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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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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What to do if you suspect embezzlement in your homeschool group

Cover Money Mgmt HS Org

I hope you never need this information, but if you suspect someone in your homeschool group is embezzling money, here’s what you need to do:

(an excerpt from my upcoming book Money Management in a Homeschool Organization: A Guide for Treasurers. Expected release date January 2014)

What to Do If You Suspect Fraud

Get help from an attorney, a CPA with fraud experience or a certified fraud examiner. If an investigation is warranted, says Allan Bachman, education manager of the Association of Certified Fraud Examiners, it should be conducted by a trained professional and not by group members with no training in such matters.

Resist the temptation to confront the suspect. If you try to handle the matter internally, you could put yourself and your group at risk for liability.

Contact the police when advised by your lawyer. This is an agonizing decision, but it should be made based on the evidence, not your personal relationship with the person you suspect.

Cooperate with the authorities. The police will review evidence, question the suspect, and determine whether he or she should be charged. If police decline to pursue the case, your attorney can advise you on a civil suit.

When communicating with your group, focus on the steps you are taking to recover the money and prevent theft. Do not comment on past actions, including the alleged theft and any current or pending charges, unless the person has been convicted.

Keep your group functioning as normally as possible. A legal case can take a year or longer to resolve. You don’t want to put your events and other activities on hold.[i]

 

Please do not let embezzlement go unpunished. The guilty party will just go onto another organization and could do more damage. Seek to get the embezzled funds paid back to you.

Carol Topp



[i] Ghezzi, Patti. “Protect Your Parent Group From Embezzlement.” PTO Today. http://www.ptotoday.com/pto-today-articles/article/1180-protect-your-parent-group-from-embezzlement. Accessed October 29, 2013.