1. Does one person have control over all of your accounting functions?
2. Are two signatures required on checks over a pre-determined amount - say, $500?
3. Are checks ever pre-signed?
4. Are your bank accounts consolidated so that your book keeping accurately reflects the school's true financial position?
5. Is there petty cash lying around?
6. Are different people assigned to the deposit and account reconciliation functions?
7. Do you have a purchase order system?
8. Does your committe review expenses and supporting vouchers carefully and frequently?
9. Does an outside auditor review your books annually?
10. Do you run background checks and speak to references before you hire?
Some schools find it difficult to implement standard business practices. Even when they do, they can find it even more difficult to stick to those practices. Be careful of the trusted old employee who's been there forever and resists your updated business procedures. Reassigning him or her to some other function and bringing in some new blood is probably a good idea. Off the shelf accounting software such as QuickBooks makes short work of financial reporting and day-to-day management.
Part of your fiduciary responsibility as a trustee is to observe. Ask lots of questions. Insist on answers. People are less likely to steal if they know they are being watched.
Require an annual audit
Smaller schools may want to avoid the expense of an audit. Audits cost money. But they are worth it for several reasons. First of all, an audit will give you peace of mind knowing that the finances have been reviewed by an accounting professional. Secondly, most serious donors will want to know that their gift is going to an organization which is properly administered. Serious donors tend to avoid bad investments. Thirdly, an audit can identify trends both good and bad and suggest corrective action. Do not let the board skip the annual audit.