Booster Club’s Embezzler Is Caught

Anna Mueller was a volunteer bookkeeper for the Booster Club at Benson High School in Portland, Oregon. As reported by the Portland Tribune newspaper, she has now pled guilty to embezzling more than $10,000 from the club, which supports athletics at this technical high school. How was she able to take that much money? She had total control over both the records and the money, and she had access to the bank account.

The Booster Club’s predicament is a common one. It’s an all-volunteer organization and last year was its first year. At the time he started the Club, the coach was more than willing to accept help from an experienced parent who had skills he knew were important and didn’t possess. Through the school district, he ran a background check on Mueller, but it failed to uncover her prior conviction in another state for a similar crime because the district’s procedure only checks for crimes involving children.

He left the door of opportunity wide open by not setting up relationships and procedures so that Mueller would be dependent on others to complete her work, others who could participate in the processes so that duties were at least somewhat segregated, others who could review the records she kept.

Benson High’s athletic director, Bruce Alton, now says he thinks that the amount embezzled was closer to $17,000, but because “most of it was undocumented cash, it couldn’t be accounted for”. Booster clubs sell things:  refreshments, sweatshirts, other “school spirit” items. It seems that Mueller must have been the enthusiastic volunteer, waving away help from others, saying she was happy to take care of everything so others could have a good time. And nobody documented a cash count or looked to make sure the amounts they had documented actually made it into the bank.

The Tribune quotes Alton as saying he will make sure he follows any protocols for any volunteers, district employees, everybody. “I tried to use her sincerity to my advantage as well. I own that.” Other groups, he says, should take his experience to heart when accepting the services of eager volunteers.

Posted in Fraud in nonprofits, nonprofit accounting | No Comments »

Balance Sheets With Classes in QuickBooks

Balance Sheets With Classes in QuickBooks

My client - let’s call him Bob - is a mild-mannered guy, so when I heard him muttering swear words under his breath the other day, I had to ask what was wrong. “QuickBooks!” he exclaimed. “I wish it would export to Excel without wiping out everything I had set up in my financials last month!”   

A few days later, K2 Enterprises sent their April e-newsletter and a highlighted article about QuickBooks caught my eye. (K2 is a technology education firm based in Louisiana that puts on high-quality training for CPAs and others. I’ve taken two or three of their classes over the years and found them excellent.) Intuit has put out a report writer for QuickBooks. It’s called ISW, or Intuit Statement Writer, and it functions by pulling data out of QuickBooks into Excel. Before you get too excited, you should know that ISW is for QuickBooks Premier only, and it doesn’t work with versions prior to 2009. Still, if you spend hours every month formatting and proofing financial statements, upgrading QuickBooks and purchasing ISW at $149.95 may be worth it to you.

According to K2, ISW makes producing a balance sheet with classes in columns– similar to income statements by class – very easy. If you’d like to see a demonstration of how it works, you can go to http://www.youtube.com/watch?v=WOzPORNs-NA and view K2’s video. Why would you want a balance sheet by class? The most common instance in the nonprofit world is probably to separate restricted assets from unrestricted ones. A columnar balance sheet by class could also be useful for organizations with fixed assets in different locations, where locations were set up as classes, or for reporting operations and capital projects separately. You can probably think of an application for your organization.

When you report balance sheets this way, remember that in each class, assets should still be equal to liabilities plus net assets. Achieving that in QuickBooks will almost assuredly take you some extra time each month. As you do your daily work, you’ll need to remember to post accounts payable, accounts receivable, and all journal entries affecting balance sheet accounts to classes – something QuickBooks doesn’t normally prompt you to do. Then, as part of your month-end closing, run a balance sheet by class and verify that each class is in balance. Don’t expect that it will be, and allow enough time before any deadlines to correct errors.

Once you’ve gotten each class to balance, you’ll need to run an unclassified balance sheet and compare it to the total column on your classified one to see that they agree. This will ensure that the classes you’ve set up truly capture all of the balances in the GL.

Posted in Nonprofit Finance, Nonprofit Financial statements, QuickBooks formatting, nonprofit accounting | No Comments »

For Those Prone to Clutter

I’ve had a very busy winter with lots of client work in addition to writing this newsletter and getting my next project ready to announce to you. My desk top – the physical one – is beginning to show signs of incomplete projects, plans not yet realized, and working until interrupted by the next appointment. What does that look like? Clutter, in a word.

The worst clutter I think I’ve ever seen was many years ago during my accounting studies. I served for a couple of years on the finance committee of a local grass-roots organization (Let’s call it GRO). I was quite inexperienced; I didn’t know a journal from a subsidiary ledger. The bookkeeper at this GRO had always kept books by hand, but computers had arrived and it was time to make the switch. He was very nervous about the change, but was more or less told by the executive director and the more experienced members of the finance committee that he needed to do it.

At the time of the conversion, his office was neat but there were stacks of undone work here and there. He was clearly not caught up. I only hope he had some good help with the conversion and got some training in the new software – I don’t really know because I wasn’t involved in the process. What I do know is that about nine months later, IRS suddenly impounded about $10,000 from the GRO’s bank account for nonpayment of payroll taxes and the bookkeeper took a mental health leave of absence. He never returned to his job.

The executive director’s response was to engage a contract bookkeeper to come in and straighten things out. Her first challenge was organizing all the papers in the office, and she tackled the project with energy and skill. It wasn’t long before she found a cardboard box, about the size of a box of copy paper, full of unopened mail. In that box were months worth of IRS notices about the payroll tax problem.

To this day, I believe the bookkeeper was well-meaning:  he thought he was doing what he needed to do to manage cash when GRO didn’t have much. But he kept silent about it when he should have alerted the executive director and the finance committee so they could do their jobs and manage the situation. Not only were the consequences tough for the GRO, but the bookkeeper’s reputation suffered, too.

Ever since, I’ve understood clutter as a signal that overwhelm is on the horizon. Sometimes the workload is too great, sometimes clutterers are too optimistic about what they can accomplish, sometimes there’s a simple lack of filing cabinets or storage space, sometimes skills to do the work are lacking, sometimes procrastination is a factor. Whatever the cause, the person at the center is at risk for reduced performance and perhaps worse.

If you work for or supervise someone with a clutter problem, take it seriously enough to find out how long-standing a problem it is and notice whether it gets better or worse over time. Don’t let it go on long if you’re the supervisor. If you’re the one supervised, be extra careful to get what you need to do your job – including an annual review.

And if you’re the clutterer, devote some time to addressing the elements of chaos in your immediate surroundings. Consider using experts:  a recently-arrived executive director I know hired a professional organizer to help him get settled in the disorganized office he inherited and she did a great job. What works best for me is setting an intention before I go into my office that I will not read email or do any research or writing; I am going there to create a desk-top that won’t distract me the next time I sit down to work. Looking around me, I see that it’s time.

Posted in Nonprofit Finance, nonprofit accounting | 1 Comment »

Barack Obama’s Example for the Nonprofit Accountant

Recent client engagements have reminded me how easy it is to become overwhelmed with requests and expectations from our colleagues. On any given day, you could find that one comes to you for help with her time sheet, another needs a check by 3:00, the development assistant “reminds” you – for the first time! – that a grant report is due tomorrow and she needs the financial report from you. Your own work plan can get lost amid the distracting requests. It can be challenging to both accomplish it  and serve the needs of the organization your department is there to help.

It is certainly key to making progress that procedures be clearly and efficiently designed so that accurate information is gathered timely and you can be as efficient as possible. But just as important is managing your own reactivity.

Today is inauguration day. The news is full of information about Barack Obama, yet there’s one story I recall hearing on the election day evening news that I haven’t heard again. On that night, the NPR reporters said that the reason Obama hadn’t spoken on the news shows as early as people expected him to was that he was having a family dinner with his wife and daughters and he wasn’t answering his pager or his cell phone. Yes, it was the night he would learn whether the time and energy he had spent over the last two years of his life had been enough to achieve a most daring goal. Important as that was, he and Michelle isolated themselves from all speculation, drama, excitement and news so that they could have a quiet homecoming dinner with their children in their own dining room. They decided what mattered most and then protected it from everything until they were ready.

The kernel of this story that relates to the common predicament of nonprofit accountants is that you don’t need to let other people throw you off course. You don’t need to get caught up in their drama. You don’t need to comply immediately with their requests. It helps, certainly, to have an executive director or some members of your management team who can help reduce reactivity in an organization, but even without that, you can set your timelines, priorities, and processes and stick to them.

When someone comes to you with a demand, talk with them until the reasons for urgency are clear, and then make your own determination about the critical timeline. Keep smiling, keep listening, keep asking questions, stay calm, and when you have a clear picture of the task, tell them what you will do and when they can expect the finished product. Then follow through and deliver it. Letting them down will cause a breach of trust it may take a long time to repair. Performing as you said you would places another solid rock in the foundation of a great working relationship.

Posted in Nonprofit Finance, nonprofit accounting | No Comments »

Is That Money Really Yours?

One day a check arrives from a foundation with a letter that says, “We have approved your request for funding and enclosed is a check for $60,000.” Is that money really your organization’s to spend as it wishes? How can you, the accountant, record this transaction correctly?

To record the receipt of the check properly, you’ll need to know quite a lot about the terms of the grant, so locate the application and any budgets that were submitted with it and copy them for your own files, if you haven’t already. Using a “grant summary form” can be very helpful because you can use it to document all the information you’ll need to locate repeatedly over the life of the grant, making the task of looking up this information an easy one to accomplish. You’ll want to note the following:  the term of the grant, the date the grant was awarded, how and when the money will be paid to your organization, reporting requirements, including the due dates of the reports, and the number the grantor has assigned to this grant.

Once you have answered these questions for yourself, you’ll need to understand your accounting system, especially how and whether it handles more than one fund (QuickBooks cannot, by the way) as well as how to record the spend-down of the grant.

A new article posted at www.NFPAccountingHelp.org in the free resources section tells you a lot more about how to navigate accounting for restricted cash. It’ll be there for a week or so; after that, email me for a copy.

Nancy@NFPAccountingHelp.org

Posted in nonprofit accounting | No Comments »