At least annually, and any time there is a change in Treasurer, you should have an audit done. If you have a parents who are a CPA, you can often get one of them to volunteer. Many organizations have in the by-laws a provision that will allow a committee of at least three to perform the audit if a CPA is not available.

If you do find yourself seeking an outside CPA, you certainly don't need to go to Andersen or KPMG or any other big firm. I would look in the phone book under "Certified Public Accountants" (or perhaps it would be "Accountants - Certified Public"). Look for somebody near the school: it increases the odds you can get them to comp the service, or maybe they'll provide a services donation to your next auction.

If you do go the committee route, it is important that none of them be one of the outgoing or incoming officers with check signatory powers, nor their spouses or close relatives.

Now, what should you do? I am not a lawyer (IANAL), but... Get an audit, and get hard, documentary evidence. Do not confront the accused without a third party present. Before any meeting with the accused, you need to decide what outcomes you are willing to accept; and part of that is going to involve evaluating the extent and volume of the fraud. Meeting with the superintendent is a good idea, but given the forged signatures you really need to meet with the District Attorney's office too.

You may find that the DA isn't interested, that there isn't enough money involved. Or you may find the group is not willing to press charges if restitution is made.

If this does not turn into a criminal case, at the very least seek restitution, an agreement that the offenders will resign any offices they currently hold and will not seek future office, and an agreement that the offenders will not defame the organization nor its officers. Be sure to get the terms of any agreement in writing. You may find that you can resolve this quietly, but get in writing that all details will be made public if restitution is not made or if future words or actions require revelation to protect the reputation of the organization or officers.

If you do go the quiet route, you still can't sweep it under the rug. The treasurer needs to make a report to the organization that an audit was performed, that irregularities were uncovered, that the matter has been resolved, and that the funds of the organization have been made whole. Then, anybody who knows the details needs to keep their mouth shut; if the matter is over than it is over, and the details should only be available on a need-to-know basis.

Finally, if you go this route, it would not hurt to have a lawyer look over the language of any agreements. The school district may well have one who can do that for you. If you have to obtain one...well, see my suggestions above regarding getting a CPA; and don't be shy about asking the offenders to pay the cost of any professional services required to seek this resolution.

If the past president actually did forge someone's name on a check and you don't report it, YOU could be in trouble. Forgery is a felony if a certain amount of money was involved. After your audit is done, I would certainly check to see how much money is unaccounted for. Your PTO families deserve to have the money they raise going towards the children. You are doing the right thing by looking into it. If the PTO gets bad press, maybe they deserve it. I think people will be grateful to have someone honest at the helm. You might add a section to your by-laws requiring at least two signatures on all the checks. We allow the treasurer, pres. and pre-elect to sign checks (two required). If your PTO sees that you are instituting some safegaurds, it should minimize any mistrust.

Unfortunately this has become more and more prevalent - or at least it's been brought to light more in the media. You can look under "The Latest News" and I would say at least once every 2 weeks or so there is a case in some newspaper where this is happening across the country. You might want to check your insurance coverage and see if you have officers and directors coverage, first. If so, then you will need to follow whatever procedures the insurance carrier has in place for pursuing this.

In order not to bring unnecessary bad press to your group - I would suggest that you have an audit of your books done either internally or hire someone to do it (nothing personal, but I don't recommend Arthur Anderson at the moment in light of Enron and WorldCom.) If the outcome is that funds are missing - go to the previous administration of your group quietly and let them know what you have found and ask them to return the money. If they do not, unfortunately I think you are going to have to go your local district attorney for assistance. I'm not trying to say you should sweep this under the rug, but what I am saying is that it might be difficult to get the families behind fundraisers this year if they hear whispers that the money they raised in the past has been misspent.

Good luck and I am sorry you have to go through this.

Hello,
I was just wondering how everyone handles financial discrepancies in their PTO. I'm the current President and last school year was my first year. However, we (the new board) have just come across several financial discrepancies involving the previous president from the previous school year. Everything from personal reimbursments to forging signatures on checks. I'm not aware of any by-laws that we have and I'm not quite sure who to turn to. The present officers met last night and we decided to call a meeting with our superintendent for guidance on how to proceed. Any suggestions would be great!