The news at the end of March, that the organiser of a rugby sevens tournament in Queenstown faces fraud related charges, is a timely reminder of the need for event organisers and sports organisations to have tight systems in place. Here’s some good advice from specialist sports lawyer Maria Clarke, part of which includes the use of independent audit and assurance by organisations to stay safe.
Such tight systems will assist to prevent:
- the substantial loss of funds intended for the benefit of the community; and
- those associated with the event coming into conflict with authorities such as the Department of Internal Affairs and the Charities Commission.
- Without such systems, an event that may have started out as mates working together, to help the community, could turn out very differently.
While it might seem unfair that others associated with the event (often as volunteers) might come under scrutiny, not-for-profit organisations must appreciate that they are the recipients of funds intended for the strict purposes for which they have been granted. It is incumbent on them to take steps to protect those funds from abuse. Not only could the people involved face consequences but the organisation, or the event itself and its reputation, may be tarnished for many years making it difficult to secure future funding. The punishment can therefore, not only be personal but, hit the very community that the organisation or event was seeking to serve.
There are several practical measures that organisers of events can take, including:
- Ensuring their liability is protected by having an incorporated entity own the event, rather than an informal group of people.
- Having Director and Officer Insurance (although this will not cover criminal liability).
- Ensuring there are clear, written delegated authorities within the organising committee; and
- Always ensuring there are two or more signatories for making grant applications, having access to accounts.
- Ensuring regular reporting of the financial position to the organising committee.
- Having a committee environment which encourages questioning of fellow committee members.
- Having a fraud policy which applies to employees/volunteers and committee members.
- Seeking external independent advice and engaging auditors to assist in monitoring accounts.
The facts of this particular case will come out in Court, in the months to come, so we will see how of many of these measures were in place and what other event organisers, and sports organisations, can learn from this unfortunate situation.
In the meantime, take the opportunity to go through the checklist above and see if your organisation has fraud prevention covered.
Our thanks to Maria Clarke for sharing this information with us.