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
Great article for ANY organization! Another thing that I have seen before is that a seriously close relationship between the leader and bookkeeper. (treasurer) Sometimes those close relationships make it difficult to hold each other accountable.
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We had a similar experience in our support group years ago. Fortunately we asked the lady to resign before it got to the 10s of thousands of dollars, but she managed to keep a whole lot of money for YEARS. The first 6 signs were there for us, to the T. Our ethical dilemma came the next year when we heard she was teaching at different co-op. Should we or should we not warn them? We ended up deciding we should. Don’t know what happened after that.
Wisdom would call for safeguards to be set up in order to remove any temptation for dishonesty. Sad that it should be necessary.