Evidence of volunteer stealing money

[Eskimal]

Hi
I’m part of a small model car racing organisation, run not-for-profit. We are all volunteers. Our members pay a small fee each month to participate in events. This covers track hire and basic equipment etc. We have junior and adult members.
I long suspected a volunteer of stealing small-ish money. Floats for events disappeared when he was in charge. Race day payments for judges didn’t add up. If a member had a life event lots of other members would join up to buy a gift, eg wedding or milestone birthday. If this person collected the money the gift never quite seemed to match what we guessed had been contributed. None of these could be proved or traced 100% so I kept quiet.
i was recently asked to audit our accounts. I found evidence this member has been paid money for a gift I know wasn’t worth £35.
End of season club gifts were bought for certain helpers (eg the guy at the race track who puts up the tents in bad weather) without receipts and the amount this person requested from the treasurer was higher than the gift appeared to be worth. A bottle of wine from Aldi that is £7 vs the £35 they were paid.
the elderly treasurer at the time has done this in good faith but should’ve requested a receipt. They were not at the presentation so did not see the wine. We now have a new treasurer.
i am going to rock the boat if I bring this up but we need to audit the accounts to apply for much-needed funding. It’s the first time I’ve had proof of what I suspect is ongoing theft. My plan is to ask the old treasurer if he has any receipts on file. I am sure he doesn’t as he passed his paperwork to the new treasurer.
then I want to approach this member and ask them for the receipt. They know we are applying for funding but won’t know the association has asked for audited accounts.

i know this person will react badly to my request. They are in debt, smoke and drink heavily and have had to move in with a family member as they couldn’t afford their rent. They’re popular with a lot of members, quietly unpopular with 1 or 2 people like me who suspect the theft.

what would you do?

I believe I owe it to our members to ensure their monthly fees are spent honestly for the best interest of the future of the club. We have junior and adult members. I would hope highlighting this would indirectly stop the other theft which I can’t prove. It would be sad to miss out on the funding but I think some members would tell me to wait until April 2025 when we have the new financial year which is a long time and an extra year of funding missed. We desperately need to improve the condition of the track which has been ruined by recent weather and poor maintenance.

I don't think you can accuse historically without evidence but you can put good processes into place going forward. All money and reciepts need to be recorded and published, including amounts for collections and what to do with leftover donations- eg. £35 collected for a gift, £30 spent, leftover money is recorded and put onto a gift card for that amount.

If you have definitive proof money is missing maybe publicise to the group there is some anomalies in the accounts and the recording needs to be tightened up going forward.

You needed to put financial procedures in place. Eg if someone is donating they sign to say how much, If someone is spending money of course they should provide a receipt. You can start now, but I don't see how you can do it retrospectively.

I would innocently ask for the receipts - for auditing purposes - it might just give him the realisation that he isnt going under the radar anymore, and if it all unravels then so be it. I would then put in robust processes for the future that will stop his thieving ways.

Unfortunately you can not do anything retrospectively. All you can do is to tighten up procedures moving forward.
We had this in our very small charity and worked out that the old chair had had away with thousands because there'd been no treasurer or secretary so no one had no idea what was going on. When our committee took over and I went through the books & accounts I discovered that so much money was missing. At our first meeting we had an unofficial unminuted discussion about it and decided as a whole to draw a line under the matter as the charity had effectively been operating illegally placing it at risk of being struck off and we would have to pay for a forensic accountant to find proof of wrongdoing. She got away with it and I regret it to this day as she's now in a position of responsibility at the same location.
I was always very hot on receipts and budget control which often made me unpopular as people often don't understand how finances work. I would suggest that your committee has a strict policy on petty cash and expenses going forward fully agreed by quorum at your next meeting. We also had to agree expenditure by majority.

You need to get more robust procedures in place going forward.
No expenses without receipts is an obvious one.

Thanks for the replies. Whilst auditing FY April 23/24 a few weeks ago, I realised payments in July 2023 were missing receipts.
surely it’s acceptable to ask the person concerned about the receipt for the payment in order to “close off” the books and apply for the funding.

How do you know they are in debt? Have you seen their bank accounts? Do they go round telling people this?

@Eskimal
Yes, you can absolutely ask for receipts but there's actually very little you can do if none are forthcoming. We had a committee member who would often have an 'accident' with a receipt like putting chocolate cake on part of it that likely had items for personal use but claimed for the whole receipt amount - annoying but not a lot we could do as the amounts weren't very big.
Part of an auditor's job is to write recommendations or point out things that need to be tightened up upon (such as no receipt = no reimbursement etc) plus highlighting things that are being done well. Also an auditor should be someone with little or no involvement with the day to day running of the group/charity.

Oh jeepers. Don't touch it with a bargepole. Contact the Chair and say you are sorry, but after having had a quick look, there appears to be missing documentation and you aren't comfortable signing the books off. The Chair will have to ask someone else to do it.

I would make sure all policies and procedures are absolutely iron clad for the next auditing, if need be- call a meeting with the people involved to explain that there appears to be some deception and you need to ensure policies are followed rightly from now on. Accusing no one but he will need to be careful.

Yes perfectly reasonable to ask for recent receipts, but if they aren’t forthcoming, then what? That’s where you may find you need to just put new proper financial controls in place and draw a line under what happened previously.

I encountered a similar situation when taking over finances of a small charity. Couldn’t see how to address the historical issues without totally dragging the charity’s name through the mud, and probably closing it down.

@Eskimal
Normally a small group like yours (that's not a charity) should have framework agreement for how to run things and for admin like buying insurance, committee formation, voting etc. Does your group have one?

Unfortunately little you can do retrospectively - you can ask but easy to say ‘I thought i handed that in, no idea where it is now’.

Tighten up practices moving forward but I would approach the chair regarding discrepancies without finger pointing and say you may want someone external to look over the books.

If you don't want to involve the Chair, then it shouldn't be you who approaches the member to ask for paperwork, it needs to be the new treasurer. They can ask the old one, and if nothing is forthcoming, then they can ask the member for receipts. You can then, together with the new treasurer, go through everything and find all the discrepancies and procedural errors. You provide a preliminary pre-audition report to the treasurer, and they can take it to the next committee meeting. Something has to happen, but it isn't your responsibility unless you sign the thing off. You need to pass the buck squarely into the lap of the committee. If this funding application is imminent, they they will have to do something about the accounts pretty sharpish.

Don't sign them off. You can't. It has gone beyond that now, and they need an independent person to do it.

It is only fair to the new treasurer to make them aware of this possible fraud.

You can’t do much about past anomalies, all you can do is voice your concerns about the poor accounting and verification that has gone on previously and suggest that better procedures are adopted from now on. Signed, named and dated receipts given for donations, any purchases, including gifts, supported by proper documentation etc. Try to bring this up in a general way among several other members, do not under any circumstances name names.

I've done a few independent examinations of clubs, societies and small charities in my time, so I would normally suggest that you report findings like this directly to the Chair. I would produce a draft report and hand it in, setting out any discrepancies, missing paperwork, or procedural failures. Explain to the treasurer why you are bypassing them - it is because responsibility falls with their predecessor.

And keep a personal copy of all communications between you and the club officials.

Incidentally, did the treasurer not go through everything and check it all when they received the books? They really ought to have done.

Critical friend. Are you being one?

Processes and procedures are needed. Are you externally audited? Those auditors are a good way of bringing out missing receipts if you feel unable to pull off the sticking plaster yourself.

No, we don’t. I’m the new chair and these are the things I am putting in place. The committee have been a bit of a clique and they all turn a blind eye to things like this. Our junior subs keep the club bank balance very healthy, but the adults on the committee seem to think they can spend it how they wish, including “committee socials”. I am really going against the tide.

I am the chair! The old treasurer had wanted to step down for a long time. Nobody would take up the post so things were left to float on. The handover was poor as the old treasurer was elderly.
When the new treasurer came in board our first job was getting people in arrears to pay up. Once we did that then we moved on to the next thing on the list. We are volunteers and we have jobs and families. We have made leaps and bounds improving things.

It sounds like all you can do is to prevent this going forwards.

No payments without receipts, for example.

Proper reconciling of sales and floats for events.

If this person has already claimed stuff and been given the money, you can't really then ask for receipts as he could say it's binned or whatever. Also the float stuff - very hard to prove. Could you get a card reader or something to stop cash payments?

What do you mean by critical friend?
we cannot afford external auditors. I am the chair. I’m helping the treasurer do an audit as they have no experience of this. They are very very good at admin and following steps, but don’t have financial acumen.
i have some because I’ve run my own medium sized business (50 employees) and now I have a job where I work with a large (£45 million) budget.
most non for profit organisations have to rely on volunteers. And those that do step forward may not have the right skills. But it’s that or nobody. Our new treasurer is fantastic and honest and thorough for day to day things.

Of course you can ask for retrospective receipts. Say for the last year, as if inferring the auditors would like to see certain things. Ask for a receipt for the £35 wine. When none are forthcoming, say your'll need to put in place tighter procedures. And inform all of what those are.

SOunds to me like you need a new procedure/rules for expenses, with some basic rules eg>

• a small fixed amount above which expenditure has to be agreed by committee
• much larger amounts above £x must obtain 3 competitive quotes before supplier being agreed by committee (saves the building job being given to a relative & being overcharged)
• all expense claims to be submitted by email or on paper on a form, with accompanying receipt or photo of receipt (email)
• receipt must detail what has been bought
• all expenses to be claimed within so many days/weeks of being spent, otherwise the purchase is considered a donation

floats are to be issued by the treasurer and signed for, likewise cash taken at an event including float is counted by two people and the amount agreed and signed, said amount is handed back to treasurer, float is then deducted from the takings by the treasurer

Oh right, sorry, I didn't see your other posts as you have had a slight namechange part way through the thread.

Yes, in that case you need to approach the person who hasn't supplied the receipts and askk for them. Not a lot else you can do really, other than ensure that the new treasurer runs a watertight ship!

It would also be worth emailing all members and mentioning that from now on, any expenditure will need to be supported by receipts so that money can be reimbursed.