Kids Sports Organizations Easy Targets for Theft

Does your kid’s amateur sports organization have measures in place to prevent the theft of its assets? If not, there could be things going on that you don’t know about, being done by the people you trust the most.

A youth amateur sports organization (ASO) is usually managed by parents with little or no background in financial management. Board members who manage the ASO often only need volunteer to take on the responsibility because few are willing to take on the job. In other words, the only qualification is that the parent is willing to do it.

Most parents and coaches are totally honest and are looking out for the kids. But you know how life is. Stuff happens. For various reasons, theft of cash or use of the ASO assets for personal purposes is more common than you might think. This story caught my attention recently http://www.fox13news.com/news/local-news/173265799-story

The parent volunteer president fell on hard times in her personal affairs and “borrowed” some cash from her child’s Little League team with the intention of paying it back. Unfortunately her situation did not improve, so rather than paying it back, she took more money.

How can this be avoided? Simple. Trust, but verify. Here are some basic financial accountability procedures/tips that should be strictly applied in order to limit opportunities for theft:

• Keep track of the organization’s checks and bank deposits in accounting software like Quicken or Quickbooks Online. If cash is the organization’s only asset, Quicken is all you probably need. It’s just an electronic check register. If the ASO owns sports equipment, it should be kept track of and an inventory taken each year.
• At a minimum, the treasurer should reconcile the check register to the bank account every month. The reconciliation should be carefully reviewed and approved by another director who has no check signing authority.
• All expense items should have a paper trail. All checks should have a check request form with an explanation of the purpose of the payment. A copy of any invoice should be stapled to the check request form, which should be signed by the person who approved the expense. Expenses over a certain dollar amount should require two signatures, one by a person with no check signing authority.
• For each bank deposit, there should be a deposit ticket and bank receipt. If payments for multiple activities are included in one deposit, there should be documentation as to what each deposit relates to. For instance, if a $1,000 deposit consists of $300 banner advertising, $100 t-shirt sales, and $600 registration fees, attached paperwork should show this information. This is important for properly recording the transaction.
• There should be two authorized check signers. Any checks written over $500 should require two signatures. It is not OK to have a stack of checks pre-signed simply because it can be inconvenient to get two signatures.
• All bank statements should be kept. None should be missing. Missing bank statements are a bad sign.
• The ASO should have a written reimbursement policy to prevent duplicate reimbursements to volunteers, coaches, and board members who incur expenses on behalf of the ASO and submit receipts for reimbursement. Any reimbursement request that is more than 30 days old should be carefully scrutinized to be sure it has not been previously reimbursed.
• Any items that are purchased with the ASO’s sales tax exemption certificate must be purchased with a check from the ASO’s account. The sales tax exemption certificate should never be used when personal funds are used to purchase an item. Example: The ASO President goes to Walmart to purchase water, snacks and paper goods for an upcoming event and presents the Sales Tax Exemption Certificate so as not to pay sales tax on the purchase. The President should pay with a check drawn on the ASO bank account. The President should not put the expense on his/her credit card and present the receipt for reimbursement later.
• Cash withdrawn from the bank to make change at events should be tracked carefully. At the end of the event the cash must be re-deposited into the bank and documented. The withdrawal is not an expense, and the deposit is not income. Withdrawals of “change bank” cash must equal re-deposits.
• All cash receipts should be deposited in the bank the same day or the next day after receipt.

The list above is not comprehensive, but strictly applying those guidelines will go a long way in preventing theft of cash or other assets.

Addendum:

Just a week after I wrote the above post, a high school sports booster is in the news. The booster president stole $10,000 and spent it on himself. Regrettably, the booster has been shut down and funds transferred to a school account. This definitely takes a toll on booster operation.

Deputies found that [the president] spent club funds on movie tickets, gas, rental cars, personal bills, travel and hotel stays in Orlando and Tampa. Deputies say he overdrew the account which resulted in more than $2,000 in overdraft fees.

[The president] faces fraud and grand theft charges and is now in custody in the Polk County Jail.

A statement released by Kathleen High School said the Kathleen High School Athletic Booster Club is no longer operational. “Coaches from all sports at Kathleen High (with the exception of the football program) used the booster club. However, the school no longer has an outside organization for these sports.”

Instead, they will use an internal account run by the athletic director and finance secretary, the school said.