Not sure how she got away with almost $10K without being noticed, but this is a real issue in this day and time with electronic banking and struggling economy.
Funny enough, proper handling of finances was one of things discussed in last night's commissioner's meeting. And the BSA just recently posted about this subject within the past couple weeks....so maybe a trend? Or maybe it's just something we need reminded of.
Thankfully, I don't have a problem in my unit. I have a certified CPA filling our Treasurer role and he does an outstanding job. We have transparency with our books, and I and the key leaders get a monthly statement of what comes in and goes out.
Some thoughts on how to prevent the above story from happening to your unit...
- Be very selective on who is filling the role of your unit treasurer. Someone broke and struggling with their own financial situation is not the right person for the job. Too much temptation there. Just because they are willing, doesn't mean they are able.
- Be sure they have a different last name or are not in the same household as the unit leader. This one may be difficult with smaller or with units just starting out, but just as necessary as number one. Too much temptation t look the other way with questionable expenses. There need to be checks and balances.
- Double-Signer Checks. This is the BSA's policy, not a mandate, and they just wrote about it again recently. While I agree with the premise, it's not always practical. 2 signatures is an internal safe-guard, not a banks.
Your bank does not receive the physical checks from other banks when the check is cashed, only an electronic notice. The only time anyone examines a check is if the account holder questions a transaction, and they will then go to the first bank in the system to get a copy of the check. So as long as there is some sort of signature on a check it will be accepted.
The only time when someone might notice a problem is if there is a printed notice in the signature area that states "TWO SIGNATURES REQUIRED" and then it would only be noticed if the check were being cashed and not deposited.
From one bank's new account agreement:
If you (a) have specified that some or all checks must be signed by more than one person, (b) have specified that the authorized signers for checks in one category are different than those for another check category, or (c) utilize checks that require multiple signatures, you acknowledge that those restrictions are for your internal use only and do not bind us even if you have made us aware of them in a certificate of authority or otherwise.
- Have all purchases and pre-authorizations for purchases approved by the committee. This is a no brainer. Again checks and balances. If the committee approves the purchase then it's valid. Be sure to reconcile all purchase orders and receipts and have any supporting documentation.
- Examine all cancelled checks as soon as the statement arrives. Watch for authorized signatures, endorsements, and payees. This makes sure a check was paid to a bonafide expense, not someone's Uncle Bill.
- Control access to checkbooks. Avoids the whole forged check thing.
- Divide bookkeeping responsibilities. The person paying the bills should not be the person who reconciles the account. This one may be hard to do if you don't have enough people in the committee, but probably the most important and the most transparent.
- Give receipts when accepting cash and keep duplicates. If possible, have cash payments witnessed. Have 2 parties count the cash prior to deposit.
Do you have any suggestions to help units with their finances?