Andrew Taylor on the Business of Arts & Culture
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Keeping an eye on the kitty
  Posted: August 25, 2006
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While motivating, trusting, and supporting their dedicated staff is a primary issue for cultural managers, it's also their duty to keep a close eye on the cash. The Orange County Performing Arts Center found this out the hard way this past spring as it discovered an employee had stolen $1.85 million from the coffers (more on this case here).

Auditors have several red flags they look for when sniffing out fraud or theft. Employee pressures and incentives are key indicators (personal financial problems or ill will against the organization), as are opportunities left open by easy access to cash or inventory, or lack of financial controls. Finally, attitudes and rationalizations by staff can suggest a need to dig a bit deeper (disregard for accounting controls, sudden change in lifestyle, and such). Full details of these risk factors are on-line, including specific examples of what to look for (thanks to Nonprofit Eye for the link).

It's an unpleasant reality you may never have to face. But you owe it to your donors, your constituents, and your board to be alert.