An audit is
required for every PTA and must be completed over the summer before
the first general meeting of the school year where the report is
presented to the membership
PURPOSE
OF AN AUDIT
An
audit involves an examination of financial transactions and the procedures
used to conduct those transactions. Its purpose is to assure
both the membership and the executive board that the funds of the
PTA have been properly administered and that good financial practices
have been followed. Maryland PTA bylaws REQUIRE that all PTAs submit
a copy of the treasurer’s annual report reviewed by the auditing
committee to MD PTA or their designated representative (PTA Council
of Howard County).
According
to your bylaws: (Article
VII, Section 4)
The
treasurer shall:
have the accounts examined at the close of the fiscal year and upon change
of treasurer by an auditor or an auditing committee of not less than three
(3) persons who, satisfied that the treasurer's annual report is
correct, shall sing a statement of that fact at the end of the
report. An auditor or an auditing committee shall be selected by the
board of directors at least thirty (30) days (May 31) before the new
officers assume their duties (July 1)
WHO
CAN AUDIT?
The
audit may be conducted by a committee (of no less than 3) or a member
in the local unit (sometimes an accountant will volunteer for this
task). There is no requirement that the PTA hire a CPA. The
committee may not include any person who is authorized to sign
on the unit bank accounts. If a member in the local unit volunteers
to perform the audit, she/he should not be a member of the executive
committee or a close relative of anyone who signs checks
TREASURER’S
RESPONSIBILITIES
Financial records should
be placed in order for the auditing process shortly before the end of the
term of office. The outgoing treasurer cannot pay bills after the
books are closed for audit (your bylaws has the date of the fiscal year,
generally
June 30th.). Upon assuming office, the incoming
treasurer may deposit funds in the PTA bank account. During the audit
process it is recommended that expenditures within an adopted budget be
limited to those of an emergency nature. The audit should be completed
as quickly as possible.
The treasurer shall deliver the following to the auditor(s):
- A
copy of the last audit report
- Checkbook
and cancelled checks
- Bank
statements and deposit receipts
- Treasurer’s
book and/or ledger
- The annual financial report
- Itemized
statements and receipts of bills paid
- Check
requests submitted during the year
- Copies
of board, executive committee, and organization minutes that
would include an adopted budget, as well as any amendments
that were approved during the year
- Current
bylaws and standing rules
- Any
other information requested by the auditor/audit committee
AUDIT
PROCEDURES:
Begin with records posted
after the last audit. Unless the Executive Board dictates otherwise,
a “sampling audit” may be done.
Reconcile each month’s bank statements with:
the cancelled checks
the checkbook
the treasurer’s report
the total expenditures of the unit
Verify
that every check written is substantiated with a receipt, invoice
or bill and a disbursement request form.
If
a check was issued and no receipt, invoice or bill can be found,
verify the expenditure as an appropriate budget item.
Reconcile
each deposit slip with:
the bank statement
the checkbook
the total income of the unit
Verify that a receipt was written (issued) to the appropriate person
for all funds received by the treasurer.
Verify that all income and expenditures are allocated into the same
categories that constitute the
approved budget.
Prepare
written report of findings, signed by all audit committee members
and forward to the executive board.
The audit committee
investigates, examines facts, draws conclusions from the facts, and
presents a written report of its work to the executive board. The
executive board receives the report and has the obligation to act upon
the report. An important part
of the executive board’s legal responsibility is to report the
results of the auditing committee’s report to the membership
at the first general membership of the year.
FORMAT AUDIT CHECKLIST A
Fiscal Year ______________
Does
the PTA unit have its Employer Identification Number (EIN)?
__ Yes Number:______________ __ No Explain:_________________________________
Does the PTA
unit have liability and bonding insurance? __ Yes __ No Explain:__________________________________
INCOME
Was
all the income properly allocated and categorized in
accordance with the budget? __ Yes __ No Explain:________________________________________________
EXPENDITURES
Were
all expenditures properly allocated and categorized in
accordance with the budget? __ Yes __ No
Explain:______________________________________________
Is
there a proper bill or disbursement request/voucher for
each expenditure (“paper trail” for each)? __ Yes __ No Explain:__________________________________________
Was
each expenditure a part of the budget? __ Yes __ No Explain:
INTERNAL
REVENUE SERVICE
Did
the PTA unit receive more than $25,000 in gross income? __ Yes __ No
If
yes, did the unit file a form 990 with the IRS? __ Yes __ No Explain:
________________
CHECKS/BANKING
Did
authorized unit officers properly sign all checks? __ Yes
__ No Explain: Authorized Unit Officers:___________________________________________
_____________________
Are
all checks sequentially numbered? __ Yes __ No Explain:
Are
all checks accounted for? __ Yes __ No Explain:
Were
all bank statements properly reconciled on a monthly
basis by treasurer? __ Yes __ No Explain:
BUDGET/REPORTS
Is
there an approved motion in the minutes for the budget? __ Yes __ No Explain:
Did
the treasurer submit regular written financial reports? __ Yes __ No Explain:
Were
the financial records maintained in an orderly fashion? __ Yes __ No Explain:
EXPLAIN
ALL “NO” RESPONSES.
Date Audit Completed:
By: __________________________________
1. ___________________________________
2. ___________________________________
3. ___________________________________
Balance on Hand: $__________________________
Attach the final bank reconciliation and the final Treasurer’s
Report to this checklist.
Audit Committee Recommendations: (Use additional sheet of paper
if needed.)
FORMATFOR AUDIT REPORT B
Date:
_________________
BALANCE, (Date
of last audit) (start of fiscal year) $__________
RECEIPTS (for fiscal year or date
of last audit to the current time) +$__________
TOTAL ASSETS $__________
DISBURSEMENTS (for fiscal year
or date of last audit to the current time) -$__________
BALANCE, (Date of end of audit
period)(end of fiscal ye^) $__________
RESOLUTION OF AUDIT ENDING BALANCE
Latest Bank statement Balance (at end of audit period) $
__________
Outstanding
Checks:
Check No. Amount
List Checks: No. ________ $________
No.
________ $________
No.________ $________
Total Outstanding Checks -
$_____________
Deposits not yet credited by Bank +
$_____________
Final
Checking Account Balance $
____________
ATTACH COPY OF ANNUAL REPORT
We
have examined the annual report and financial records of the treasurer
of ________________ PTA for the period of____________ to __________
and find them to be correct, incomplete, or substantially correct with
the following adjustments (list adjustments), or incorrect).
Auditor’s
Signature Date
______________________________________ ______________________
______________________________________ ______________________
______________________________________ _______________________
Comments
Provide comments
on issues that should be brought to the PTA's attention.
The
ending balance should be the amount shown at the end of the year on
the cash ledger and verified by
using the process shown on most bank statements to resolve the account
and adding any other transactions included in the audit. Notations
should be made of any checks that have not been cashed but are included
in the audit summary totals.
The
approved budget and any subsequent budget amendments should be verifed
through the minutes.
Treasurer's
reports should be reviewed. It is important that the reports are accurate
and that current factual information is provided to executive board
members for their review.
Comments
should be provided at the end of the audit report noting any items
that should be brought to the PTA's attention.
Some
items could be but are not limited to
the need
to file federal tax, Maryland Charitable Solicitations Act,
or sales tax forms,
failure to resolve
bank statements,
exceeding budget
amounts without authorization,
keeping poor
financial records, etc.
Common Mistakes to Look For in Reviewing the Records
- neglecting
to record returned checks and bank charges
- transactions
are not entered in all documents
- reversal
of numbers when entering amounts for transactions
- mistakes
in arithmetic (adding and subtracting)
- written
treasurer's report not being filed
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