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Prepare an Financial Review Report, including recommendations, for each bank account or savings account. The form should list the account bank, branch address and account number. The report is presented as follows:

• Unless mismanagement is uncovered, the financial review and recommendations are presented to the treasurer and president.
• The report(s) and recommendations are then presented to, and the report adopted by, the executive board.
• The report(s) is then presented to the association for adoption. After the financial review report is adopted by the association, the report(s), checklist and recommendations are uploaded to the document retention system in accordance with the bylaws.

When called upon, at the association meeting read only the statement “I/The financial reviewer/financial review committee has/have examined the records of the treasurer (and financial secretary) of _____ PTA and find them

• to be correct,
• to be correct with the following recommendations, or
• to be substantially correct with recommendations, or
• to be partially correct but more adequate accounting procedures are needed so that a more thorough financial review report can be given, or
• to be incorrect.”

The financial reviewer, or in the case of a financial review committee, each committee member, must sign the report. If there were recommendations, the president should state that the treasurer and executive board is or will be addressing the issues. The financial review report is adopted by the association with the motion, “I move that the audit report be adopted.”

Whenever questions are raised by the membership, the president should appoint a committee to look into the concerns and report back to the association at the next meeting.

The Financial Review Checklist should be used, and each box marked in the negative should result in a financial review recommendation. Review each account separately. Check off items in red ink as they are reviewed. Do not correct errors. Ask the responsible financial officer to correct errors. After errors have been corrected, and the financial reviewer is satisfied that the financial accounts are correct, the financial reviewer needs to denote the ending date of the financial reviewer. If a manual ledger and check register exists, draw a double line across the ledger and checkbook register where the audit concludes and sign and date using red ink, “Reviewed by (name) on (date).” If a computerized accounting program is used, attach a copy of the cash account and the last page of the check register to the financial review report filed with the secretary minutes, sign and date using red ink, “Reviewed by (name) on (date).”

The financial reviewer ensures that the association’s financial transactions have been accurately recorded

• Include bank name, bank address, type of account and the account number on each report.
• Start review with records posted after the last financial review. Verify the amount shown on the first bank statement (adjusted for outstanding checks and deposits per the prior financial review) corresponds to the starting balance recorded in the checkbook register, ledger, and treasurer report, and the ending balance of the last financial review.
• Confirm bank statement was reviewed by another non-check signer if the financial reviewer had not been assigned that task.
• Verify there have been no ATM transactions.
• Make sure every check issued for the review period is substantiated with an authorization for payment, the reason and budget line item for the disbursement, appropriate payee and a receipt or bill. Each authorization should be signed by the president and the secretary. If the check has cleared the bank verify that there are two signatures and that both were from authorized check signers. Verify authorization/ratification in the minutes. Note: Checks issued for pass-through funds do not require pre-authorization but should be ratified.
• Check that all bank charges and interest earned are recorded in the checkbook register, ledger and treasurer reports.
• Trace each deposit slip to bank statement and checkbook entries. Verify deposits are properly supported and that a Cash Verification Form (Forms, Chapter 9) or equivalent was used for each deposit. Verify that at least one of the signers of the form was an officer or committee chairman. Ensure money was deposited promptly.
• Ensure collection process is in place for returned checks that includes reimbursement of applicable bank charges. A returned check is treated as reverse income and reimbursed bank charges are treated as reverse expenses. Verify returned checks have been properly reported.
• Verify deposits and checks have been properly recorded in the treasurer’s reports.
• Verify the deposits and checks have been properly posted to the ledger and check register. Note: Request computer reports that show all the various accounts affected by the transaction.
• Verify that all income and expenditures are allocated into budgeted categories.
• Make certain that council, district, State and National PTA portions of the membership dues have been kept separate from other receipts.
• Make certain that the number of memberships agrees with membership chairman’s report, and verify that membership monies collected correspond to membership monies forwarded.
• Remember that Totem memberships do not have a corresponding amount forwarded.
• Ensure payment for insurance premiums.
• Make certain the money collected for a specific purpose (special projects, Founders Day, scholarship funds, council dues, etc.) has been so disbursed.
• Check event reports to verify receipts and expenditures have been properly reflected in the financial records.
• If an advance has been given, verify that receipts and/reimbursements have been received and properly recorded. If money was returned, verify it has been redeposited into the PTA account.
• Compare figures on monthly treasurer and financial reports against ledger for accuracy.
• Ensure proper tax returns have been filed.
• Verify that the PTA-required Workers’ Compensation Annual Payroll Report form has been filed.
• Verify that all required state and federal report forms have been filed if PTA hires employee(s) or independent contractor(s).

The financial reviewer should feel free to contact the treasurer if there are questions or issues needing clarification. If an error in recording a transaction is found, the financial reviewer needs to recommend the entry be corrected. Any corrections made as a result of the review need to be listed on the next treasurer’s report.

The financial reviewer should not be punitive in the report/recommendations. Difference of opinion as to process should not result in a recommendation if the treasurer’s records are correct.

Some examples of recommendations are:

• Cash must be counted by two PTA members and each must sign the Cash Verification Form. On xxxx, xxxx, xxxx, and xxxxx there was only one signature.
• Authorization for expenditure must be voted on by the executive board or association before checks are issued. Check numbers xxx, xxx, xxx were issued before authorizations were approved.
• Authorization forms must be signed by the secretary and president for check numbers xxxx, xxx and xxxx.
• Check numbers xxx, xxx and xxx were issued more than six months ago. They should be voided, and investigated and reissued if necessary.

If assistance is needed, contact the council or district PTA. At any time during the process, California State PTA also may be contacted for information and assistance.

Collect all financial books, records and reports from the treasurer, including:

• A copy of the last financial review report;
• Current bylaws and standing rules;
• Originals of checkbook register, whether handwritten or computer generated, and canceled checks (including voided checks);
• Originals of bank statements, bank book for each bank or savings account;
• Deposits and supporting documents for the cash receipts;
• Authorizations for payment with attached receipts;
• Itemized statements and receipts of bills paid;
• Monthly Treasurer’s Reports;
• Original treasurer’s books/ledgers including back-up files (external storage device) if books are kept on a computer;
• Financial Report by category for the period of the financial review with or without budget comparison;
• Copies of board, executive committee and association minutes, including an adopted budget, any amendments that were approved during the year, approval of expenditures, and ratification of payments;
• Committee reports from chairmen (e.g., fundraising, membership, etc.);
• Any other information requested by the financial reviewer;
• Copy of PTA-required Workers’ Compensation Annual Payroll Report form;
• Copies of all required state and federal report forms if PTA hires employee(s);
• Copies of all required federal report forms if PTA hires independent contractor(s);
• Copies of the most recently filed IRS Form 990;
• Copies of the applicable State Form 199 and RRF-1 and CT-TR-1 form if applicable.

All unit, council and district PTAs must conduct financial reviews semiannually or upon resignation of the treasurer, financial secretary, any check signer, or at any time deemed necessary by the executive board.

At the beginning of the year, the treasurer should organize the association financial documents in a manner which can easily be reviewed. The finacial reviewer should meet with the financial officers and explain what is required to conduct a financial review.

PTA fundraising activities are carried out by a committee whose chairman is an appointed or elected member of the executive board. The president should not be a chairman. All plans must be approved in advance by the executive board.

The major responsibility of the fundraising committee is to raise the amount needed to meet the proposed unit budget and to work cooperatively with the PTA president and treasurer in accounting for receipts and disbursements for the activity. The committee may also plan specific fundraising events and activities. Check the Insurance Guide to be sure the activity is allowed.

PTAs must maintain their nonprofit status as governed by the Internal Revenue Service Code section 501(c)(3). Within the language of the code, the IRS does permit expenses that are not directly related to the primary purpose of the PTA if the expenses are not of a significant amount.  Five percent is the recommended limit to be used as a guideline for PTAs for all hospitality expenses, including staff or volunteer appreciation based on previous definition by the IRS. It is important to budget appropriately when considering all PTA expenditures, and all expenditures must be approved by the membership.

The PTA may provide hospitality for association, executive board, and committee meetings; staff appreciation; volunteer appreciation; and other events requiring refreshments, food, paper goods, certificates, or decorations. The PTA may choose to:

• Purchase nonalcoholic drinks and/or snacks
• Solicit donations from businesses or members, or
• Store supplies to make coffee and/or punch, etc.

The cost of meals or beverages provided for volunteers during the course of their work; e.g., while processing fundraiser orders or counting money after an evening program, are not considered to be hospitality. Such expenses must be budgeted and approved by the association in advance. The expenditures are accounted for as a cost of doing the program or fundraiser on which they are working; e.g., wrapping paper sales or a fall festival.

A PTA-sponsored Academic Enrichment Program designed as an extension of the school curriculum offers students an opportunity to expand their knowledge and academic experience.

Prior to implementation of any academic enrichment program the Insurance Guide must be consulted to ensure compliance with sanctioned activities. For insurance purposes, an enrichment program is intermittent in nature and does not continue on a daily basis over the duration of the school year. For any questions regarding general liability insurance, contact the California State PTA insurance broker whose number can be obtained from the Insurance Guide.

If a unit, council or district PTA chooses to sponsor activities that the insurance underwriter has not listed, the unit, council or district PTA must contact the California State PTA insurance broker and may have to purchase the necessary additional participant liability insurance for that activity, and the entire association (California State PTA and its unit, council and district PTAs) must be named as an additional insured. Please contact the California State PTA insurance broker for requirements for additional insurance. (Refer to the Insurance Guide.)

A special enrichment program study committee should be appointed by the PTA president to determine if a need for a specific academic program exists and to assess its potential value. A program must be acceptable not only to the PTA association but to the principal as well; therefore the committee should include the school principal, a PTA financial officer, a faculty member and other interested persons. Consideration should be given to the feasibility of the local Parks and Recreation Department providing such a program rather than the PTA.

TOPICS FOR CONSIDERATION

The program must be academic in content with defined goals. The PTA must monitor and evaluate the program to ensure that the goals are being met.

The instructor may be a volunteer or a paid professional. Qualification guidelines must be established for the instructor, and PTA may not hire a voting member of the board as an employee for enrichment programs.

If the instructor is to be paid, the budget must reflect this expenditure. There must be sufficient income from other sources, such as fundraisers or program fees, to meet this expenditure.

A fee may be charged. However, fees should be minimal. All interested children must be served and no child may be excluded because of inability to pay any fee.

The PTA treasurer may handle the bookkeeping or there may be a need for a project financial chairman, who provides written reports given at the regular meetings of the executive board and the association. Checks can be signed by designated elected officers only. All procedures outlined in the Bylaws for Local PTA/PTSA Units for the expenditure of funds must be followed.

The program should be held at a time when all interested students may attend, including those on bus schedules and those residing outside the school attendance area and those students “off-track” when the year-round school calendar is being followed.

Consideration must be given to where the program will be held and the site’s accessibility for all students.

Compliance with the Americans with Disabilities Act requires that the PTA make reasonable accommodations necessary to make the class accessible to students with disabilities. This may include determining that a private location or specialized medical training is available for the handling of student’s personal needs.

The PTA must be responsible for defining and implementing safety and emergency procedures.

When it has been determined that an enrichment program will benefit all children, the committee shall bring its recommendations, including how the program will be operated, to the PTA executive board for approval and recording in the executive board minutes.

In order to continue the program, it must be approved each year by the association.

If the program needs approval by the school district administration or the school board, the PTA must proceed accordingly to obtain the appropriate authorization. The committee responsible for coordination of the program must make a progress report at each executive board meeting and, periodically, to the association. Approval dates must be recorded in the association minutes.

If the program is held before or after school, on or off school grounds, a signed parent consent form must be on file for each student. There must be phone access for emergency needs. The instructor must use procedures established and monitored by the PTA for checking children in and out of the program. The insurance underwriter requires there be at least two unrelated persons 18 or over in attendance at all times.

It is strongly recommended that PTA fund an academic program by giving the monies to the school district as a gift to the school, in accordance with school district policies, instead of the PTA hiring instructors. If PTA votes to hire an instructor, refer to PTA as an Employer.

To reduce risk of exposure and protect California State PTA, California State PTA has determined that sponsoring certain programs is not permissible for PTAs and is not to be covered under the California State PTA General Liability Insurance Policy. Refer to the Insurance Guide for a listing of prohibited activities.

When considering and carrying out large fundraisers, keep the following concerns in mind:

• Is the fundraising project related to PTA’s educational, charitable and philanthropic purposes as a tax-exempt organization?
• Will the proceeds of the fundraiser be designated for specific approved projects that meet the purposes of PTA? Do not hold a fundraiser if the PTA has not determined how the funds will be spent.
• Does the project violate PTA’s noncommercial policy?
• Does the association have enough volunteers?

 

Many PTAs fundraise by ordering a product from a specific vendor. When the product arrives at a school site, the PTA must maintain product inventory. The PTA executive board must ensure that inventory records are maintained and recorded following all PTA financial procedures. PTA membership approval is needed for each fundraiser before ordering product. Any agreement between the PTA and vendor is a contract that must be honored. Carefully document items ordered. Treat inventory like cash. Just like a cash verification form, have two people count product items upon receipt, reconcile against the order form, packing slip and invoice, and sign an inventory summary sheet. If there is a discrepancy, contact the vendor immediately. Pay all invoices promptly. Inventory should be stored in a secure lockable location. Track all sales in detail. Document when items sold are picked up or delivered to customers. If a customer complains, handle it promptly and refund monies if necessary. Periodically count inventory to ensure accuracy. Retain all records for auditor. Write a committee report at the end of the fundraiser documenting the details of the fundraiser. Contact the district PTA immediately if there are any problems.

The standard PTA insurance does not generally cover losses to stored inventory in case of damage. You should consult AIM, the California state insurance broker, if you think you will need additional coverage for property storage.

Fundraising events must be approved in advance by the executive board and association. Approval should be recorded in the minutes. Recruit enough volunteers to conduct the project. Assign each volunteer specific tasks and develop a work schedule. Solicit donated goods and services. Clear the dates with the school and reserve needed facilities and equipment. (See Event Planning Worksheet; Preliminary Planning)

Make firm arrangements with vendors. Obtain all necessary permits. Be sure each vendor is fully covered by his own liability insurance and Workers’ Compensation insurance. Have vendor sign a Hold Harmless Agreement and obtain a copy of the vendor’s certificate of insurance.