The Financial Reviewer is responsible for working with the Financial Review Committee to review the books, and financial records of a PTA/PTSA to determine their accuracy, and that PTA financial procedures, as outlined in the Bylaws and Finance Toolkit, are adhered to.
Financial Reviews may be conducted by an elected financial reviewer, an appointed financial reviewer, or the council/district PTA. Alternatively, the board may authorize, subject to the ratification of the association, that the required financial review be conducted by a qualified accountant (volunteer or paid).
The financial reviewer is often a member of the budget, programs, or fundraising committees, but is never the one authorized to sign the PTA/PTSA’s checks.
Purpose of the Financial Review
The purpose of the financial review is to ensure the PTA/PTSA’s money is being handled in the safest way possible to avoid fraud or theft of funds. A financial review determines the accuracy of the books, detects inconsistencies or errors, provides recommendations for corrective action, protects the financial officers, verifies that funds were sent through channels as appropriate, and assures the membership that the association’s resources were managed properly.
One requirement of the Fidelity Bond, provided by the insurance company, is that each PTA/PTSA Association must conduct an annual audit/review of the books by an audit/review committee or qualified accountant or coverage for embezzlement, robbery, theft, and fraud may be voided.
Financial Reviewer’s Duties
- Work with the Financial Review Committee to verify the financial records of the association are accurate and reflect the approved income and expenditures of the association.
- Verify that the Association has filed required state and federal documents and taxes and that funds were sent through proper channels.
- Prepare the Financial Review Report to be presented to the executive board, and the association as stipulated in the Bylaws.
- The outgoing financial reviewer is responsible for conducting the year-end financial review at the end of their term.
- Ensure the Financial Review Report is forwarded through appropriate channels by either uploading a copy to the document retention system (MyPTez) or providing copies to their council or Ninth District. Financial Review Report(s), checklist and recommendations should be submitted.
Financial Review Schedule
The financial review schedule is in your bylaws. It is strongly recommended to conduct a financial review mid-year and a second financial review at the end of each fiscal year. A financial review must also be conducted anytime there is a change in financial officers.
Financial Review Committee
The financial review is conducted by the elected or appointed financial reviewer and the appointed financial review committee. The financial review committee is appointed by the executive board and ratified by the association and shall be composed of the financial reviewer and at least one other member of the unit, council, or District PTA. The majority of the financial review committee may not be check signers.
If a qualified accountant conducts the financial review (paid or volunteer), the requirement of appointing a financial review committee is not required.
Financial Review Procedure
It is recommended that the Financial Reviewer meet with the treasurer before the financial review begins to discuss how the financial records are organized, so that they can be easily reviewed.
Using the Financial Review Checklist and Financial Review Report forms found in the Finance Toolkit, the Financial Reviewer and the Financial Review Committee will review each account of the association separately. (Checking, savings, Paypal, etc. will each have their own Financial Review Report even when the balance is zero. One checklist may be used for all accounts.)
Using the Financial Review Checklist, gather all documents required from the treasurer, secretary, financial secretary, membership chairperson, and committee chairs as appropriate. It is recommended to gather all documents available before beginning the review.
Documents should include:
- Treasurer’s Financial Records (Budget, treasurer reports, annual financial report, bank statements including reconciliation documents, registers, checkbook, previous financial review, ledger, payment authorizations with receipts and canceled checks, cash verifications with deposit slips, 990 Form, 199 Form, RRF-1 form with documentation, etc.)
- Secretary Minutes
- Bylaws and Proof of Insurance
- Membership Reports
Reviewing is more than verifying addition and subtraction; it involves tracking all financial transactions that were approved income and expenditures of the association.
- Verify income receipts were verified by two signatures and the deposit matches the cash verification form.
- Verify payment authorizations match the receipts provided, the check amount, and that the expenditure was approved in the meeting minutes and budget. The authorization should have the president and secretary’s signature, and the date it was approved in the minutes.
- Verify that the monthly bank statements are reconciled with the checkbook register and that the statements and reconciliation are reviewed and signed by someone who does not have authorization to sign checks. (This is a requirement of the Fidelity Bond for insurance.)
- Verify that insurance has been paid, the state tax form, federal tax form, the RRF-1 with supporting documentation, and the workers’ compensation form was submitted.
- Verify that all checks were signed by 2 authorized signatories on the account. All EFT/ACH transactions have proof of 2 authorized signatures for the transactions.
- Verify all transactions are listed in the checkbook register and that all accounts are recorded in the ledger.
- Verify membership dues, not collected through e-membership, pass-through has been forwarded as specified in the Bylaws.
In completing the Financial Review Checklist check off the items as you review the records. Any items that are missing, contain errors or inconsistencies, or are answered “no” on the checklist will result in a recommendation.
To complete the Financial Review Report Form, the last financial review, bank statements, and income and expenses will be needed. The balances with the asterisks (*) must be equal to each other.
- Include bank name, address, and account name
- Record membership dues from Bylaws
- Record total memberships year-to-date and total e-members (TOTEM) year-to-date (You will need to subtract e-members from total membership to determine if the amount that should have been forwarded to the next level of PTA was accurate.)
- Record the dates covered in the financial review – these should be one day after the last review was completed. (For example, if the last review was completed 6/30/2023 this review would start 7/1/2023.)
- If the review is for a checking account the check numbers should be consecutive from the last review. (For example, if the last review was for checks 1101 to 1136, this review would begin 1137 to…)
- The Balance On Hand as of the end of the last review period is the date and ending balance from the last Financial Review. This amount should match the reconciled bank statement ending balance.
- Receipts since the last review is all the income during the review period. This amount should be the total of all income from ACH deposits, and cash verification forms, and should match income from the bank statements. Deposits should be made in a timely manner. Money should not be held.
- Disbursements since last review is all the expenses during the review period. This amount should be the total of all expenses from the Authorization for Payment/Reimbursement Forms, EFT transactions, bank charges, etc, and should match the debits/withdrawals from the bank statements.
- Balance on Hand as of (date of the end of the review period). The balance may not match the ending balance from the bank statement because there may be outstanding deposits or checks.
- The Bank Reconciliation Statement Balance (last month of the review period)
- Deposits not yet credited (This is unusual as this would be money that has been collected but has not been deposited. Money should be deposited as soon as possible.)
- Uncleared Checks should be listed by check number and amount and the total recorded. Checks should be consecutive. Verify voided checks.
- Balance in the bank account as of the ending date of the review should match the Balance on Hand. (These amounts are denoted by an asterisk (*).)
- The committee should determine if the books are “Correct with no recommendations” (unusual), “Correct with the attached recommendations” (typical), “Substantially correct with the attached recommendations and findings” (this finding will have quite a few “no” boxes checked on the checklist and have detailed recommendations for significant improvements to the financial records.)
- If the committee determines the books are “Partially correct.” or “Incorrect” the committee may decide to return the books to the treasurer for corrections to be made and then review the books once more. If this is not possible, ensure recommendations are clear on how to improve the financial records in the future. You may also want to contact your council or Ninth District PTA for assistance.
- If the committee determines that mismanagement may have occurred the financial reviewer should contact the District president (president@ninthdistrictpta.org) Do not share information with anyone outside the committee unless directed to do so by the District president.
There is no form for the Financial Review Recommendations that will accompany the Financial Review Report and Financial Review Checklist. This document should include the name of the association, the time period the review was conducted, specific recommendations for improving the financial records for the association, and be signed by the financial reviewer and the committee members. A useful tool for writing the recommendations is to utilize the wording from the Financial Review Checklist.
Reporting Financial Reviews
After the financial review is completed, you will present the Financial Review Report, Financial Review Checklist and the Recommendations to the executive board to review and adopt. At the next association meeting the Financial Reviewer will present the Financial Review Report for adoption by the association. When giving your oral report, simply read the statement on the Financial Review Report from about your findings and state that the financial review recommendations are attached. You should have a few copies available if people have questions, but do not need to read all the recommendations.
It is also recommended that if the financial review report has significant recommendations or raises questions, the president should appoint a committee to look into the issues and report back to the association. This may involve creating a procedures handbook for the executive board of best practices.
Resources
California State PTA Resources
http://toolkit.capta.org/finance/pta-financial-review/
Questions? Please contact Deborah Childers, NInth District PTA Financial Reviewer financial.reviewer@ninthdistrictpta.org