FINANCIAL PROCEDURES

1. FINANCIAL PROCEDURES for Locals and Regions (FPLR)

2. Handbook Sections • Administration & Fiduciary Oversight • Regulatory Requirements • Technical Tasks

3. Session Overview • FP 101: Survival! • FP 102A: Need to Do • FP 102B: Need to Know • FP 103: Best Practices • FP 104: Management Issues

4. Session Overview, continued • All local/region leaders need to be aware of financial concepts • Oversight • Emergency coverage • Treasurer needs to know in detail • Following these guidelines helps you to avoid problems and be more accountable Note FPLR handbook page references at bottom of slides (centered and green)

5. FP 101 Survival!

6. Pay the Bills • IEA dues- Pay monthly except SEPTEMBER/OCTOBER • Member reimbursement • Vendor bills 45, 50

7. Bills, continued • Check supply • Types of checks • Record in checkbook/Accounting system

8. IEA DuesTransmittal Policy 50

9. Deposit Checks • Employer dues checks • Make sure you obtain and retain supporting detail! • Other checks • Keep copies and documentation! Appendix 6

10. Deposit, continued • Deposit slips- Ample supply • Deposit checks when received • Do NOT withdraw cash from deposit!

11. IRS Issues • Taxpayer ID Number (TIN) • Annual filing requirement • Nonemployee compensation • Unrelated Business Income 26-33, Appendix 13

12. Taxpayer ID Number (TIN) • “Social Security Number” for associations and corporations:9 digits (xx-xxxxxxx) • Need when opening a bank account • Need when filing IRS forms • IEA has your number on file • IEA will apply for numbers when needed 27

13. IRS Annual Reporting • IRS Form 990-N (“E-Postcard”) • “Gross Receipts” under $50,000 • “Gross Receipts” do NOT include IEA-NEA dues! All except around 30 IEA locals file this form! 28, Appendix 13

14. IRS Annual Reporting,continued • “Gross Receipts”$50,000-$200,000: IRS Form 990 EZ • “Gross Receipts”Over $200,000: IRS Form 990 Most locals pay a CPA to file these forms. 28, Appendix 13

15. IRS Annual Reporting,continued • If you tell us that you are filing the 990/990-EZ but fail to do so, after a period of time the IRS will take away your tax exemption! • Serious financial consequences for your local • Significant time, effort and expense to get it back

16. E-Postcard • Must file if not required to file 990 or 990-EZ • “Simple” electronic submission • IEA files on your behalf 28, Appendix 13

17. Unrelated Business Income • Income not related to union business • Rarely occurs, examples: • Rental income • Newsletter ads (not sponsorships) • Merchandise sales • Need $1,000 in UBI to incur a tax liability 28, Appendix 13

18. Form 1099-Misc • Must report payments to INDIVIDUALS to the IRS, IF: • Over $600 in total for a calendar year • For Services: Not for products, supplies or expense reimbursements • Gifts and awards don’t count 29-31, Appendix 13

19. Form 1099, continued • Stipends: officers(W-2 vs. 1099) • Stipends: non-officers • Payment of dues for officers • Undocumented expenses: report even if under $600 29-31, Appendix 13

20. Form 1099—Misc 30

21. Form 1096 31

22. Political Funds • You need to know if your local association is currently filing quarterly reports with the State Board of Elections. • If so, you need to continue to file them in order to avoid penalties. • Keep IPACE funds in separate bank account! 34-35

23. More Info for New Treasurers • There are some tips for new Treasurers on the IEA website • Click on RESOURCES • Then FINANCIAL PROCEDURES

24. FP 102A Need To Do

25. Documentation • Every dollar that goes in or out of your bank account needs to be documented • Possible audit • Fiduciary duty: “Other People’s Money” • Proof of business purpose • Proof of dollar amount • Proof of date/place 52-57

26. Funds Received • Where from • What for • Dollar amount • Employer checks- Be sure to retain detailed list of dues deducted, etc. • Other Checks: Copy of check with notes/attachments 52

27. Funds Disbursed • IEA dues: Maintain copy of monthly statement • Member reimbursement • Travel: Use travel form with receipts attached • Other: Need original vendor bill, not a handwritten note • Outside vendors • Detailed bill needed • No bill (stipends, scholarships, etc.): document in minutes 53-57

28. Funds Disbursed,continued • Forms: • Use some sort of voucher system (p 54) • Attach bills, etc. to vouchers • For travel expenses: USE A TRAVEL EXPENSE FORM!! • Example on page 57 • Label receipts and staple them to the forms • No stapled envelopes with miscellaneous random receipts!! • If travel funding is provided by another body, make sure there is no duplication of reimbursement 53-57

29. Sample Voucher 54

30. Sample Travel Form 57

31. Record Your Transactions • Every dollar that goes in or out of your bank account must be recorded • Permanent record • Future audits by IRS, etc. • Internal questions • Financial reporting • What system do you use: “It depends” 38-43

32. Accounting Systems • One size does not fit all • Size/complexity of organization • Prior treasurer’s system • Current treasurer’s preference 38-43

33. Systems,continued • Your system needs to: • Record all transactions in sufficient detail • Allow you to produce financial reports efficiently • Provide a record that others can follow ` 38-43

34. Systems,continued • Some possibilities • Checkbook/check stubs • Cash receipts and disbursements journals • Excel/Access • Specialized accounting software (Quicken, etc.) 38-43

35. Bank Reconciliation • Perform and document monthly • Detects errors by the bank and/or yourself 45, Appendix 14

36. Filing • This is the link between “Documentation” and “Recording” • Should be able to look at any item on the bank statement or your accounting system and find the source document easily and quickly. 58

37. Filing, continued • Examples: • Cross reference vendor bills/vouchers with check numbers • Attach bills to bank statements, or • File vouchers numerically (chronologically) • No envelopes/sacks with miscellaneous random documents 58

38. FP 102B Need to Know

39. Internal Controls • Checks/balances and separation of duties • Helps protect the organization from undetected fraud • Helps protect officers from potential embarrassment and liability • Protects the treasurer’s credibility 17-18

40. CONTROLS,continued • List of controls, Appendix 6 • Please read the example on page 18! 17-18, Appendix 6

41. Controls, continued • Checks and cash should be deposited daily, with the date of the deposit indicated in the applicable records. The bank deposit slip totals should match the total in the books. • Cash should NOT be withdrawn when making a deposit Appendix 6

42. Controls, continued All disbursements, except petty cash items, should be made by checks. Complete supporting documentation should be maintained. Appendix 6

43. Controls, continued Checks should never be made payable to “Cash”. Appendix 6

44. Controls, continued Checks should be paid from original vendor invoices. Appendix 6

45. Controls, continued Two (2) signatures are recommended on all checks. Appendix 6

46. Controls, continued Signing of blank checks should never be permitted. Appendix 6

47. Controls, continued A person other than the treasurer should receive bank statements directly from the bank. Appendix 6

48. Controls, continued Appendix 6

49. Dues Billing From IEA • Locals are billed at the beginning of the month: November-August • Bill is sent to “Membership Contact” • Penalties for late payment • Need to pay entire amount shown!! • See Appendix 15 for “How to Read the Statement” • Some locals arrange for direct payment by employer 49-52

50. MEMBERSHIP CONTACT RESPONSIBILITIES • Include home e-mail addresses for your new members on their enrollment forms • Encourage all of your members to use the “My IEA Profile” portal to update their home e-mail addresses