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Fidelity Bonds Thursday, April 4, 2013

Fidelity Bonds Thursday, April 4, 2013.

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Fidelity Bonds Thursday, April 4, 2013

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  1. Fidelity Bonds Thursday, April 4, 2013

  2. A small non profit discovered money missing from a deposit. The suspected employee was solely responsible for collecting, verifying and totaling receipts on a daily basis. The same employee was responsible for depositing the funds in the bank. The organization had no way of verifying accuracy. The suspected employee was questioned and admitted to the theft of funds. Further investigation revealed that money had been stolen for at least four years. What could you have been done to prevent this?

  3. An employee of an affordable housing complex embezzled money by depositing collected rent into his personal checking account. The tenants usually paid the rent in cash or with a money order. The theft was reported to the police and the District Attorney pursued legal action. The claim was paid and the court ordered restitution. What could you have been done to prevent this?

  4. Agenda • Scenarios • Requirements per the Terms and Conditions • Defining Fidelity Bonds • Fidelity Bonds vs. Directors and Officers Coverage • Documentation Submission

  5. Terms and Conditions The Sub-Grantee, unless it is an Institution of Higher Education or State/ Local Government Agency, shall obtain a Fidelity Bond equal to or greater than the grant award amount. If the Sub-Grantee’s current coverage is lower than the grant amount, the Sub-Grantee shall amend the coverage to reflect the grant amount. In addition, OneStar Foundation shall be named as a third party loss payee. 17.8.1 The Sub-Grantee receiving the Grant Award is the party insured. This insurance shall cover the dishonest acts of all employees, volunteers, officers and directors. 17.8.2 Sub-Grantee may obtain the necessary Bond through their general liability carrier, a major casualty insurance carrier, or a bonds specialty company. 17.9 The Sub-Grantee shall keep bond insurance current from the start date of the budget period to six months after the date of final reimbursement. 17.10 The Sub-Grantee may request total waiver or reduction of the amount of fidelity bond by submitting a written statement that is determined to be satisfactory to the Commission from an independent certified public accountant that certifies the reduced bond amount as being appropriate and sufficient bond to provide coverage for the total amount of funds administered by Sub-Grantee and also appropriate to the internal controls in place by Sub-Grantee.

  6. What are fidelity bonds? A fidelity bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.

  7. Fidelity Bonds vs. D&O Insurance Fidelity Bonds Directors and Officers Ins. Covers mismanagement by directors and officers Certificate of Insurance Does not name a specific payee (provides more general coverage) • Covers employee dishonesty • Evidence of Insurance • Includes the name of the third-party loss payee

  8. Documentation Submission Timeline • Submit current coverage • Tuesday, April 30th • OneStar will review and give feedback • Friday, May 31st • Submission of adequate coverage along with the other fiscal readiness/start-up review items • Late June** Stay tuned for official timeline.

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