Finance

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Finance

These finance tools help financial officers of unit, council, and district PTAs gain a better understanding of their responsibilities, keep and maintain accurate records, and exercise proper control of all PTA monies. Sound financial procedure must be a prime concern of the treasurer as well as all officers and chairmen.

Although fund-raising is not a Purpose of the PTA, funds must be raised to carry on the work of the organization. Each PTA should raise only the funds necessary to conduct annual activities and projects as outlined in the PTA's adopted budget. Fundraisers should be planned to meet all budget expenditures, including special projects and funds for emergencies.

Remember that providing adequate public school facilities, supplies, and programs is the responsibility of the taxpayers, not the PTA. Public officials must remain responsible for providing each and every student with the resources necessary for an equitable, quality education.

TABLE OF CONTENTS

Policies and Procedures

Fiduciary Responsibilities ..................................................................................................................F5 Signs of Good Financial Procedures.................................................................................................F5 Sample Financial Calendar of Activities ............................................................................................F5 Records Retention and Destruction Policy........................................................................................F6 Commingling of Funds.......................................................................................................................F7 Fiduciary Agreements and Gifts to School ........................................................................................F7 Contracts ...........................................................................................................................................F8 Hold Harmless Agreements...............................................................................................................F8 Miscellaneous Operating Information ..............................................................................................F8 Special Request for Professional Opinion.........................................................................................F8 PTA-Provided Babysitting Services...................................................................................................F9 Handling Requests for Relief Assistance ..........................................................................................F9 School Bond and Other Ballot Measure Campaigns.........................................................................F9

Financial Officers

Financial Officers .............................................................................................................................F10 Treasurer Duties ..............................................................................................................................F10 Financial Secretary Duties...............................................................................................................F11 Auditor Duties ..................................................................................................................................F11 President Financial Duties...............................................................................................................F11 Secretary Financial Duties...............................................................................................................F12 Vice President/Chairman Financial Duties ......................................................................................F12 Financial Officer Transition..............................................................................................................F12

Records, Reports and Forms

Contents of the Treasurer's Records...............................................................................................F12 Computer-Generated Financial Records.........................................................................................F13 Guidelines for Computer Use ..........................................................................................................F13 Budget .............................................................................................................................................F13 Treasurer's Report...........................................................................................................................F14 Financial Secretary's Report ...........................................................................................................F14 Auditor's Report ...............................................................................................................................F14 Annual Financial Report ..................................................................................................................F14 Unit Remittance Form......................................................................................................................F14 Cash Verification Form ....................................................................................................................F14 Payment Authorization/Request for Reimbursement Form.............................................................F15 Workers' Compensation Annual Payroll Report ..............................................................................F15

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Banking

Banking ............................................................................................................................................F15 Bank Statements ............................................................................................................................F16 Outstanding Checks ........................................................................................................................F16 Deposits ...........................................................................................................................................F16 Bank Cards/ATM and Credit Cards .................................................................................................F17 Petty Cash .......................................................................................................................................F17 Savings Account ..............................................................................................................................F17

Income and Expense

Income ...............................................................................................................................................F17 Handling PTA Funds .......................................................................................................................F17 California State PTA E-Membership Program.................................................................................F18 Providing Documentation to Donors................................................................................................F18 Returned Non-Sufficient-Funds Checks..........................................................................................F18 NSF Checks Bookkeeping Procedures ...........................................................................................F19 Non-Dues Revenue .........................................................................................................................F19 Financial Procedures for the Internet ..............................................................................................F19

Expenditures .....................................................................................................................................F19 Check Request System: Payment Authorization/Request for Reimbursement ..............................F19 Authorization Procedure ? Funds Budgeted But Not Authorized ....................................................F20 Unbudgeted Expenditures ...............................................................................................................F20 Financial Procedures for the Internet ..............................................................................................F20 Payment Via Electronic Funds Transfer/Bank Bill Pay Services.....................................................F21 Request for Advance .......................................................................................................................F21 Stale Dated Checks .........................................................................................................................F21

Budgeting

Developing the Budget ....................................................................................................................F22 Recommended Budget Line Items ..................................................................................................F22 Funds Not Belonging to the Unit......................................................................................................F23 Approving the Budget ......................................................................................................................F23 Amending the Budget ......................................................................................................................F23 Protecting PTA Tax Exemption .......................................................................................................F23

Fundraising

Local Requirements for Fundraising................................................................................................F23 Standards for PTA Fundraising .......................................................................................................F23 Fundraising Committee Responsibilities .........................................................................................F24 Committee Procedures....................................................................................................................F24 Fundraising Inventory Management ................................................................................................F24 Noncommercial Policy .....................................................................................................................F24 Sponsorship versus Endorsement...................................................................................................F24 Selecting Appropriate Fundraising Activities ...................................................................................F25 Obtaining Grants..............................................................................................................................F28

Programs at Schools

PTA Funds versus School Funds ....................................................................................................F29 Field Trips ........................................................................................................................................F29 School Staff Positions......................................................................................................................F29 Computers, Technology and Other Major Purchases .....................................................................F29 Academic Enrichment Programs .....................................................................................................F29 Personal Gifts ..................................................................................................................................F30 Hospitality ........................................................................................................................................F30 Staff Appreciation ............................................................................................................................F31 Volunteer Appreciation ....................................................................................................................F31 PTA and Education Foundations.....................................................................................................F31

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PTA Audit

Audit Schedule.................................................................................................................................F31 Purpose of an Audit .........................................................................................................................F31 Preparation for an Audit...................................................................................................................F32 Audit Procedure and Recommendations.........................................................................................F32 Audit Report.....................................................................................................................................F33

Tax Filing

Tax Requirements.............................................................................................................................F33 Employer Identification Number (EIN) .............................................................................................F33 Tax-Exempt Status and Letters of Determination ...........................................................................F34 Sales Tax.........................................................................................................................................F34 Federal Taxes..................................................................................................................................F34 State Taxes and Government Forms ..............................................................................................F35 Gross Receipts ................................................................................................................................F35 Unrelated Business Income Tax......................................................................................................F35 Filing Due Dates ..............................................................................................................................F35 Officer Responsibilities for Filing .....................................................................................................F36 Internal Revenue Service (IRS) Audit..............................................................................................F36

PTA as an Employer

Employee versus Independent Contractor ......................................................................................F36 Approving Projects That Require Employees..................................................................................F37 Planning ........................................................................................................................................... F37 Hiring Requirements........................................................................................................................F37 Comprehensive General Liability Insurance for Independent Contractors .....................................F37 Workers' Compensation Insurance .................................................................................................F37 In Case of Employee Injury .............................................................................................................F38 Workers' Compensation Annual Payroll Report ..............................................................................F38 Employer Tax and Withholding Requirements ................................................................................F38 Filing Requirements for Employers .................................................................................................F39 Penalties ..........................................................................................................................................F39 Filing Requirements for Independent Contractors...........................................................................F39

Insurance

Insurance Claims ..............................................................................................................................F39 Mismanagement of Funds/Embezzlement ......................................................................................F39

Glossary .....................................................................................................................40

FIGURES

F-1 Budget (Sample)..............................................................................................................................F42 F-2 Treasurer's Report (Sample) ...........................................................................................................F43 F-3 Financial Secretary's Report ...........................................................................................................F44 F-4 Audit Report.....................................................................................................................................F45 F-5 Audit Checklist .................................................................................................................................F46 F-6 Annual Financial Report (Sample)...................................................................................................F47 F-7 Unit Remittance Form......................................................................................................................F48 F-8 Cash Verification Form ....................................................................................................................F49 F-9 Payment Authorization/Request for Reimbursement ......................................................................F50 F-10 Workers' Compensation Annual Payroll Report (Sample) ............................................................F51 F-11 Authorization for Payment Via EFT/Bank Bill Pay Services ..........................................................F52

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Policies and Procedures

Fiduciary Responsibilities

The responsibilities of financial officers are specified in the association bylaws and are also established in California State PTA policies and procedures. Additional information can be found in the Finance and Job Descriptions chapters of the Toolkit. The Toolkit can be found on the PTA website, .

The treasurer, financial secretary and auditor are generally considered the financial officers. The president, secretary and vice presidents/chairmen also have specific financial responsibilities. Every PTA board member has a fiduciary responsibility to:

Protect the assets of the organization. These assets include cash, assets, volunteers and the PTA's reputation.

Ensure compliance with all laws. These include federal and state laws as well as the policies and procedures of the PTA.

Ensure the assets are used to meet the needs of the children and members served by the PTA.

Ensure continuity of the association by preserving assets for the future and not encumbering future boards.

Ensure the association remains transparent ? all the members are given the opportunity to participate in decision making and to view financial reports.

Ensure the association is carrying out the purposes of PTA. These include increasing family engagement, advocacy and increasing communications between home and school. Fundraising is not a purpose of PTA, but PTAs may fundraise to provide PTA programs. Councils and districts have an additional purpose, which is to train and support local associations and their officers.

PTA officers/chairmen need to understand why they are doing the things they are doing and be committed to doing them correctly and completely.

Signs of Good Financial Procedures

A financially healthy PTA

Ensures that only authorized check signers (as specified in the bylaws) are on the bank signature card. Removes previously authorized signers from the signature card whenever a resignation occurs or a new term begins.

Prepares and presents monthly treasurer reports, budget-to-actual comparative reports, financial secretary reports, committee reports and semiannual audit reports at board and association meetings.

Ensures budget is approved by association, funds are released and expenditures are authorized prior to spending funds.

Only pays bills which have been authorized by the executive board or association.

Has the bank statements and reconciliations reviewed and signed monthly by a non-check signer; may be the auditor.

Conducts at least two audits per year, in accordance with the bylaws. Audits not conducted by a qualified accountant are reviewed by an audit review committee.

Files the appropriate IRS Form 990 annually and all state forms required by due date

Conducts a membership campaign throughout the year and remits membership funds not belonging to the association monthly. No remittance is made for memberships received through the California State PTA E-membership program.

Remits California State PTA insurance premium in accordance with council/district due date. District PTAs must remit to California State PTA office before December 20th. Remits Workers' Compensation Annual Payroll Report Form and any additional premium through channels no later than January 31st.

Ensures all monies are counted by two PTA members, one of whom must be an officer or chairman. Cash verification forms are signed by everyone who counts monies. A signed copy of the verification form is kept by each person who participates in the count.

Issues a receipt for donations (see Providing Documentation to Donors, Finance Chapter; and Donation Receipt, Forms Chapter).

Ensures checks, bill payments/electronic funds transfer authorizations and transfers between bank accounts are signed by two authorized check signers.

Ensures officers receive training at convention, state, district, and/or council PTA workshops.

Sample Financial Calendar of Activities

(Year-round PTAs adapt accordingly)

UPONELECTION/MARCH/APRIL President-elect appoints the budget committee to develop the budget based on proposed PTA programs for the upcoming year.

Treasurer-elect chairs budget committee.

Board-elect adopts preliminary budget.

MAY/JUNE Present proposed budget for adoption to the current executive board and the membership at the last PTA meeting of the year.

Association approves and releases any funds required prior to the next association meeting in the fall. This allows the board-elect the ability to cover routine summer expenses as outlined in the bylaws.

AUGUST/SEPTEMBER Re-present budget to association for adoption at its first meeting. Release any funds required prior to the next association meeting.

Present audit and year-end Annual Financial Report to association. Send approved audit, year-end Annual Financial Report and approved current year budget to

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council or district as directed. Upload copies of all documents to MYPTEZ.

Send the first remittance of per capita dues through PTA channels. Send dues as received and at least monthly thereafter. No remittance of E-membership dues.

Through channels: The route of formal communications through the PTA. Typically from unit to council, council to district PTA, district PTA to California State PTA.

OCTOBER Confirm tax forms for prior fiscal year are filed as required with copies forwarded to council or district as directed (Tax Requirements, Finance Chapter) and uploaded to MYPTEZ. (Contact District PTA for assistance if needed.)

Send checks for insurance premiums through channels.

Send checks directly to the council or, if out of council, to the district, by the appropriate council or district deadline. The premium must be forwarded through PTA channels to be received in the California State PTA office by December 20, or a late fee of $25 will be assessed by California State PTA.

NOVEMBER/DECEMBER Send per capita dues through channels. Send dues as received and at least monthly thereafter. No remittance for E-membership dues.

Balance membership totals with council and district membership reports.

Prepare books and financial records for the midyear audit.

JANUARY Submit books and financial records for mid-year audit, as specified in the bylaws.

Present budget versus actual report to the executive board and association and revise budget if necessary.

Ensure that Workers' Compensation form and additional premium, if required, have been forwarded through channels by the appropriate due dates.

FEBRUARY Send Founders Day freewill offering through channels to district PTA, when collected. The event may be held during a month other than February.

MARCH Ensure all per capita dues have been forwarded through channels. No remittance for E-membership dues.

Register for convention.

APRIL Issue convention checks for authorized expenditures for elected delegates, if necessary.

Begin transitioning with newly elected financial officers.

MAY/JUNE Attend workshops for financial officers, when offered.

Submit books and financial records to outgoing auditor for end-of-term audit, as stipulated in the bylaws (after close of fiscal year).

Give financial records and materials to the incoming financial officer (except those under audit).

Assist incoming officers with changing authorized signers at the bank as needed. The treasurer-elect should contact the bank to determine the requirements for changing authorized signers.

Prepare Annual Financial Report that reflects the fiscal year. Prepare and file tax returns (end of fiscal year) and upload to MYPTEZ. The fiscal year is listed in the bylaws and on previous tax returns. The recommended fiscal year is July 1 to June 30.

Ensure all per capita dues have been forwarded through channels so that there are no audit exceptions. No remittance for E-membership dues.

Other pertinent dates should be added (or adjusted) to the calendar to meet time frames specific to each PTA and fiscal year.

RECORDS RETENTION AND DESTRUCTION POLICY Model Practices for Districts, Councils and Units

It is very important that certain records be retained. The current letter of determination, the current bylaws and standing rules approved by the state parliamentarian and the articles of incorporation (for incorporated PTAs) should be readily available at all times.

A policy was adopted by the State Board of Directors and Board of Managers November 2016 and meets all applicable state and federal statutes as it relates to document retention and non-profit organizations. This policy is intended as a guide for model practices at the local district, council and unit level.

Purposes of the Policy include (a) retention and maintenance of documents necessary for the proper functioning of local PTA as well as to comply with applicable legal requirements; (b) destruction of documents which no longer need to be retained; and (c) guidance for the Board of Directors (the "Board"), officers, and other constituencies with respect to their responsibilities concerning document retention and destruction.

Please refer to the Toolkit online at toolkit. for the complete policy recommended for all districts, councils and units.

RETENTION SCHEDULE

PERMANENT STORAGE

Accounting & Finance ? Annual Financial Statements & Audit Reports ? Cancelled Checks ? special, such as loan repayment ? General Ledger

Contributions/Gifts/Grants ? Contribution Records ? Documents Evidencing Terms of Gifts

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