Online Banking Tips for Schools
By Charles K. Trainor
Computers, smartphones, and tablets have changed the way we live. For example, digital banking is now at our fingertips. Online banking customers can open accounts, transfer funds from one account to another, pay utility and credit card bills, change passwords, authorize access for additional computers, and much more. Some digital applications can even scan checks for deposit into customer accounts.
Banks benefit from the trend toward online conveniences. They send account statements to customers digitally, cutting costs associated with printing and postage. Similarly, after checks are cashed through an account, digital images are sent back to the customer, eliminating sorting, packaging, and shipping cancelled checks. These measures streamline functions and save banks both time and money.
School districts have been quick to adopt many of the efficiencies offered by their banking partners. By embracing new technologies, districts save taxpayer money by making their own operations more effective. However, while employing banking innovations does improve financial operations, administrators and board members must be cautious.
Recent cases of cyberfraud in school districts have prompted state regulators to begin targeting online banking policies and procedures during their audits of school business operations. For example, in October 2011, nearly $138,000 was stolen from a Vermont school district. The Washington South Supervisory Union’s bank acount was victimized via wire transfer. The money was deposited into 17 accounts in 10 different banks across the U.S. and the Ukraine.
In another case this past February, Vermont’s state auditor issued a 77-page report documenting more than $415,000 in school district losses. Sixteen districts experienced theft, embezzlement, or wire fraud. Of the 25 incidents reported, four losses exceeded $40,000. The State Auditor speculates that the number and total dollar amounts of the losses may, in fact, be much larger.
Threats to online banking operations can come from within a school district or from the outside. It is important for your board to be familiar with the nature of external and internal threats. A knowledgeable board is prepared to safeguard the district’s financial resources.
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