6 Practical Steps Districts Can Take Today to Reduce the Risk of School-Level Fraud

Track Every Dollar of Cash from Collection to Deposit

Cash theft remains the most common type of school-level fraud because it’s often handled without adequate tracking or oversight.

In fact, our data shows that 62% of fraud cases involved skimming cash from activity fees, fundraisers or ticket sales — highlighting a critical truth: the risk isn’t cash itself, it’s the lack of visibility around it.

Many schools still rely on manual processes like paper receipts, spreadsheets, and unsecured collection methods, making it difficult to trace funds from collection to deposit. These visibility gaps create risk, even when everyone involved has good intentions.

While reducing or eliminating cash over time is a worthy goal, districts must balance that with equity realities. Cash won’t disappear overnight for many families.

The priority for K-12 districts today is increasing financial visibility and control, including:

• Digital receipt tracking for every transaction
• Clear documentation of cash collections
• Systems that trace funds from point of payment through deposit

With the right tools in place, districts can serve all families equitably while still maintaining the transparency their communities deserve.

Prohibit Unauthorized Payment Apps and Digital Wallets

Cash isn’t the only concern. Our data found that although digital payment fraud occurs less frequently, it accounts for a disproportionate share of total losses.

While digital wallet fraud represents only 10% of fraud incidents, it drives 77% of total dollar losses — a high-impact risk fueled by personal PayPal, Venmo, and Square accounts created outside approved systems.

These unauthorized payment channels create serious oversight gaps, preventing districts from detecting missing funds until long after losses occur. When payments bypass district-approved systems, it becomes harder to track who collected funds, where they were deposited, or how they were ultimately used.

School districts can reduce this risk by ensuring that all electronic payments are subject to the same controls as cash, including:

• Prohibiting the use of personal payment apps for school-related collections
• Requiring that all digital transactions flow through district-managed platforms
• Maintaining centralized reporting and audit trails for every payment type

Digital payments offer convenience for families — but without clear oversight, they can quickly become the modern version of the cash box: easy to use, but difficult to monitor.

Increase Internal Controls at the School Level

While most districts have strong financial controls at the central office, those controls often don’t extend to individual schools, where funds move daily through athletics, fundraising, and student activity accounts.

Fraud risk increases significantly when a single individual manages multiple steps of a transaction.

Districts can reduce that risk by implementing practical internal controls such as:

• Segregation of duties (e.g., collecting funds, preparing deposits, and reconciling accounts are shared across multiple staff members)
• Dual-person verification for cash counts and deposits
• Pre-approved vendor lists and purchase order authorization limits
• Positive Pay systems or similar protections to reduce check fraud

These safeguards aren’t only about preventing misappropriation — they also protect staff by creating shared accountability and clear processes.

Strengthen Oversight with Real-Time Visibility

Oversight doesn’t mean micromanaging school office staff. It means ensuring district leaders have enough visibility into school-level financial activity to detect irregularities early — before they become crises.

Too often, districts only discover issues during audits or after funds are already missing.

A stronger approach includes:

• Clear role documentation acknowledged and signed by anyone handling funds
• Central dashboards that provide real-time visibility into all school-level financial activities
• Ongoing training that includes clear escalation procedures

Anyone collecting, managing, or depositing money — from bookkeepers to coaches to volunteers — should understand the policies, expectations and accountability structures in place.

Invest in Purpose-Built K-12 Finance Systems

Generic accounting tools like QuickBooks weren’t designed for the complexity of school-level finance — where money moves across schools, programs, students, events, and staff.

Purpose-built school finance platforms reduce risk by eliminating the visibility gaps and creating a complete digital audit trail.

When evaluating K-12 finance management systems, districts should look for solutions that are:

• Unified – accounting, payments and reporting in one platform
• Controlled – real-time visibility for all stakeholders, with role-based access and approval workflows
• Integrated – connects with existing ERP and SIS systems to complete the financial picture
• Flexible – supports modern payment methods without losing visibility or control
• Easy to use – intuitive for school staff and families to adopt
• Secure – PCI and SOC 2-certified to protect financial and student data

Create a Culture of Accountability from the Top

At the core of every fraud incident is an environment where expectations are unclear and controls are inconsistent. Prevention starts with a strong culture of accountability set at the top and embedded throughout the district.

CFOs and district leaders can foster that culture by:

• Setting clear expectations through formal policies
• Communicating regularly about proper financial practices
• Providing ongoing training, including fraud awareness training
• Offering safe, anonymous channels to raise concerns
• Recognizing and championing strong financial stewardship

Moving Forward

The takeaway from the data is clear: what districts can’t see puts them at risk. But with the right controls, tools, and leadership in place, K-12 fraud can be prevented.

Districts that invest in purpose-built K-12 finance platforms don’t just reduce risk. They protect their people, strengthen community trust, and ensure every dollar reaches the students it’s meant to serve.

Learn More

Download the full K-12 Fraud Report to explore the findings, real-world cases and actionable strategies districts can use to strengthen oversight and safeguard funds.