The Missing Carnival Float Money
Devon is 19 and treasurer of the Riverside Youth Club, which has 60 paid-up members. In February he collected $4,200 in cash from members for a Carnival float. He did not issue receipts. In March he told the committee that $3,100 had been spent, but the club's bank account shows only one deposit of $300, and his notebook lists a $450 payment for sound-system hire made to a cousin without the committee's approval. The club's constitution requires two signatories on the account and the annual general meeting to approve any spending over $500. It has not been audited for two years. At the committee meeting, one member says, 'Devon is a good youth, and if we report this he will lose his place at college.' Another says the club should just write off the difference and move on. Devon has offered to repay $200 a month.
1. Explain why the absence of receipts and proper records is a problem for accountability, even if Devon did not intend to steal.
Read the worked answer
Accountability means being able to show that money was used for the purpose it was collected for, and to answer for it to the people who provided it. Receipts and records are the mechanism for that, and without them several things fail even when nobody is dishonest.
- Members cannot verify anything. Sixty people paid roughly $70 each. Without receipts, a member cannot prove what he paid and the club cannot prove what it received. If a dispute arises, neither side has evidence.
- The treasurer is left unprotected. A treasurer with no records becomes the automatic suspect when money is missing, even if he is honest. Devon's claim that $3,100 was spent cannot be checked, so he cannot clear his name.
- Errors cannot be separated from theft. $4,200 collected, $300 banked and $3,100 claimed spent leaves a gap that could be theft, sloppy accounting, or cash still in someone's pocket. Records are what distinguish these possibilities.
- The club loses access to support. Sponsors and funding agencies normally require audited accounts; two years without an audit damages the club well beyond this incident.
The key point is that accountability depends on the possibility of proof, not only on a person's character. A system that runs on trust in one individual is not accountability at all, because it gives honest and dishonest treasurers the same appearance.
2. The committee is considering three options: write off the loss, ask Devon to repay and resign, or report the matter to the police. Evaluate each option and recommend one, with reasons.
Read the worked answer
Option A - write off the loss. Cheap in the short term and avoids conflict, but it rewards the breach, tells the 60 members their money needs no explanation, and leaves the club's systems unchanged. It also sets a precedent: the next treasurer learns that gaps are tolerated. Reject.
Option B - repay and resign. Repayment addresses the money but not the process, and $200 a month is a slow way to settle a disputed sum. Resignation alone does not establish what happened. However, the option has real strengths: it is proportionate, it keeps a 19-year-old out of the criminal justice system, and it can be combined with a genuine reconciliation of the accounts. It should not, though, be accepted as a substitute for finding out the facts.
Option C - report to the police. Appropriate where there is evidence of dishonesty, and the unapproved $450 payment to a relative is a warning sign. But the case is not yet clear: there are no receipts, no audit, and the constitution was already being ignored by the committee. Reporting before an internal reconciliation risks being disproportionate.
Recommendation: a sequenced response. First, appoint two members who are not on the committee to reconcile the accounts with Devon within 14 days, in writing. Second, if a shortfall is confirmed, agree a written repayment plan and suspend him from signing authority. Third, report to the police only if he refuses to cooperate or if evidence of deliberate misappropriation emerges. The 'he will lose his college place' argument is a reason to be proportionate, not a reason to skip the process; an honest reconciliation may in fact protect him.
3. Recommend TWO changes to the club's financial practice and explain how each would prevent a repeat.
Read the worked answer
Change 1: Separation of duties and no single-handed cash handling. Money should be banked within 48 hours, and any payment above a small threshold made by cheque or transfer requiring two signatories. Why it prevents a repeat: the constitution already required two signatories, but practice was cash in hand, which bypassed the rule. Separation of duties means no one person can collect and spend, so the unapproved $450 payment to a cousin could not have been made unilaterally. The lesson is that a rule which is not practised is not a control.
Change 2: Receipts at the point of collection, plus monthly reporting and an annual independent audit. A numbered duplicate receipt book (or a simple digital record) for every payment; a one-page statement tabled at each meeting and posted in the club's group; and an annual audit by someone outside the committee. Why it prevents a repeat: it makes the accounts visible while errors can still be corrected, and it closes the two-year audit gap that left this dispute unanswerable. Members can check what they paid, and the treasurer has a record that protects him.
Supporting change: minuted written approval for any spending over $500, as the constitution already states. Recording the decision in the minutes matters, because the next treasurer inherits a working system rather than a piece of paper.