Wednesday, April 2, 2008

That's where they ran into a great big hassle...

I don't know much about the finances of a cub scout troop or an elementary school PTA, but I find it hard to believe that someone could steal more than $20,000 from each over the course of ten months before anyone figured out that something was not quite right. How much money does a PTA and a boy scout troop rake in a year, anyway?

Of course, it helps that the culprit was the Treasurer of each organization. A simple way to prevent this scale of fraud would be to have the bank statements and canceled checks mailed to someone other than the person who is keeping the books, and have that person take a critical look at the money flowing out. While obviously not completely foolproof, that simple step can prevent a whole lot of potential problems from happening. Too many small companies rely on only one person to handle the finances, and that is asking for trouble. There was an article in the New York Times recently about fraud going on in non-profit companies. According the Times article, on average 13% of all money donated to charities in a year gets stolen. If true, that is pretty serious. Of course, 73.38% of all statistics are completely made up on the spot.

Even so, it would not surprise me to see more fraud like this going on in smaller non-profit associations and the like in Howard County. If you are involved with a small charity, take steps to prevent this kind of embarrassment.

2 comments:

Anonymous said...

The problem is that smaller companies and organizations do not have enough staff or volunteers to institute the simple internal controls you suggest.

I am more surprised that it was caught so early, at all.

jim adams said...

Anon, I agree, shortage of staff plays a big part.

I also agree with Diana Aviv, spokesperson in the article,the report relied on estimates of overall fraud. This weakens the statistical accuracy.

Then there is F.M.'s information, 13% times the 73.38% (accurate statistic, right) which would make it 9.54%, instead of 13%.

So who is to know? One thing I do know is the bad hearted can't steal enough, the good hearted can't give enough.