There are a number of things you can do to make the accounting of money more visible. I am sure the article mentioned by ptasurvivor and other posters to the board have other ideas. Your group will need to think and talk about what works for your situation.
Some basic ideas are:
1. Monthly Treasurers report. This should be much more than a simple balance. At a minimum it should show what money got deposited, what money came out of the account and what all the money is allocated to. Our PTO has a standard form where the top part shows the goes-intos and goes-out-ofs each month and the bottom part shows the current status of all budget items. The top part and bottom part must come to the same total.
2. Document everything. We have a form for money being deposited that shows what fundraiser/budget item the deposit is being made form, how much is being deposited, who counted the money to confirm the right amount is listed (usually 2 parents), and what board member accepted the money from the committee (ususally the Treasurer). This gets filed in the fundraiser folder with the deposit slip.
We have another form for reimbursement requests. This also notes what the fundraiser/budget item is, who is requesting reimbursement, and line-by-line what was purchased for the PTO and how much it was for. Receipts for all items are stapled to the back before a reimbursement check is written. The form also includes a line for the Treasurer to fill in what check number, amount and date for cross reference. This is also filed in the approproate folder.
3. All End-of-year reports and tax forms are to be reviewed and approved by the Exec Bd. before they are released/submitted.
4. An independent agent (could be a parent not on the board) is to review the books at least once a year and write a letter stating that everything is in order (or not if there are questions).
5. Two officers are required to sign for checks or withdrawls (we haven't felt the need to do this yet).
My heart and stomach ache hearing of this embezzlement! On September 6, 2005 our 2003-2005 PTO Treasurer was convicted and sentenced for embezzling $14,130.25. It was a long summer as myself (current PTO President) and the past PTO President audited the account. The prosecuter said we are "very" lucky to have gotten restitution! But, very importantly, the PTO gave this matter to the police and they prosecuted her. She is a liar and a thief. There are consequences for those actions. Because of how we handled this, it has never hit the papers or news media, but the 'right' thing was done by handing it to the police.
Our PTO has put procedures in place to prevent this from ever happening again. I beg any of you . . . if you have proof of embezzlement, to take it to the police!!!
The ugly truth is that parent groups can and do stick their collective heads in the sand and let thieves rob their children of hard earned funds.
PTO Today magazine published a great cover story 3 years ago regarding this issue.
(This issue basically guided our group: step by step in discovering the embezzlement, and had ideas to preventing it from happening again which we used in setting up our new money handling procedures. Is it available to read on this site? )
I remember the issue vividly for our school had the same situation happen the year it appeared.
Due to the persistence of a few lone board members, the embezzler was convicted of a 3rd degree felony (theft over $25,000), our school received over half of the money back and the rest is being paid back as part of a court ordered resistution.
Think about this: many on our board wanted to do what your group did " cover it up " the embezzler offered to pay back less than $2000, when the police did a separate audit of the year and year before that -they discovered the true amount that was stolen ( over $25 K).
Being a parent is a hard job.
We have to teach our children that actions have consquences.
Remind your PTO leaders and board members that have a fiduciary duty to protect the assets of their PTO.
Good luck to the first poster - I sincerely hope that your school decides to take the right action soon. Note to the last poster, we had to hire a CPA firm to file our taxes ( we were behind at fed, comptrollers for 2 years)
Post script -And thank you, PTO Today for providing this forum for us to post on.
We are currently going through a similar situation!!
At our summer meeting, it was brought to the President's attention that some parents were complaining that checks had not cleared from our fundraiser at the end of last school year. After some investigation, we found out that the treasuer had stole 40,000. The investigation it ongoing. I wasn't involved last year in the PTO. Actually, my first meeting was the summer meeting where this all came out. I have a banking background, so I was asked to be treasuer. There were some safeguards that the current board thought were in place but after this situation found out that they were wrong. We are trying to gain back the trust of our community by having more safeguards. We now have month audits done by a teacher volunteer. Our attendance at meetings has increased. Here are some questions- (1)Does anyone have any more ideas of what we can do to safegaurd are PTO? I want to protect my butt and the PTO. (2)The last treasuer filled out the necessary tax information. No one on the current board has a clue what we need to do. Can anyone help guide me on this one? I don't know where to start. Since all the paperwork from last year is still with the police, I have been told that we would need to file an extention.
Thankfully I have never been in your situation, but I have nothing but sympathy for you.
As frustrating as it is, it seems the only action you can take is to bring the final discrepancy figure you have to the attention of the district and see what they say. Frankly, I am surprised they didn't prosecute to the fullest extent of the law.
I don't like the secrecy approach the district is taking. If I were a non-PTO parent at the school, I wouldn't want to hear of an embezzelling problem by rumor an innuendo. I would want my current board to be up front about the situation, explain what was done and how much is involved, detail the steps taken to prevent (or minimize) it's occurance, and explain what is being done about recovering the money and what the chances are. Frankly I don't care how embarrased the embezzeler gets - s/he obviously didn't care about impact on their family when they made the illegal withdrawls.
Nothing is foolproof, but you and the new board have taken the appropriate steps to prevent this from happening again, so I assume you have a defense if your Non-Profit is put in question.
Steven F - Each PTO is different with regard to money matters. In our group only the Co-Presidents and the Treasurer can sign for checks (and if the check is made out to one of them, one of the others need to sign it). I think it is more typical that the Pres has oversight and some control over the finances as opposed to "hands-off". But if that works for you and is how your organization is defined - so be it.
In cases of mismanagement of funds/embezzlement, the elected officers of your PTO should keep in mind that they have a fiduciary responsibility to the rest of the PTO members, school, and students. These issues should never ever be taken lightly especially those organized as a nonprofit corporate entity, 501(c)(3).
It is this type of complacency that will cause you to lose your exempt organization status. I have been an accountant for over 20 years and have seen pretty severe penalties imposed by the government due to non compliance with nonprofit regulations, and misappropriation of funds.
My suggestion is to acurately audit the financial records, and notify your local police authorities.
