Many nonprofit youth sports leagues are at risk for fraud and don’t even know it. Because cash transactions are common and leagues usually are managed by volunteers with little oversight, it’s easy for individuals with ill-intentions to take advantage. Unfortunately, sports league fraud is usually committed by board members or officers who are well known and respected in their communities. How then can your league prevent this crime?
By far the most important step you can take is to segregate duties. This means that no single individual receives, records and deposits funds coming in, pays bills, and reconciles bank statements. Assign someone who is not involved in handling deposits and payments to receive and reconcile bank statements. A different person should monitor the budget, and every payment (or at least payments over a certain threshold) should require two signatures. If your league has credit or debit cards, ask someone who isn’t an authorized user to review the statements.
Here are some other steps your league can take:
Mandate board review
Your board of directors should receive and review financial reports on a quarterly or monthly basis — including when the league isn’t in season. Your treasurer should submit a report for every board meeting, with bank statements attached.
Require online registration and payment
A lot of leagues still use paper registrations and accept payment by cash or check. Cash can be pocketed in the blink of an eye, and checks can be diverted to thieves’ own accounts. But with online registration, payments are deposited directly into the league’s account.
Treasurers are the most likely youth sports league officials to commit fraud because they have the easiest access to funds and the ability to cover their tracks. Make sure no one person stays in the treasurer position for more than a couple of years. If funds are available, consider hiring a part-time bookkeeper who will report directly to your board.
Not all fun and games
Many youth sports leagues are ripe for fraud, in large part because of their lack of formality and their environment of trust. Contact us at firstname.lastname@example.org if you need help establishing business practices for your league.
If you’re interested in working with Tonneson + Co, please reach out to us. We look forward to hearing from you!
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