What is a Cash Shortage?

A cash shortage (commonly referred to as “cash short”) is the difference between the amount of money the organization should have based on the closed game's records or remnants, and the amount of money it actually has. For example, if, based on the count of winning and unsold tickets, the net receipts of a paper pull-tab game is $450 and the organization only has cash-in-hand of $445, the organization is $5 cash short.

• A cash shortage occurs when mistakes are made when handling the cash or tickets.
• A cash shortage is different than negative net receipts (a game played to a loss). Negative net receipts occur when prizes awarded exceed ticket sales for the game.
• A cash shortage differs from a fund loss, which involves missing cash or inventory by questionable means.

Cash shortages can be the result of honest mistakes or intentional theft (skimming). Human error or mistakes include:

• Overpaying on a winning paper pull-tab.
• Giving the wrong change to a player.
• Giving the wrong number of paper pull-tab tickets to a player.
• Not auditing or reporting games accurately, which skews net receipt figures reported to the Department of Revenue.
• Money mixing between cash drawers.

Dishonesty or stealing include:

• Skimming by anyone associated with the games or cash. Regular losses may indicate that skimming is occurring. For example, gambling employees might be:
  — opening paper pull-tabs (not allowed) and not paying for them;
  — taking funds directly from the cash banks and game receipts;
  — giving free paper pull-tabs to friends; or
  — taking a percentage but keeping the amount under .3% to prevent detection.
• Someone stealing cash or paper pull-tabs when unattended or the premises is closed.
• If the organization knows that ongoing skimming has occurred, the missing money is considered a fund loss by questionable means rather than a cash shortage.

Minnesota Rules, Part 7861.0320, subpart 1E, states, “...The board must require that the organization revise its internal accounting and administrative control systems if they do not meet the requirements in this subpart. Failure to respond to the board's notice that the organization must revise its internal accounting and administrative control systems must result in the board taking disciplinary action."

By addressing cash shortages during the compliance review process, your Compliance Specialist will work with you to be aware of potential problems. This is done by reviewing shortages for each site, recommending changes in internal controls, additional employee training, and changes in procedures. Ultimately, it is your organization and charities that benefit from these efforts.