There are ways, though you can reduce the chances of your department being on the front page of the newspaper with a photo of your company president doing a perp walk in hand cuffs. With some basic business controls, procedures, and processes, you can make it harder for these individuals, less tempting, and hopefully discover nefarious activities before they become bank account busting.
This isn’t about trusting good old Harry who’s as honest as the day is long. Honest Harry and others like him will welcome financial controls because it removes trust from the equation and the opportunity for questionable activities. If the opportunity exists, somebody, eventually, will take it. Maybe not Harry, but who knows about the gambling problem his brother-in-law, the company president has.
The basics have a lot of common sense components. You don’t need an MBA to put these in place.
· Establish rules. They need to apply to everyone—no exceptions.
· If it involves cash, more than one person needs to be involved. This can’t be repeated too often, and as the teacher said before the test, you will see this material again.
· Have a line item budget. The treasurer should monitor receipts and revenue versus that projected. Likewise, the expenditures for each line item should be noted. A monthly report with this data provides a transparent picture to the organization and helps the leadership with their management responsibilities.
· Reconcile bank accounts on a monthly basis. Another job for the treasurer, right? Wrong. Someone other than the treasurer or anyone else handling funds or writing checks should have this job. This provides an independent verification and removes one obvious opportunity for someone to cook the books.
· Periodic audits. Annual is best, but at least every couple of years, an audit should be completed. When treasurers change is also another good time to ensure a clean bill of financial health. Accountants are expensive, you say, and you’re right. If the funds are hard to come by to pay for an audit, consider asking a local CPA who lives or works in your first due if they would consider doing it as a donation. Wait until after tax season, though. Ask if they see any opportunities to improve financial management, procedures or record keeping. Use their expertise to your advantage.
· The two (or more) person rule. Multiple signatures on checks, counting cash, opening mail, are all times to have more than one person involved. Cash is not your friend when it comes to financial safeguards. Minimize it where possible and always, always have more than one person involved.
This isn’t a comprehensive list but just these few items will go a long way in limiting the opportunity for financial funny business.
So it’s all about the money, right? Wrong; the money is important but the main issue is trust. Not Honest Harry, the long term treasurer. The trust of the citizens we’ve sworn to protect is what we need to ensure. It is easily damaged and difficult to repair. We’re the stewards of that trust, measured by how we take care of their money—whether raised by taxes or chicken barbecues and pancake breakfasts. These folks have the right to know that it’s being spent carefully and honestly.