You may have heard about fraud in other sports clubs. It’s a reality that, without proper controls and oversight, can affect any organisation. All members of the management committee share the responsibility of preventing, identifying and addressing fraud.
Fraud refers to dishonest or deceptive behaviour by individuals linked to the club, leading to financial loss, misappropriation of funds or misuse of resources.
The following key indicators can signal fraudulent activities. Your club should vigilantly monitor them to minimise the risk of fraud occurring.
Identify fraud risk factors
Personal circumstances can tempt individuals to commit fraud. These triggers often include personal financial pressures, an expensive lifestyle to uphold, addictions (particularly gambling) and health issues.
Challenge justifications for fraud
Fraud often begins as minor infractions, with individuals telling themselves, “It’s only a few dollars…” Over time, these small acts can escalate, with fraudsters rationalising their actions with excuses such as, “I’m using the funds for a good cause,” “I need the money more,” or “I deserve this for my volunteer work.” Remember, every dollar taken dishonestly from the club is fraud.
Monitor skills and traits
Unfortunately, some individuals possess the skills and personality traits that enable them to conceal fraudulent actions. These individuals may have backgrounds in finance or accounting, along with access to a club’s operations and financial activities.
Strengthen financial oversight
Club fraud can often stem from inadequate oversight and weak control over financial activities. This can happen when a single individual has unrestricted access to the club’s bank accounts and passwords, or when there are no financial safeguards in place. Situations where management committee vacancies persist for extended periods can further increase the risk. An atmosphere of mistrust or suspicion towards certain management committee members can be a sign that transparency and ethical behaviours are lacking, which may in turn provide fertile ground for fraudulent activities.
How to avoid fraud
Maintaining robust and timely financial reporting helps management committee members stay ahead of fraud, as does being aware of the key indicators mentioned above.
See: Financial reporting and Financial statements.
Administration and bookkeeping procedures that are compliant with laws and best practice, such as membership receipt and payment making procedures, financial delegations and dual authority on all bank accounts, can further reduce the likelihood of fraud. Always maintain effective management committee procedures such as having clear separation of duties, managing conflicts of interest and keeping whistleblowing policies and procedures up to date.
Red flags
Because every management committee member needs to stay informed about your club’s financial position, keep an eye out for red flags, such as:
Finally, and most importantly, asking questions that challenge assumptions, clarify information and promote transparency is a critical part of every management committee member’s role in financial management.
Did you know? Good questions can help committee members identify potential risks and opportunities and make informed financial decisions. When it comes to financial management and protecting the funds of your club, the old saying is true: “The only silly question is the one you don’t ask”.
There are several financial safeguards that clubs can use to protect their funds against accidental loss, theft and fraud.
Ensure accurate financial record keeping
Keeping accurate and up-to-date financial records is crucial for transparency and accountability. All receipts and invoices should be recorded and organised in a secure location while being easily accessible for management committee members. Remember that your duty to act with care and diligence means that you should review the financial records of the club as much as needed to inform your decision making.
A cloud-based electronic bookkeeping system can help keep track of where money comes from and where it goes. Build in regular reviews and checks to help protect your club against false entries.
Approve and ratify club expenses
All expenses incurred by the club must be either approved or ratified by the management committee. Approval refers to the process of seeking approval for an expense before it is incurred, while ratification is the process of approving an expense after it has been paid.
This helps to ensure that expenses are within budget, recorded and aligned with the club’s goals. Remind your members that they should never spend their own money on purchases for the club without prior written approval.
If you know that you will incur regular expenses throughout the year, such as electricity costs or a budgeted amount for repairs and maintenance, your committee can pre-approve expenditure up to the budgeted amount for the whole year, to save you approving payment of every invoice as they are received.
It’s best if your club doesn’t have multiple bank signatories from the same family or household.
Go electronic
Minimising cash handling reduces the risk of theft or loss. Where possible, the club should make and receive payments electronically.
Set up dual authorisation
The club’s bank accounts will require dual authorisation for any withdrawals or transfers. This means that two separate people must authorise the transaction, adding a layer of protection against fraud or theft. Before electronic funds transfers became the norm, cheques required two signatures to provide the same level of protection. If you still use cheques, never sign a blank cheque!
Supervise cash transactions
All cash handling should be supervised to prevent theft or mismanagement. If cash is accepted at any events, it should be counted and recorded by at least two people to ensure accuracy. If someone in your club is required to handle significant amounts of cash, consider a criminal history check.
Validate large financial transfers
Before making payments over a certain amount, e.g. $1,000, a club may have a policy that requires independent confirmation. When a staff member or committee member receives a payment request over that amount, they would need to contact the recipient by phone to confirm the details before processing the payment. This extra step can help prevent unauthorised payments and ensure that the club’s funds are being used appropriately.
Encourage financial vigilance
If anyone on the committee or within the club notices something that seems unusual or suspicious, speak up as soon as possible. Reporting concerns early can help prevent small issues from turning into larger problems.
UQ Sport reinvests all profits into services, facilities, and programs, and is supported by funding from the Student Services and Amenities Fee (SSAF) to benefit UQ students.
UQ Sport Ltd is a division of UQ Holdings.
