NBC Miami reports that the former volunteer treasurer of a Florida elementary school PTA was arrested for stealing US $32,000 from the organization. Authorities say the woman falsified documents to conceal her theft using a software program to show that the PTA's bank account was higher than it actually was and by keeping bank statements to herself. When confronted, the former treasurer admitted to the crimes and signed a document promising to repay the stolen money, according to police records.
All organizations are vulnerable to fraud — even small, public organizations in which people may assume the level of ethical standards and public accountability are high.
The PTA fraud should remind auditors about control weaknesses that warrant vigilant oversight of financial activities, including:
- Regular board oversight. Monitoring and discussion of financial assets, budgets, and expenditures are more likely to present opportunities for active board questioning as well as disclose irregularities in financial accounting activities. Boards, particularly of not-for-profit or similar organizations, should demand that the structure of financial controls and reporting be appropriate for the organization's mandate and business focus.
- Clear roles and responsibilities in relation to financial controls. More than one person should be involved in receiving and monitoring financial statements from the organization's bank or accountant. Smaller organizations also should consider splitting the roles of treasurer among two or more people.
- Detective controls. In situations where there is not enough staff to provide sufficient segregation of duties, detective controls should be established. For example, a board member could review significant bank transactions while another board member could review and approve all changes of bank account information. This would include examining regular bank statements, which could reveal a change in format or detail.
- Regular audits or assessments. Conducting a regular audit, fraud risk assessment, or similar external assessment of the organization's financial situation could identify irregularities and unclear policies, procedures, or practices.