Internal Financial Review
Remember: The financial review is just a guideline to examining the books of your non profit. When completing the form, it is acceptable to have missing items, just consider this a teaching moment.
10 Steps for Conducting a PTA Financial Review
Shortly before the end of your Treasurer’s term or at the end of the fiscal year, it is important to conduct a financial review of the Treasurer’s records. Take these 10 simple steps for success.
Step 1: Recruit an internal committee. Your financial review committee should not be anyone with check signing authority.
Step 2: Provide committee with Treasurer’s records including:
- A copy of the last financial review report
- Checkbook and canceled checks
- Bank statements and deposit receipts
- Treasurer’s book or ledger
- The annual financial report
- Itemized statements and receipts of bills paid
- Check requests
- Copies of Board, executive committee, and association 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 financial review committee
Step 3: Explore the records posted after the last audit or financial review. Check to see if the amount shown on the bank statement corresponds to the starting balance recorded in the checkbook and ledger.
Step 4: Explore a sampling of transactions. The size of this sample should be based on the size of the association. If mistakes are found, the sample should be broadened to take in more transactions. You may need to review all the transactions of a PTA. Consider retaining an external auditor if there are numerous errors or concerns regarding accuracy. Some items to look for:
- Monthly bank reconciliation
- Unexplained reconciling items
- Unusual endorsements on checks
- A match of check endorsements to payees
- Disbursements not supported by invoices or other documentation
- Blank checks secured in a safe place
- Deposit ticket dates timely with dates received by bank
- Timeliness of deposits based on known dates of events
- All invoices paid by check and not cash
Step 5. Ensure accurate disbursements. Make certain that money collected for a specific purpose (special projects, gifts, scholarship funds, council dues, etc.) has been disbursed for that purpose. This includes keeping state and national portions of the membership dues separate from other receipts and forwarding immediately to the state office.
Step 6. Check the Treasurer’s reports and annual report for accuracy.
Step 7. Collaborate with Treasurer and President to correct errors. After errors have been corrected by the Treasurer, and the President is satisfied that the financial accounts are correct, sign and date the annual report using a different color ink: “Examined and found correct. (Name), (Date).”
Step 8. Prepare financial review results. The financial review committee also must submit a report documenting their efforts and sharing results. When there are not adequate records available to conduct a proper accounting of the association’s funds, sample statements might read:
- CORRECT: The financial review committee has examined the records of ABC PTA for the period of (time covered) and found them to be correct. Balance on hand: $(Amount). (All committee members sign)
- NOT CORRECT: The financial review committee has examined the records of ABC PTA and found that more adequate accounting procedures need to be followed so a more thorough financial review can be given. (The financial review committee should indicate the information that is needed). (All committee members sign)
Step 9. Submit report to board or membership. The financial review must be officially adopted by your PTA and must be included in a completed annual report covering the association’s entire fiscal year. If the report states that additional information and verification is needed, the requested information should be provided by the Treasurer.
Step 10. Contact your state PTA or a CPA if questions remain. If the validity of the financial review is questioned, an independent certified public accountant (CPA) should be engaged. At any time during the process, contact your state PTA for information or assistance.