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The Youth Sports Embezzlement Epidemic And Asset Management

There are adults taking hundreds of thousands of dollars earmarked for the children of their communities and businesses thanks to the failure of making investments in asset management. The connection is stronger than you might think. For many businesses, fixed asset management means ensured compliance, greater savings and peace of mind. Unfortunately, many companies (particularly small and medium sized companies) still haven’t made the commitment to tracking their assets with automated software. There are several main reasons for the reticence to make investments in asset management. Some believe that their manual processes do a good enough job; some don’t recognize how much time and effort is put into maintaining records that can be updated on the fly. One sorely overlooked reason may be that businesses simply don’t think that their assets need to be tracked.

For smaller businesses, close relationships between partners, or employers and employees, is seen as a defense against the loss of costly fixed assets (the long-term pieces of property used to create income, such as computers, vehicles and office supplies). “Surely no one in our company would steal these things,” CEOs or CFOs or anyone in upper management might say. “They understand how important it is for the business to have them.” Sadly, trust in even the most well-respected members of any group, be it an office or neighborhood community, can be misplaced. Towns around the country have, in recent years, experienced this phenomenon firsthand, in the form of parents who steal from their children’s youth sports’ leagues.

Trusted parents steal millions from kids’ leagues across the country

An article from a July issue of The New York Times details the epidemic that is sweeping the country, due to either increasing desperation or the growth of youth leagues into “quasi-professional enterprises:" Adults charged with managing the funds of youth sports leagues -- adults who often have children and friends’ children playing in those leagues -- are instead embezzling that money, using it to pay off gambling debts, keep their own professional interests afloat, or just buy themselves things from yard mulch to MLB tickets.

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From the NYT: Across the country, people who volunteered as treasurers and other officers for Little Leagues and sports clubs have been prosecuted for pilfering gobs of money from the coffers: $220,000 in Washington, $431,000 in Minnesota, $560,000 in New Jersey, and so on, according to law enforcement authorities, league officials, experts on nonprofit organizations and news reports… Investigators and prosecutors in several states say embezzlement investigations involving youth sports have become common, almost always committed by unpaid board members who are highly regarded in their communities. The biggest contributing factor to these scandals is the lack of centralized oversight. Another factor is the common lack of interest in serving as the organization’s treasurer, described as a “tedious, thankless job.”

How businesses can learn from those costly and embarrassing mistakes

That’s also a recurring theme for companies that have to track and audit their fixed assets using manual processes, like Excel spreadsheets or hand counts. The time it takes to track down assets that have gone lost or missing; depreciate those assets for both tax purposes and on the business’ general ledger; keep track of broken assets; and eliminate “ghost assets,” which can be both a tax burden and a strain on production, not to mention the yearly audits conducted by businesses, schools and governmental organizations alike that sometimes require hiring temporary employees to handle the load, monumental. Some of the most popular automated systems for tracking assets of all kinds, including inventory, are barcode-based. The humble barcode, which has been with us for decades, is now the backbone of some of the most sophisticated and complex tracking systems in the world. Amazon uses them to create the “chaotic storage” system that enables them to push out billions of items to customers a year; NFL teams use them to keep track of vital scoreboard and other technology-based equipment for use on game day. For fixed assets, attaching a printed barcode label to an asset and assigning it a corresponding code in a central database allows managers to track who is currently in possession of an asset, when its return is expected and if it will require any maintenance or service in the near future. While these youth leagues don’t have “fixed assets” the way other businesses do -- the leagues aren’t looking to turn a profit, but rather to fund formative experiences -- they do deal with items that could benefit from automated asset management systems.

Youth leagues can learn lessons and asset management

A similar system could be used for youth leagues. For example, parents and kids alike are all too familiar with the exciting day when equipment -- helmets for football, jerseys for baseball -- are ready to be picked up. It can be a bit of a mess to ensure that each child gets the correct size uniform, with the right number, as well as any other specialized equipment, in a crowd that includes everyone else on the team. If each item was given a barcode that was scanned upon pick-up, there would be digital record of each child’s receipt of their equipment, an acknowledgement that they are ready for the season. This kind of system might also prevent further embezzlement issues or confusion: Parents wouldn’t be able to say they never received their equipment and need it to be reissued; whoever is in charge of distribution would be held accountable for the whereabouts of every item disbursed by the league. It’s essentially the same way that asset management systems work in business settings. It keeps good people honest, and dishonest people from indulging in tendencies that could result in lost funds and great anguish for the community. It’s essentially the centralized oversight that is often lacking from these community-based leagues. No one wants to admit that a member of their community, whether that community is a neighborhood filled with like-minded families or an office, could take advantage of the trust placed in them and steal from those who contributed willingly (whether what they gave is money or their time and effort). But this recent rash of league-destroying thefts -- as well as the continued history of asset mismanagement that can costs companies thousands -- shows that, if we have the technology and means to make sure all-important funds or property stays where it should be, we must use them.