Sports Law • Risk Management

Financial Controls and Insurance to Limit Theft and Embezzlement

In my August 4, 2010 blog entitled “Cash Collection by Volunteers for Club Sports,” I encouraged non-profit clubs to establish fiscally responsible money collection practices. No one wants to believe that someone you know is capable of committing theft from a club sport team, but it does happen.

Theft and embezzlement insurance claims have been on the rise according to the insurance company Sadler & Company (http://www.sadlersports.com/blog/tag/embezzlement/, Retrieved on April 22, 2012).
Since these claims are on the rise, it is apparent that sports organizations are not immune from being victim to theft and embezzlement. Therefore, it is important to buy theft and embezzlement insurance that will pay out should a loss occur due to theft or embezzlement. Insurance, though, does not replace the need to have a good financial control system in place. In fact, to recover for a claim, an insurance company may require proof of your financial controls that were in effect to limit the occurrence of such a loss.

Thus, financial controls are important for youth league or other amateur league organizations to adopt in order to minimize the risk of economic loss from its volunteers and staff. It is important to be careful to whom you give financial control in your organization. Try to limit the intake of cash. Have a second person check the accounting of all monies received and expensed by the organization. Talk to your bank about other financial controls that may be practical for your organization to adopt.
In short do not assume that your organization is immune to theft and embezzlement. A change in the method of your financial controls, along with purchasing an insurance policy protecting against such a loss may be what your organization needs.