How to prevent embezzlement in the fire department
10 steps to reduce the risk of financial misconduct, promoting a transparent and accountable organization
The fire chief receives an e-mail from the finance director asking if he has time to meet this week to discuss an issue within the department. While finding it a bit out of the ordinary that the finance director didn’t identify the topic of the meeting, the chief reluctantly sets up a meeting, assuming it’s a budget issue that requires attention.
But the meeting turns out to be something far different – something the chief didn’t expect in the least.
A fire department investigation has revealed several instances of financial mishandling and embezzlement. Specifically, it has been discovered that over the past seven months, one of the chief’s administrative assistants has been using a department credit card to purchase personal items at a local convenience store – groceries, alcohol and gasoline to name a few.
The chief is shocked, as he had known the employee for years and had no clue that this was happening. The assistant was responsible for all credit card statements and their reconciliation. The discovery is a huge blow to the department, and will require further investigation, public disclosure and personnel termination.
Unfortunately, this situation happens far too often at public safety agencies. Fire chiefs have been tasked with overseeing the department, and an incident like this can severely erode the public's trust in administration, leading to criticism and skepticism about how taxpayer funds are being managed.
What can we do to prevent fire department embezzlement? Several steps must be implemented to help an organization stay focused on the mission of serving the public and keeping their trust.
To start, a culture of transparency should be established at every level of the department. Encourage a culture where honesty, integrity and accountability are highly valued. This should be the high standard that is maintained in everything the organization does, from loading hose to making equipment purchases for the department. We must also recognize and reward ethical behavior and enforce consequences for unethical conduct.
With this as our foundation, there are some additional steps that can help prevent fire department embezzlement. [At the end this article, fill out the form to download a printable copy of these 10 steps to save and share with colleagues].
- Establish policies: Establishing clear and well-documented financial policies and procedures is essential. These strong financial controls will assist the department in managing funds while maintaining that honesty and integrity.
- Sign agreements: Have employees sign agreements that they understand the purchasing card policy and will adhere to it. This holds them accountable for their usage and demonstrates the importance of this financial responsibility.
- Provide training: Ensure members are trained on the organization’s policies and procedures. Training should cover fraud prevention, financial integrity and, importantly, the consequences of embezzlement within the department. Education is the most important element when dealing with any form of financial matters.
- Establish a code of conduct: Establish a code of conduct that clearly identifies the expectations for members related to financial integrity.
- Set the example: Strong leadership sets a good example by demonstrating good ethical behavior and financial responsibility.
- Monitor financial activity: Company officers, assistant chiefs, administrative personnel and, of course, the fire chief, should actively monitor financial activities and enforce adherence. There should be zero variance from established policies at any time.
- Separate finance: Consider separation of responsibilities within the area of a financial division of the department. Assign different individuals who are responsible for authorizing, recording and reconciling financial transactions. This ensures that no single person has complete control over the financial process, producing a built-in check-and-balance system.
- Invest in software: Invest in reliable accounting and financial management software that provides real-time monitoring and tracking of financial activities. Many organizations have systems like this in place. This technology provides a new level of financial accountability.
- Require receipts: If the department is not currently doing so, start mandating that members provide receipts for every credit card purchase or any other type of transaction. Discourage purchase reimbursements if possible. Reimbursements should only be made upon submission of proper documentation, including an itemized receipt detailing exactly what was purchased and from whom.
- Hold audits: Consider conducting regular scheduled and surprise audits to keep employees alert and to discourage potential embezzlement. The audits should be conducted by someone outside of the department to maintain objectivity. The financial director may be able to provide someone who can help with this.
Prioritize public trust
By implementing these measures, the fire department can significantly reduce the risk of embezzlement and financial misconduct, promoting a transparent and accountable organization.
The public trust should be number one in every organization, so we must continue to monitor and update financial policies and procedures to address any issues that may appear.