Tuesday, August 20, 2013

Lack of Controls Leads to School Frauds

by Gary Snyder

For two and a half years, Beverly Hodges, a former North Canyon High School (AZ) bookstore manager, embezzled $67,162 by taking cash from the bookstore cash register
Her methods may be instructive for all charity and school retailers. 
·       Throughout the school years, Hodges would hide her thefts by rekeying transactions into the cash register, then generating new, false cash-register tapes she used to prepare daily records — more than 300 falsified public documents in all
·       Over the years she told bookstore staff to withhold $5,349 worth of cash receipts from the deposit, which she used to buy food and beverages for herself and the staff.
·       Bookstore processed extracurricular tax-credit donations and handles transactions for fees for items such as parking permits, athletic programs, replacement student ID cards and tests.
·       Hodges deposited more than $77,500 into her personal bank account, using the cash to pay for personal car and home-equity loans, retail purchases, groceries and restaurant meals. 
·       A former North Canyon principal and unidentified district officials, saying they “failed to exercise an appropriate level of oversight of Ms. Hodges’ activities. ... Moreover, district administrators allowed the NCHS bookstore to use an
outmoded cash-register system without ensuring that cash-handling, record keeping and depositing duties were appropriately separated and adequate controls were in place.”
·       Even before Hodges’ criminal activity was suspected or discovered, all schools in the district except North Canyon had stopped using cash registers, The software for a new transaction system was in place (at North Canyon) but not operating properly, so Hodges continued to use the cash register

There was an overhaul. The district installed an updated student-payment system across its schools, allowing the district to monitor bookstore activity online. School principals received more training in cash-handling procedures.

Two district-level employees now oversee reconciliation between school cash receipts and accounting documents, and school bookstore workers and administrators discuss internal audit findings annually.

The superintendent and cabinet are reviewing the report, will discuss it in depth in the coming weeks and will adopt improvements beyond those already implemented as warranted.

Hodges pleaded guilty to one felony count related to theft. As part of the plea agreement with the Attorney General’s Office, Hodges agreed to pay $72,511 in restitution to the Paradise Valley district.

As if this was not enough, investigators found that Brian Dyer, a former North Canyon athletic director and math teacher, embezzled $10,578 by depositing school-related cash and checks into his personal bank account from December 2008 to May 2010.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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