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This training session covers bank account procedures, fundraising, cash receipt and disbursement procedures, treasurer reports, and more for booster clubs and PTO/PTA treasurers. Presented by Javier Campos, CPA on September 5, 2019.
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Edinburg Consolidated Independent School District Booster and PTO/PTA Treasurer’s Training Presented by: Javier Campos, CPA September 5, 2019
Topics Covered • Bank Account Procedures • Fundraising • Cash Receipt Procedures • Cash Disbursement Procedures • Bank Reconciliations • Treasurer Reports • Communicating and Reporting with ECISD • District Audit Procedures • Tax Responsibilities
Bank Account Procedures • Account Setup - • For a new organization, make sure to use the organization’s EIN number to setup the bank account at the bank of your choice. • For an existing organization, make sure that the organization’s EIN number was used in the account setup. Have one of the account signers verify the number used for the account setup. • A person’s social security number or the District’s EIN number must not be used to set up the organization’s bank account. • Mailing Address – • District recommends not to use a home address for your organization, due to the constant changes in the management of the organization. • Obtain a post office box (PO Box or something similar to use as the official mailing address of the organization. • The address and box keys can be given easily to the new officers at the beginning of each year. • Maintain a constant address to receive all correspondence with regards to the organization’s matters.
Bank Account Procedures • Account Approved Signors – • All parent organizations and booster clubs that want to maintain affiliation to the District must agree to include at a minimum 2 approved signers on all accounts and checks of the organization. • A District employee, substitute, or temporary worker may not be an authorized signer on the bank accounts of a PTO/PTA or Booster Club. • No Principal, Secretary or Designated Faculty sponsor who serves as a liaison/sponsor between the organization and the District shall be approved as signer on the bank accounts of a PTO/PTA or Booster Club. • For ideal control purposes, if feasible, it is recommended that person responsible for preparing the checks, is not an approved signer on the account. • Recommended Signers on the account are the President, Vice-President and Secretary, if the Treasurer is the responsible for writing and recording checks.
Bank Account Procedures • Bank Account Statements – • Monthly bank statements need to be submitted to the organization’s campus and / or to the District Auditor’s Office. • Bank statements will be due for submission 10 days after the receipt of the statement by the organization. • Bank statements submitted must include all pages sent by the bank and copies of the cancelled images of deposits and checks cleared. • All financial activity and account balances will be summarized and presented to the Board of Trustees periodically or at their request. • Organizations that fail to submit required monthly bank statements will be recommended for closure and will no longer maintain affiliation with the School District. • Coordinate the bank statement submittal with your organization’s sponsor or campus liaison to facilitate compliance with this requirement.
Fundraising • Fundraiser Approvals - • A fundraiser approval form must be completed and approved by the campus Principal and Assistant Superintendent for Finance, before conducting any fundraising activities. • All fundraiser approvals must be turned in to the campus at least 2 weeks in advance to ensure that approvals are in time for purchases and sales to begin. • A copy of the fundraiser approval form for booster and parent organizations can be found on our District website under the Audit Department's Booster Clubs & PTOs Section. • Organizations will need to include their account balance as of the date of the request on the fundraiser approval form for the Principal and administration to review the balance and consider allowing additional fundraising. • Organizations with an excessive balance ($5,000 or more) may have their fundraisers denied, unless they detail on the approval form why they need more funds and the use agrees with the District’s policies and procedures. • Maintain on your records a copy of all your requested fundraiser approval forms for audit and documentation purposes.
Fundraising • Fundraiser Guidelines – • Fundraiser approvals must include, purpose, type of fundraising activity, date, time and place of activity, number participants, and contact information for the person in charge of the fundraising event. • Fundraising efforts shall be within federal, state and District guidelines and shall be for the purpose of supporting the school program or group activity for which the organization was formed. • Organizations must be aware of the Texas Comptroller’s requirements regarding the collection and remittal of Sales Tax. Organizations will be solely responsible for collecting and remitting sales tax. (Covered in-depth ahead) • Benefits given by a booster or parent organization cannot be distributed based on participation in a fundraiser or based on revenues individually generated in a fundraiser.
Cash Receipt Procedures • Treasurers must use a pre-numbered receipt book to document all receipts of money turned in for deposit. (Make sure to only use one book at a time) • Treasurer receiving the money should always give a receipt to the person submitting it and both individuals need to verify the totals together. • Receipts should indicate whether, • cash, check or any other financial instrument was received, • the total and date of the receipt, • the purpose/source of the receipt, and • name / signature of the person receiving the money. • When preparing a deposit, complete a Tabulation of Monies Collected form and have at least 2 individuals count the money and sign off on the form. • The tabulation of monies collected form is a document that details the currency and coin totals as well as the check numbers with amounts. Use this form as a measure to solve discrepancies with the bank at the time of deposit. • A copy of the tabulation form can be found on the District’s website under the Booster Clubs and PTOs section of the Audit Department’s site.
Cash Receipt Procedures Cash Receipt Sample Tabulation of Monies Collected Form Sample
Cash Receipt Procedures • Must prepare a receipt for every time money is collected from a member or individual, a donation is made, change from a purchase is received, or a check is collected. • Make sure to follow the receipt sequence to assist in matching the receipts to their corresponding deposits. • You should prepare one tabulation form for every deposit made to the bank. Your tabulation forms should each tie to an individual deposit in the bank. • You can deposit various receipt amounts within one sole deposit and identify them on the tabulation form. At the end your tabulation form should equal your deposit slip total. • Maintain all records for audit purposes!
Safeguarding Cash Received • All monies should be deposited on the account without delay, to minimize the risk of funds at hand being misappropriated. • Do not keep any money in an unlocked drawer, unlocked filing cabinet, vehicle, or other unsecured location. • Maintain all receipts within the pre-numbered receipt book and keep all tabulation forms attached to their corresponding deposit slip for audit documentation purposes. • Never spend funds from money not yet deposited! Money received and not yet deposited should not be used for purchases, check cashing, loans, advances, reimbursements, or for any other purpose. • Never deposit funds without having at least 2 individuals verify totals. • Always identify the source of the proceeds on the receipt and on the tabulation forms. • Money should only be deposited in the booster club or parent organization’s account, never deposit into personal accounts.
Cash Disbursement Procedures • All expenses of the organization must be paid using an organization check. • As of March 9, 2017, from Superintendent’s directive, “all parent organizations and booster clubs that want to maintain affiliation to the District must agree to cease the use of Debit/ATM cards as a means of payment” • This directive was made to prevent any abuse that can potentially occur due to the easy unauthorized accessibility to the organization’s funds. • The organization’s check book and stock should be kept safe and secure at all times. • The sequence of check numbers should be maintained and every check accounted for including void checks. • Reconciliation of bank statement to checking book will detail the list of outstanding activity that needs to be inquired by the organization. • Remember all checks must include at a minimum 2 approving signatures.
Cash Disbursement Procedures • All expenses of the organization should be approved either through a yearly budget that details the transactions or specifically within the minutes to the board meetings. • All expenses must be supported by a corresponding receipt or invoice that details the purchases made and the total paid. • If a purchase must be made before board approval is obtained, submit a memo explaining the cost and reason for the purchase with the receipt / invoice for approval at the next board meeting. • Ensure that all transactions are documented even when vendors fail to provide a receipt or invoice. For these kind of transactions create a dated memo detailing the transaction and items or services purchased and have at least 2 board members sign the memo to maintain as backup documentation. • Whenever a receipt or invoice is lost, request that the person who paid the expenditure to contact the vendor and ask for a copy. If copy cannot be reproduced have the person document in a memo what was purchased, for what purpose and a reason why receipt/invoice was not kept. Have board approve the memo within the next meeting.
Cash Disbursement Procedures Example Memo for a vendor that does not issue invoices or receipts. Example Memo for a lost receipt or invoice.
Cash Disbursement Procedures • When issuing checks to a member of the board of the organization for reimbursement purposes, make sure to keep a copy of the receipt or invoice that documents any purchase being paid for by the organization. • If properly established the booster or parent organization should be tax exempt and should use their tax exemption in order to save on the cost of sales tax on purchases. • Do not use the schools tax exemption number to receive tax free benefits. • Do not use other organization’s tax exemption number to receive tax free benefits. • Make sure your purchases are in compliance with all UIL guidelines with regards to Booster Clubs. (Will be covered in depth on 2nd training). • Emergency expenses should be spent as directed on the organization’s bylaws.
Basic Bookkeeping • Maintain a ledger in which you keep track of all your transactions as they occur. This way you will always have a real running total for your bank account and will ease your bank reconciliation process.
Basic Record Keeping • Maintain all of your information in a binder divided by month so that you can have access to the information at the time of reconciling your bank account or in case something is requested for an audit. • Documentation to maintain by month would include: • Tabulation Forms (For Deposits) • Deposit Slips • Receipts (Maintain these attached to receipt book) • Invoice / Receipts • Copy of Monthly Bank Statement • Copy of ledger for the month • Copy of Bank Reconciliation for the Month • Copy of Treasurer’s Report for the Month • Documentation to maintain by year would include: • Copy of Ledger for the Year • Copy of Yearly Budget • Copy of Tax Return (Form 990) • Copy of any Form 1099 received (Bank interest)
Bank Reconciliations • The goal of the bank reconciliation is to make you aware of the “true” balance in your account, based in actual organization’s financial activity. • Your goal is to make the balance on your ledger match the balance that the bank has at the end of every month. • Make sure to reconcile your account within 30 days of the bank cut-off date. • Resolve outstanding checks and deposits. • Resolve outstanding checks over 6 months old. • Resolve outstanding deposits over 1 month old. • Keep copies of all bank reconciliations. • Use a standard form for consistency if not using a computerized record keeping solution. • Ease of the closing will depend on the number of transactions made for the month. • Separate duties whenever possible, have someone other than the treasurer prepare or review the bank reconciliation. • When properly reconciled entity will have a better indication of how much money is in their account and can avoid going overdraft and paying fees.
Bank Reconciliations • Let’s work through a simple reconciliation example, assume the following is your ledger for the month: • And lets assume your bank balance is being reflected as follows: • The difference in this case is the outstanding Check #1002 that did not clear at the end of the Month. • $3,287.90 – 4,290.50 = $1,002.60 • As you can see the balance of one and the other look very different! This could be the difference that make you believe you have more money when in reality you do not!
Bank Reconciliations • Let’s go back to see how this would look on your bank reconciliation: • As you can see both your bank statement adjusted balance and your ledger balance are the equal, giving you your true balance for the month.
Bank Reconciliations • Please note that your bank reconciliation can be affected by some of the following items: • Outstanding Deposits - These are deposits that have already been made by the organization, but did not clear the bank as of the closing month date, • Outstanding Checks – These are checks that were paid/made during the month, but the vendor has not cashed them and they have not cleared the bank yet. • Bank Charges/Fees – These are bank charges which you might not be aware of as you complete your ledger during the month. Identify all of your charges when you get the bank statement and record them accordingly on your ledger. • NSF Checks – These are checks that you have deposited on your account, but where the payee had insufficient funds. You will need to discount these deposits from your ledger as it is money you are not going to be given credit for. • Interest Earned – This is interest that might be generated on some accounts and which might not be recorded on your ledger until you have the bank statement.
Treasurer Reports • If properly maintained your ledger can serve as your treasury report. • This will detail for your members all the activity that occurred during the year. • For greater transparency to your members consider adding to your treasurer report a copy of the bank statement and if needed a copy of your bank reconciliation.
Communicating and Reporting with ECISD • Make sure to send required information to the District within the established timelines. • On an annual basis (or as a change occurs): • Copies of Board Member Contact Information Sheets. (To Campus and District Auditor) • Copy of your Bylaws. (To Campus) • Copy of your EIN Number and Tax Exempt Form. (To Campus and District Auditor) • Copy of your projected Budget. (To Campus) • Copy of your Fundraising Plan for the year. (To Campus) • On a monthly basis: • Copy of your monthly bank statements (To Campus and District Auditor) • As requested or needed: • Fundraiser Approval Forms (To Campus) • Audit Requested Information (To District Auditor)
District Audit Requests • In accordance with ECISD Board Policy GE (Local) – Relations with Parent Organizations: “Upon request by the Superintendent or designee, the District may at any time order a review of all funds and financial statements of the organization by the District’s internal auditor. Booster clubs and parent organizations shall also submit a copy of their monthly bank statements in accordance and within the timeframe of any given request.” • Audit would include, but is not limited to the following procedures: • Verification of reported cash account balances, • Analysis of transactions reported to the parent member groups, • Analysis of bank statement activity, • Controls over approval of transactions, • Adherence to District’s policies and procedures, and • Overall organization controls.
District Audit Requests • Scope would include of walkthroughs, inquiries, procedures, and analysis of controls. • Documentation requested will include, but will not be limited to the following: • Official monthly bank statements, • Treasurer’s Financial Reports, • Deposit receipts, • Expenditure receipts or invoices, • Booster club minutes to monthly meetings, • Fundraiser requests, and • Organization bylaws • Transactions selected for testing will be reviewed for compliance with ECISD Board Policy GE (Local) or any other applicable Board policy and with the ECISD Booster Club & Parent Organization Handbook procedures. • Documents requested will be accepted in paper or electronic format. • Audits usually take from 1 month to 1 ½ months to complete.
Tax Requirements • All organizations must become tax exempt, either applying directly for their tax exempt status with the IRS or paying for a group exemption with another non-profit organization. • Details on how to apply for tax exemption will be covered in the General Booster and Parent Organization Training. • Once organization is tax exempt it will need to file their organization 990 form, to report their financial activity and changes to the IRS. • The return is due by the 15th day of the 5th month after the accounting (FY) ends. (That is 5 months and 15 days to file). • If your organization collects less than $50,000 in receipts you will need to file using Form 990-N. • If your organization collects less than $200,000 in receipts or has less than $500,000 in total assets, you will need to use Form 990-EZ or Form 990 to file. • If your organization collects more than $200,000 in receipts and has more than $500,000 in total assets, you must use Form 990 to file. • Remember that if you fail to file for 3 consecutive years your tax exemption will be revoked and you will no longer be a recognized non profit organization.
Tax Requirements • Texas imposes a 6.25% state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services. The City of Edinburg also imposes a 2.00% sales and use tax for a combined 8.25% • Federally non-profit organizations will be granted a “tax exempt” status by the Texas Comptroller’s Office, which will enable them to buy, lease or rent taxable items without paying sales tax if items are necessary to their function as a tax exempt organization. • Details on how your organization can become sales tax exempt will be presented on the next Booster and PTO/PTA Training scheduled for September 18, 2019. • If your booster club or parent organization conducts a sale that qualifies as taxable you will be required to collect and remit sales tax. • Organizations are exempt of paying taxes on our purchases, but we are not automatically exempt from collecting and remitting taxes on our sales. • The organization must obtain a sales tax permit and collect and remit sales tax on taxable items it sells unless one of 2 exemptions apply. (Instructions on how to get a sales tax permit will be provided in our next training)
Sales Tax Exemptions • An organization does not have to register for a sales tax permit nor report sales tax if, • All its sales are of exempt items, or • If its sales take place through tax-free fundraisers. • We have to identify whether our items for sale are taxable or non-taxable. • Sales tax exempt organizations may conduct two one-day tax-free sales or auctions each calendar year. • ECISD recommends organizations accommodate their taxable item sales in one of their two tax-free days. • Either the date on which the items are delivered by the vendor to the organization or the date the organization delivers the items to its customers may be designated as the one-day tax-free sale day. • Ex. Booster selling shirts may accept pre-orders without collecting tax if the day the shirts will be delivered to customers is designated as one of the groups tax-free fundraisers. • If taxable sales occur outside the tax-free day, organization is liable for collecting and remitting the sales tax to the Texas Comptroller.
Sales Tax Tips and Recommendations • When you use a for-profit retailer (fundraising company) to fundraise as a sales representative or commissioned sales, you will not be responsible for remitting sales tax, this will fall back on the fundraising company. • If you plan to have sales of taxable items please make sure to accommodate them in one of the tax-free sale days, to avoid having to collect and remit sales tax. • Failure to collect and remit taxes can lead to audits from the Texas Comptroller and can result in tax liability and incurrence of penalties. • For additional information, search the web for the following documents: • Sales and Use Tax Bulletin – “School Fundraisers and Texas Sales Tax” • Rule 3.286 “Seller’s and Purchaser’s Responsibilities” • Rule 3.222 “Exempt Organizations” • Tax Publication 96-122, “Exempt organizations – Sales and Purchases”
Additional Resources ECISD policies are available on the ECISD website, which can be found at: https://pol.tasb.org/home/index/635 The ECISD Finance & Operations Division website has links to the following: • Booster Club & Parent Organization Handbook 2019-2020: https://4.files.edl.io/b21d/08/09/19/175459-9192a191-ffc5-40b5-992e-707c9b8185fa.pdf • Booster Club & Parent Organization Officer Information Form: https://www.ecisd.us/apps/pages/index.jsp?uREC_ID=1371636&type=d&pREC_ID=1727715 • Booster Club & Parent Organization Training 2019 (To be Updated): https://www.ecisd.us/apps/pages/index.jsp?uREC_ID=1371636&type=d&pREC_ID=1727715 • Booster / PTO / PTA Fundraiser Approval Form: https://4.files.edl.io/0c70/08/08/19/180253-40f58b19-aa95-4ef9-a2f7-2cf93271a2dc.pdf • Tabulation of Money Collected and Fundraiser Profit and Loss Forms: https://www.ecisd.us/apps/pages/index.jsp?uREC_ID=1371636&type=d&pREC_ID=1727715
District Auditors Javier A. Campos, CPA – Ext. 2155 – javier.campos@ecisd.us Delia Orellana – Ext. 2063 – delia.orellana@ecisd.us Thank You!Next Trainings – Booster and Parent Organization Officer’s Training (September 18, 2019)Booster and Parent Organization Treasurer’s Training (September 19, 2019)
