By Thomas A. Merrill
When headlines appear featuring stories about volunteer firefighters embezzling funds from their fire department, it definitely hurts the professional reputation we work so hard to earn. Department theft has far-reaching implications. Not only is it embarrassing for an organization and certainly damages its professional image, it can also inflict long-lasting financial damage to the department. Unfortunately, incidents like this seem to be in the news more and more. What’s even more disturbing is that studies have shown that it happens more often than is reported. Often times, when it uncovered, departments endeavor to keep it quiet to avoid embarrassment and the community’s ill will.
There are many important steps that the professional volunteer fire department can implement to safeguard the department’s treasury and maintain accountability by department leaders.
Sometimes easier said than done, department leaders should strive to ensure that the people doing the various jobs are qualified, properly prepared, and understand exactly what the job entails. One way to help prepare them is to have clearly defined job descriptions. This will outline the duties, responsibilities and expectations for each office, and can help prevent malfeasance sand misfeasance.
In my experience in the volunteer ranks, it is sometimes much harder to fill an administrative office than it is a firematic office, although both roles are critical to the success of any department. Becoming a board of director or the corresponding secretary might not be as appealing as being the lieutenant in charge of the department’s extrication equipment or new ladder truck. Sometimes, somebody is simply thrust into a spot just to fill the open position. If nobody is there to help guide this new officer, or there is nothing for them to reference to help them understand their duties and responsibilities, there can be major problems. If some of the jobs that are not being done correctly pertain to managing the department’s treasury, embezzlement and misappropriation of funds can occur much more easily.
I always found it helpful to also attach a calendar to the job descriptions, showing what needed to be done for each month. For example, on the firematic side, the annual ladder inspection was set up in August. On the administrative side, every October an appointment was made with an auditor to begin the process for the annual department audit. This was not only a reminder to the experienced officer, but served as a starting point for all new officers. The important tasks that need to be completed each month were there to see, and reminder notifications can even be easily set up to appear on an officer’s cell phone or e-mail.
Getting the job duties, descriptions, and responsibilities written down should be a priority for department leaders. Current boards should ensure it is done. Once set up, the information can easily be kept in a folder–such as an old-fashioned manila folder or a computer folder–for easy reference and safekeeping.
Once done, the governing boards need to provide adequate oversight and make sure that various duties are completed and officers are held accountable. Boards can remind the officers that helpful information is in the folder for them to use and help guide them. You will be amazed to see that, years from now, long after those who originally set up the job descriptions and wrote down office responsibilities, those folders will still be used to guide new officers and serve as a reference for veteran officers, as well.
As I mentioned, sometimes it can be difficult to fill some of the important administrative positions. To help prevent the practice of simply filling an open position with a body, one idea embraced by some departments is to solicit outside help. There may be people in the community who don’t have the interest or time to be fighting fires or providing medical help, but would be willing to volunteer to do the books or record the minutes. They may be a CPA, banker, or a business board leader, and have incredible knowledge and expertise to offer the department as well as a strong desire to volunteer to help their community. This somewhat non-traditional approach seems to be catching on more and more throughout the country.
To further safeguard the department from theft and embezzlement, credit card use must be closely monitored and tightly controlled. Well-written credit card guidelines need to developed and implemented. These guidelines should be part of a comprehensive financial management program and embraced by department leaders.
Reasonable credit limits should be established for the cards, and under no circumstances can the cards be used for personal expenses. A governing board should authorize all purchases, and a receipt should also accompany the purchase. The receipt should be turned in along with an expense voucher that is reviewed by the governing board on a monthly basis. More than one person should do the review of the credit card statements and nobody should be allowed to review their own purchases.
It’s not recommended that departments use debit cards. In most cases, once a debit card is swiped, the money is quickly taken from the account and gone, leaving the department little chance of recovering misappropriated funds.
A well-written financial management plan requires two signatures on all checks. Before any checks are signed, they need to be completely filled out. It is just not a good practice to pre-sign checks and many recent stories of financial improprieties involve blank checks being signed by department leaders. Work with the issuing bank to ensure signature cards are kept on file and kept up to date.
Boot drives, BINGO events, and other events that typically see large amounts of loose cash have proven problematic for departments to control and properly keep track of. Unfortunately, these types of events are very susceptible to thievery. At all times, a minimum of two people should be together when cash is collected and handled and bank deposits are prepared. When possible, the cash should be collected and handled in a central location.
Department bank statements need to be reviewed every month. They need to be reviewed not only by the treasurer, but by governing boards, as well. Leaders must ensure that all purchases were properly authorized, actually received, and, in most cases, drawn from established accounts. A good idea is to have the treasurer read the bank statements and account activities out loud, each month, at the department’s business meeting. The reading should clearly outline expenditures and account balances. Even when this is being done, my experience has shown that many members do not pay attention and use this time to chat with the person sitting next to them at the meeting. Pay attention and make sure it is all making sense.
Another sound idea some departments have embraced is to have the department bank statements reviewed by members who do not have check-writing privileges, and some have the statements mailed to a board member before being passed on to the treasurer.
It’s also a great idea to try and avoid having family members or people with close personal ties hold positions of financial responsibilities, especially when it comes to signing checks. It’s understandable that this is not always practical or possible in the strong, family-connected volunteer fire service, and that’s why it’s so important to implement other safety valves and checks and balances, as well.
Additional safety valves to be written into the financial management plan include ensuring that regular internal audits are performed as well as regular third-party independent audits. Often times the audits are required by law, but its still necessary to ensure they are done. Here is an example of an important aspect of a job that needs to be written down and placed on a calendar to both teach and remind officers.
Departments need to verify that they have adequate insurance in place to cover risks associated with organizational finances. Even conducting background checks is a recommendation to protect departments from financial mismanagement, as many examples of department theft involving members with previous convictions have been disclosed.
Even with well-written and firmly established financial plans, all department members should be aware of “red flags” that could be an indication of financial improprieties. Resistance to audits, an urgency to sign incomplete checks, and members approving their own transactions are all signs of potential problems.
Stories regarding volunteer firefighters embezzling funds and stealing from their department seem to be occurring more regularly. Unfortunately, these incidents badly damage the reputation of the volunteer fire service. Review and reinforce the policies you have in place to prevent such behavior, or create and implement them if they don’t currently exist. A well-written and strong financial management plan will safeguard the friendships we cherish in our volunteer firehouses, and also safeguard our professional reputation, as well.
Thomas A. Merrill is a 30-year fire department veteran in the Snyder Fire Department, which is located in Amherst, New York. He served 26 years as a department officer, including 15 years in the chief officer ranks, and recently completed five years as chief of department. He also is a professional fire dispatcher for the town of Amherst fire alarm office. He can be reached at email@example.com.