welcome To The Module Five: Record Keeping Revised 03/31/2011! Bingo Chairperson Training Program
Why Keep Records ? Maintain records to substantiate the Organization’s: • 501(c) Exempt Status • Charitable Purposes • Quarterly Reports
RECORDKEEPING Question: How long should an organization maintain it’s records? Answer: Four Years Could you produce your bingo records for the past 4 years if asked?
Exempt Status and Charitable Purpose Organization must maintain and make available to the Charitable Bingo Operations Division: • A complete copy of their IRS 1023 or 1024 application. • Records which show an organization’s charitable purpose: • Articles Of Incorporation • Articles of Association • Trust Indenture • Constitution • The organization’s enabling documents, amendments or adopted bylaws which indicate in writing the cause, deed, or activity consistent with the organization’s purposes and objectives which the net proceeds from bingo will be used
Information on Quarterly Reports • There are three main areas of the quarterly report and all of the information reported in them must be substantiated. • Receipts, • Expenses, and • Charitable Distributions
Information on Quarterly Reports • Receipts– Amount of Money Raised from Bingo. • Expenses – Used to Determine the Final Proceeds Resulting from Bingo. • Charitable Distributions – Money Used for Charitable Purpose of the Organization.
Forms-Use Ours or Your Own • Commission-provided forms may be used or you may create your own forms to meet your needs as long as they provide sufficient detail to fully and accurately suport the quarterly report. • Bingo Chairpersons and Operators need to know the proper use of these forms.
Receipts • Regular card sales • Electronic bingo card sales • Pull tab bingo sales • Entrance fees • All bingo gross receipts must be recorded on a cash register.
Receipt Records • Cash Register Tape • Occasion Cash Report • Floor Sales By Ushers Form • Inventory (Paper/Pull-Tabs) • Sales Journal • Bank Statements & Deposit Slips
Occasion Cash Report • An Occasion Cash Report should show detailed information regarding sales, prizes, prize fees, and cash reconciliation for a bingo occasion. • Sales information required includes quantity and dollar amount of each type of bingo paper or pull tab and a description of the item with form numbers and serial numbers where applicable. Revised January 2010
Occasion Cash Report • Prize informationmay be summarized on the Occasion Cash Report if a separate schedule of prizes is provided that details all prizes awarded, number of winners, prize fees, and net payouts.
Occasion Cash Report • The cash reconciliation portion of the Occasion Cash Report can you tell if the occasion was profitable and identify areas of concern regarding errors or shortages. • It is recommended that the Occasion Cash Report for each occasion be examined by someone in your organization other than the person completing the report.
Floor Sales by Usher • The floor sales by usher form is used to track inventory and money that each usher is responsible for during an occasion.
Sales Journal • The sales journal is where all of the information listed on the occasion cash reports for the entire quarter are compiled. • Keeping the sales journal aids in accurately completing the related areas of the quarterly report. Revised January 2010; available on Bingo website
Bank Statements and Deposit Slips • Bank Statements and Deposit Slips provide you with third party proof of the occasion proceeds.
Expenses • Expenses can be broken down into two areas: • Prizes – regular bingo & pull tabs • Permissible bingo expenses
Occasion Schedule of Prizes • Number of half and full pay winners • Cash prize per winner for half and full pays • Cash game prize amount • Non-cash prize amount • Total prize amount awarded • Prize fee withheld • Net prize amount awarded ACCURACY here means accuracy in your Quarter Report!
Documenting Permissible Expenses • Paid invoices • Itemized receipts • Funds transfer letter • Payroll records
Documenting Permissible Expenses Bank Statements Cancelled Checks Cash Disbursements Journal I would like to examine your…
Documenting Permissible Expenses • In addition to documenting the purchase of a particular good or service, you should be able to show how it benefited your bingo operations. “As you can see, our net receipts increased 23% which we attribute to the new PA system and surround-sound speakers. People were getting frustrated; now they can hear!”
Documenting Permissible Expenses • The Cash Disbursements Journal is an excellent tool for compiling and organizing the details of expenditures for the quarter, which is essential to accurate quarterly reports.
Charitable Distributions • Documentation should: • Reflect the actual expenditure • Show that the disbursement was used for an authorized purpose
Supporting Documentation • Meeting Minutes • Committee Minutes • Cancelled Checks
Supporting Documentation • Thank- You Letters • Newspaper Articles • Scholarship Criteria See Administrative Rule 402.502(d)(4)
Supporting Documentation • IRS Form 990 • IRS Forms 940 and 941 • IRS Examination Reports
Debit Card Transactions • Involve both gross receipts and an expense to the organization • Issue a receipt to the purchaser • Retain a copy of the debit card receipt by your organization
Debit Card Transactions • Records showing that debit card funds are deposited within 72 hours of the transaction • Records showing any fees or expenses charged to your organization for debit cards • Debit card transactions are reported in the time period they occur See Admin Rule 402.504
Automated Forms Manual • An Excel workbook that allows daily entries for your bingo operation throughout the reporting quarter. • The automated forms manual includes the forms most commonly used to document a bingo occasion - daily cash reports, schedule of prizes, and floor sales forms. • Information from one form that is used on another form is automatically compiled and inserted for you. • Information from the sales journal and cash disbursements journal is compiled and automatically entered into the quarterly report. • Easy to download from the bingo website • www.txbingo.org • (see licensees/conductor/applications & forms)
Charitable Use of Proceeds • All distributions for charitable purposes must be made from the bingo checking account.
Use of Proceeds Charitable Distributions must be used for a Cause Deed or Activity consistent with purposes noted in Title 26 U.S.C. Section 501 Tax Exemption We use our bingo proceeds to assist with family counseling
Use of Proceeds • Any “charitable activity” may or may not be charitable. • Make sure you know what your organizing instruments say about the purpose(s) of your organization. • First Aid Classes • CPR Classes • New Fire Hoses or Radios • X Donations to the local Seniors Assisted Living Facility
Use of Proceeds • Charitable Distributions may not benefit any private shareholder, individual, officers, governing body or member except as payment for services rendered.
Use of Proceeds • When you make a charitable distribution, you must document not only actual expense but the purpose of the distribution as well. Thank You!
Use of Proceeds Charitable Distributions • Cannot be used for bingo expenses • Must be used by the recipient for purposes consistent with objectives of the donor organization No, we cannot use our bingo proceeds to purchase door prizes on Saturday!
Use of Proceeds • Payment of travel expenses from bingo proceeds are permitted if the purpose of the seminar is primarily to discuss the charitable functions and objectives of the organization.
Use of Proceeds • Documentation for travel expenses must include: • Itinerary showing the purpose of the travel • Original receipts or correct copies of actual out of pocket necessary and reasonable expenses • Employee or member request for payment or reimbursement
Permissible Expenses • The Bingo Enabling Act permits payment of bingo expenses that are: • Reasonable • Necessary
Permissible Expenses • Necessary Expenses are: • Essential to the conduct of bingo • Required to conduct bingo • Generally recognized as a bingo expense • Contributes to an increase in proceeds
Permissible Expenses • Reasonable Expense • Appropriate to the conduct of bingo • Moderate or fair in amount • Not excessive or extreme • Does not exceed the going rate for the goods or services
Permissible Expenses • Reasonable Expense: • Does not exceed the rate paid by a prudent person under the same circumstances • Authorized by a person acting with prudence in the circumstances • No significant change in established practices for the expense • Considered generally accepted sound business practices
Permissible Expenses • Items of Expense: • Advertising • Security • Repairs to premises and equipment • Bingo supplies and equipment • Prizes • Rent • Mortgage & Insurance See BEA Section 2001.458
Permissible Expenses • Items of Expense • Bookkeeping, accounting, and legal services • Payroll for bingo workers • Janitorial and utility services and supplies • License Fees • Attending required bingo training courses • Debit card transaction fees, bank fees, cash over or short and electronic funds transfer fees
Permissible Expenses-SHARED! • Allocated Expenses: • Reasonably ALLOCATED among all benefiting activities • Pay only PROPORTIONAL share of shared expenses • Allocate expense to the extent that the bingo operation benefits from the product or service • Maintain documentation to support allocated expenses • See Administrative Rule 402.505
Permissible Expenses Remember…. • All permissible bingo expenses must be paid by check from the bingo checking account. • Document all expenses.
Managing Your Inventory • The organization is required to keep a purchase log of all pull-tab inventory purchased. The organization is also required to maintain a perpetual inventory of all pull-tabs in inventory.
Managing Your Inventory • The Disposable Card Sales Summary is used to keep a perpetual inventory for disposable bingo paper.
Managing Your Inventory • The organization is required to maintain records for pull-tab deals that are not completely sold out during an occasion.
Managing Your Inventory • The Inventory Recap and Verification Form is used to do a physical inventory. • Organizations are responsible for all missing inventory.
Managing Your Inventory • Q - Can you throw away unwanted bingo supplies? • A – No, it must be destroyed in the presence of a Charitable Bingo Operations Division staff member. That’s a whole bunch of pull-tabs!