 501c3 status is and how to protect your leaders.

 

In the show Carol mentioned a Facebook group called I Am a Homeschool Group Leader

She also mentioned some policies for your group to have from HSLDA: https://www.hslda.org/GroupServices/Leaders.aspx/Legal

 

Featured resource

The IRS and Your Homeschool Organization book.

The information in this book has been helpful to homeschool support groups, co-ops, music and sports groups to understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

 

Carol Topp, CPA

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Homeschool field trip leader wants checks written to her (or she’ll quit!)

From looking at your book, Money Management in a Homeschool Organization, it appears that all field trip money should be run through the group’s account. Checks should be made out to the group, any cash receipted, then one check going out to pay for the field trip. This seems to be a real hassle, especially since trip attendance can change the day of the trip due to illness, etc.

After a year of not having field trips, a committee was put together, so now some are on the calendar. It was my belief that the above needed to be practiced. The leader refused. She wants the money paid to her, checks preferred, no receipts. This is how she operates another large homeschool prom she coordinates for another set of people. I was on the field trip team for years. This has never been done before! If we do not do it her way, she won’t do field trips.

I am new as Treasurer. I don’t know if we can do that, legally.

The other question it brings up is putting those field trips in our yearbook (we do a yearbook each year of our sports, activities, field trips). If they are not really functions of our group (which is what the leader is saying), can they be in yearbook? If they are in yearbook, does the money need to be run through the account and all that hassle?

Thank you so much!
Karen M Treasurer

 

Karen,

Thank you for contacting me. I’m glad to see you have read my book Money Management in a Homeschool Group  and are trying to be compliant with good money practices.

Yes, all field trip money should go through your homeschool group’s bank account. But in reality, sometimes it is easier to collect cash on the day of the event and pay for the field trip that day with cash. I understand that. But, as much as possible, if checks are collected they should be made out to your organization and deposited in the organization’s checking account.

It greatly concerns me that your field trip volunteer is demanding that checks be made out to her. That is a red flag! It looks suspicious. She is trying to direct money that belongs to your group to her (that’s called embezzlement!). Tell her that your group does not do things in an improper way just because another group does it that way. You are seeking to implement good financial practices and that means no checks for funds that that belong to the organization are written to a volunteer (i.e., her).

Tell her that if checks are written to her then:

1. It is personal income to her and needs to be included on her personal tax return (!) and
2. If checks are written to her then your homeschool organization is not sponsoring the trip and your insurance will not cover the event. Her personal insurance must cover the event (Get her to agree to #1 and #2 in writing!) and
3. If the checks are written to her, then this is not sponsored by your group and should not have your group’s name associated with the field trip or include it in the group’s yearbook.

This is less a legal issue than a moral, ethical problem. If a volunteer insists on checks written to her personally and threatens to quit her volunteer job if you don’t comply with her demands, you have an ethics problem.

I am concerned that her behavior and demands sound as if she is trying to embezzle money. Have nothing to do with her, at least as far as handling money goes.

If she threatens to quit leading field trips consider yourself fortunate!

For more help in managing the money in your homeschool group get my book Money Management in a Homeschool Organization or listen to these podcasts:

How to Handle Reimbursements

Can a Homeschool Group Collect Money Now for Next Year?

What Homeschool Leaders Don’t Know About Fundraisers

Carol Topp, CPA

P.S. I will be unavailable from October 24, 2017 through November 5, 2017. I will be on a long-desired trip to Israel, walking where Jesus walked! Thank you in advance for your patience as it will take me some time to catch up after I return.

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What Does It Take to be a Nonprofit?

 

It takes two things to be a nonprofit. Do you know what they are?

Which one are homeschool leaders doing well and which do they mess up most often?

HomeschoolCPA, Carol Topp, will explain what it takes to be a nonprofit in this short podcast episode (13 minutes).

In the podcast Carol mentioned that she offers consultations with your homeschool group leadership via phone or conference call.

To schedule a private phone consultation with Carol Topp, the Homeschool CPA visit: http://homeschoolcpa.com/services/consultation/

 

 

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HomeschoolCPA unavailable until November 6, 2017

Image from PilgrimTours.com

I will be unavailable from October 24, 2017 through November 5, 2017. I will not be replying to emails and will be unavailable by phone.

I will be on a long-desired trip to Israel, walking where Jesus walked!

I’m traveling with a group called Pilgrim Tours. I’ve heard nothing but rave reviews about their tours. It will be a busy 10 days since we are traveling up and down the country seeing Galilee, the Dead Sea, Masada, Jerusalem and much more.

Thank you in advance for your patience as it will take me some time to catch up after I return.

Carol Topp, CPA

HomeschoolCPA.com

The Difference Between Nonprofit and Tax Exempt Status

 

Do you know the difference between nonprofit and tax exempt status?

The difference can be confusing, so HomeschoolCPA, Carol Topp, explains the difference in plain  English and gives a real life example in this podcast episode.

 

 

Featured resource

The IRS and Your Homeschool Organization book.

The information in this book has been helpful to homeschool support groups, co-ops, music and sports groups to understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

Carol Topp, CPA

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Simplify your homeschool group fees (please!)

Carol,

Our all volunteer homeschool co-op charges fees for several things:

  • A $20/family registration fee.
  • A $12/family fee to pay a cleaning crew for cleaning.
  • The building usage fee is $40/student/school year.
  • A $4 PayPal fee per transaction.

Then some of the class teachers charge a supply fee or require the parents to purchase books, etc.
Is there a way to simply these fees?
Emily

 

Emily,

I’ve seen lots of homeschool groups with complicated fee structures. There are separate fees for the facility, the supplies, the insurance, the website, etc. The list of fees on the parents invoice is 5-6 separate lines!

Something like this is invoice overkill!

You don’t need to be this complicated with all the separate fees!

Most preschools, private schools, colleges,  etc. include all their fees into one tuition fee charged to parents. (Okay, I  know that colleges love to charge lots of fees for supplies, etc. and then can claim they are not increasing tuition!)  The school adds up all the expenses to operate their program and charge the parents enough to cover those expenses (that’s why a budget is so important). They lump everything into one bill to the parents called “tuition.”

Instead, just lump it all the fees into one fee, call it student fees or “tuition,” if you like. The parents do not need to see all the details of what goes into running the organization; that’s what the board does. The budget is the place to list the expenses and see if the tuition charged is enough to cover all the expenses.

Simpler invoice to send to parents. All fees lumped together.

P.S. About the Paypal fee you’ve been charging…Paypal forbids you tacking on an extra charge to cover their fee. It’s in the User Agreement your organization agreed to when you signed up for a Paypal account. It says, “You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method.” So just roll that fee into your total fee charged to parents.

Why You Can’t Charge Clients Paypal Fees + What to Do About It.

Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders

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What Does a Treasurer Do?

 

Do you think all a treasurer does is write checks? Their job involves a lot more that that! Carol Topp of HomeschoolCPA explains the tasks a treasurer does and why her position needs lots of oversight in this short podcast (14 minutes).

In the podcast Carol mentioned a list of Best Financial Practices for homeschool organizations. Find it at  http://HomeschoolCPA.com/Fraud

 

Carol Topp, CPA has written a book just for homeschool treasurers:

Money Management in a Homeschool Organization

  • Does your homeschool group manage their money well?
  • Do you have a budget and know where the money is spent?
  • Do you know how to prevent fraud?

This 115 page book will help you to open a checking account, establish a budget, prevent mistakes and fraud, use software to keep the books, prepare a financial statement and hire workers. Sample forms and examples of financial statements in clear English are provided.

 

Carol Topp, CPA

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Update to Paying Workers in a Homeschool Organization

 

I released the 2nd edition of my book Paying Workers in a Homeschool Organization in November 2016, 11 months  ago.

Now, less than a year later, it needs an update. Several events occurred that required me to research the issue of worker classification for homeschool organizations. As a result of my research, I have made several changes to the book.

The update is significant enough that I’m calling it the 3rd edition!

 

The paperback book will be unavailable for a short time while it is getting updated. I expect the paperback and Kindle versions to be ready by October 15, 2017.

Update (October 13, 2017): The paperback version has not been updated. The Kindle update should be completed before November 1, 2017.

The ebook version (in pdf) is available now.

Wonder what changed? Or maybe you bought an earlier version of the book and you want to know what’s different.

I created a document explaining what was added or eliminated from the book between the 2nd and 3rd editions. I clarified when a teacher should be paid as an employee and added some additional Sample Agreements including an employment agreement.

Summary of Changes to Paying Workers 3rd edition (click to open the file).

Carol Topp, CPA

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What Does a Secretary Do?

 

What does the secretary of a nonprofit organization do?

A secretary does a lot more than just record minutes of meetings. Carol Topp of HomeschoolCPA explains the important tasks a secretary does as the keeper of important papers in a homeschool organization in this short podcast episode (13 minutes)

In the podcast Carol mentioned …

Homeschool Organization Board Manual

This manual will help your organization’s secretary assemble all your important papers.

But this is more than just a few cover sheets for your binder. It is also a 55-page board training manual with helpful articles on:

  • Suggested Board Meeting Topic List
  • Board Duties
  • Job Descriptions for Board of Directors
  • What Belongs in the Bylaws?
  • Compensation and Benefits for Board Members
  • and more…

 

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