One of the most common ways Parent Teacher Organizations (PTOs) are in the news is because a trusted volunteer, usually the PTO Treasurer or the PTO President has embezzled money from the school parent group.
This is super sad because PTO theft prevention is relatively easy with some checks and balances.
This post is going to cover straightforward ways to safeguard PTO money that you can implement today to prevent financial fraud, theft, or embezzlement going forward.
Cash Controls
Some PTOs handle a lot of cash, which is an attractive target for less than honorable volunteers.
My local high school PTO routinely handles $3,000 every Friday night home football game.
That’s a lot of money to keep track of.
There are several smart cash controls your group can implement to keep your money safe and reduce the risk of theft.
Use Cash Trackers and Counting Forms
If you anticipate needing to provide change for cash payments at PTO events (think football game concessions), you’ll need to have a cash box.
The event chair should fill out a Cash Box Start Up form to request the cash box and indicate how much change they need and the preferred form.
This way, the PTO Treasurer can provide the exact breakdown of the various money denominations so that you’ll be able to break bills throughout the event.
Using the Cash Box Start Up form creates a paper trail for the bank withdrawal.
This means that there is a documented reason for the withdrawal to take place and it will be clear why the PTO Treasurer is taking out cash.
Once the cash box is received, the cash should be counted by someone other than the Treasurer to ensure all of the requested money is there, again documenting it with a Cash Box form.
Limit Access to the Money
Designate a few volunteers to handle and stay with the cash at all times.
Limiting which people have physical access to the cash box at PTO events is a smart way to prevent money theft.
More hands going in and out of the cash box only increases the difficulty of keeping the money safe.
Adults Only
Insist that only adults handle the money.
Kids sometimes have sticky fingers, a looser understanding of consequences, and lower impulse control to boot.
Leave the money collection and handling job to adults.
There are plenty of other ways kids can meaningfully help at events that doesn’t involve touching money.
Designate Money Counters
After the event, designate a few people to count the money and count the money in the same space as a group.
All the counts should match up and the Cash Counting Sheet should be signed off by all counters.
Also remember to use the cash counting forms to reconcile the cash boxes and ensure the numbers match up.
Using the suggested cash handling forms means that the money is being counted and reconciled multiple times, limiting the opportunity for someone to steal the cash.
Matching Up Counted Cash
Funny aside about one time when another longtime volunteer and I were counting up the football concessions cash.
After multiple counts by both of us, we were off by 25 cents and could not figure out why.
We were deliriously exhausted and my friend was intent on making sure we figured out our mistake.
More than 15 minutes later, even more tired, I convinced her that it would be ok to be off by a quarter.
I was the current PTO President and she was the immediate past President, so no one would believe we would be stealing anything, let alone a measly quarter- we’d never been off the count before.
She relented and we signed the sheet.
And of course we then discovered the missing quarter, and had a big laugh!
We adjusted the count sheet to account for the 25 cents and headed home after putting the cash in the PTO safe.
Deposit immediately
The next PTO theft prevention tip is to deposit all PTO money right away.
Many banks offer after hour deposits, so use this service to safeguard PTO money.
If that’s not possible, protect the money in the school safe and then deposit the next available banking day.
Leaving wads of dollars hanging around school or even at someone’s home is just asking for trouble.
My high school PTO purchased a wall safe and installed it in the PTO closet.
Since we run Fall sports concessions, there are as many as 8 games a week, between football, soccer and volleyball.
Having a secure place to keep money until the Treasurer can snag it to deposit is a smart way to safeguard PTO money without overtaxing the Treasurer.
Limit Cash Acceptance
In order to insulate your PTO from having a loss, it’s totally acceptable to not accept cash in certain situations.
Fundraising being one of them!
Here’s why I advocate for NOT accepting cash for product fundraisers…
A few years ago, I got a call from the school Principal.
A parent was upset, because she hadn’t received her PTA fundraiser order for her co-worker.
The parent claimed she sent in cash as payment for the order, despite the fact that the fundraiser order forms made it clear that cash wasn’t an acceptable payment method.
Wanting to keep the peace and appease the parent, the Principal and the PTA President made the call that the PTA would have to reimburse the parent for the cost of the order.
We were out the $76. Ugh!
All the more reason to set a no cash policy for fundraisers and use a digital payment service instead.
Payment Controls
This section will focus on controls you can put into place to make sure payments are being done a way to boost PTO embezzlement prevention.
Never Pay in Cash
Never pay in cash.
Never ever, ever.
Here’s why…
There’s absolutely no paper trail with cash, so your PTO has no way of proving payment unless you’re lucky enough to get a receipt.
If money is withdrawn from the bank, that’s not proof the money went to pay for anything in particular, only that it was withdrawn.
Instead, issue payment via check and only send payment if a payment request form is submitted.
Again, using the form ensure the payment is legitimate and going to pay for product or service for the PTO and not spurred by a scammer.
Say No to Debit Cards
Resist the temptation to get a debit card for your PTO.
Debit cards do add a lot of convenience, but they come with many opportunities for misappropriation of PTO money.
Not everyone is good about keeping receipts, so you might end up with a charge that can’t be verified as a legitimate PTO expense.
That’ll get flagged during the annual audit (more on that in a bit).
If an officer or committee member can’t afford to pay for a PTO expense out of pocket and wait to be reimbursed, then the PTO Treasurer can always issue a check to pay the vendor.
I know it’s more of a headache with more hoops to jump through to reimburse members for purchases made on behalf of the PTO, but it is better than someone draining the PTO bank account from unauthorized charges or having to chase down receipts.
Reimburse the Right Way
The PTO Treasurer should never reimburse for any expense that wasn’t approved by the PTO, whether it was something in the annual budget or is permitted by agreement during a meeting.
The reimbursement request should be accompanied with a reimbursement form and a receipt showing what was purchased, the cost and the date of the purchase.
This way, the Treasurer and anyone else can confirm that it is a legitimate PTO expense to reimburse.
Checks and Balances
Unrelated Officers
Don’t allow married couples or volunteers who are related to serve as President and Treasurer simultaneously.
Doing so removes a potential check against theft and decreases the likelihood of misappropriation being reported because the relative will want to spare their loved one from consequences.
Here’s how I personally avoided this situation.
One year, I was nominated to be PTO President.
I was game to go, but there was only one problem: My husband had been slated as Treasurer for the same PTO.
Neither of us are embezzlers, but having us be the primary names on the PTO bank account with the sole authority to sign checks would’ve looked really, really bad.
I know I would’ve been suspicious if another couple tried to be President and Treasurer of a PTO at the same time, so I knew we needed another solution to filling the officer vacancies.
We resolved this by finding a new Treasurer for the PTO and then my husband served as Treasurer for a different PTO.
Everyone was happy and more board positions were filled.
It’s a smarter idea to spread around responsibility for PTO financial matters and have at least two (unrelated) people on the PTO bank account, and 2-3 PTO officers with the online PTO bank account passwords.
Allowing only one person to have access to everything is a dangerous position to put your PTO in.
Two signatures
Similarly, another suggestion that’s super common for theft and embezzlement prevention is to have two people sign PTO checks.
Good advice, but know that this tactic alone is not enough to prevent embezzlement.
Just Google PTA embezzlement or PTO embezzlement and you’ll find many instances where someone simply forged the second signature.
This is why planned oversight of PTO finances is a must.
Planned Oversight
PTO embezzlement often happens because people simply aren’t tuned into the financial particulars of the group.
They take the Treasurer or President’s word for the accounting and don’t have independent review process to make sure everything is on the up and up.
Oversight doesn’t need to be involved or scary.
Here are two forms of planned financial oversight to ensure your group implements:
Monthly Treasurer Reports
The Treasurer should have an open door, open book policy when it comes to the PTO’s finances.
The Treasurer should issue a monthly Treasurer’s report.
Each month, one or two PTO members should be reviewing the bank statements and the Treasurer’s report.
Look for inconsistencies like:
- Missing check numbers
- Checks made out to cash
- Unexplained low balances
Annual Audit
Another method of planned oversight is to ensure an annual audit is conducted at the conclusion of every fiscal year.
Your PTO can hire a CPA or accountant to handle the audit. The going rate fro a professional audit varies by location.
My PTA has paid $75-$125 in the recent past.
There’s no need to hire a professional, though, so don’t let not being able to pay for an auditor prevent the review from taking place.
You can also swap books with other PTO in your school district.
Or you can recruit PTO members to form an audit committee to look over the past year finances.
No matter what, the annual audit should happen and anyone participating in the audit process should be conducted by someone who doesn’t have signing authority on the PTO bank account.
This leaves out the possibility of the PTO President, Treasurer and anyone else who may be an account signatory.
Get Paper Protection
Insurance
Don’t overlook the protection that Bond Insurance provides.
This type of insurance protect the cash of the PTO against theft, fraud and embezzlement.
Anyone in the group who handles money is covered.
This type of insurance isn’t expensive to get, so don’t try to scrimp on this protection!
They’ll likely only cover your group against loss if you implement most of the money handling best practices laid out above.
Update your Bylaws and Standing Rules
All of the financial controls outlined in this post should be incorporated into your PTO’s bylaws and standing rules.
If you decide to implement any of the above best practices, ensure they’re incorporated into your bylaws or standing rules.
After the bylaws and standing rules have been updated, make sure to give a copy to every officer and committee chair, so everyone is literally on the same page.
Don’t Carry Huge Bank Balances
Another idea to limit the potential hit to your PTO from theft is to not roll over so much money from year to the next,
With less in the account, the opportunity to steal is lower.
So what to do if not rolling it over?
To reduce how much money is in your PTO bank account, make a plan to spend it.
So even if all of the other financial controls you put into place flop, at least there won’t be so much lost.
Ideally, you should keep enough money accessible to fund PTO activities and programs for the first few months of the school year, or until your first major fundraiser of the year, no more.
Alternatively, if your PTO is saving up for a large purchase, consider putting those funds into a short term Certificate of Deposit.
You’ll earn a little interest and those funds won’t be touchable until the term is up!
Watch this!
This video has great tips for how to safeguard PTO money:
Over to You
This is one of those posts that I make in the hope of sparing you and your PTO from ever having to deal with this the horrible situation of theft or embezzlement.
These steps are easy to implement today to protect your PTO’s money today and tomorrow.
Your group is should have very specific financial controls and policies in place to make theft and embezzlement a non-issue:
1. Control cash. Reduce the hands touching it, count it, then deposit it.
2. Use forms to create a paper trail for otherwise untrackable financial transactions.
3. Implement checks and balances. Don’t let all of the responsibility or access fall onto any one volunteer. Spread it around to reduce the odds of wrongdoing.
4. Perform regular financial oversight. Have a few people aside from anyone with access to the bank account to review the monthly bank statements. Insist upon an independent annual audit.
5. Get insurance to help make your PTO whole after a loss.
6. Update your Bylaws and Standing Rules to reflect the financial control methods outlined in this post.
7. Don’t keep extra money in the PTO bank account. Spend it or put it into stable investments like bank CDs.
If you choose to not take any preventative steps, then know that your PTO very well may fall victim to a predator sooner or later.
Resources you’ll love
Take the headache out of managing your PTO’s money with some done for you tools and templates.
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