All money must be deposited in accounts at a bank approved by the executive board. The association Employer Identification Number (EIN) is required on all accounts (Employer Identification Number 5.6.9, 238).

If the bank issues an ATM card for an account, the use of that card must be restricted to deposits only. The ATM card cannot be used for cash withdrawals.

The IRS considers all funds in PTA accounts to belong to the association regardless of source. A PTA may handle only those funds over which it has full control and the total amount must be declared as gross income to the PTA. All funds in the PTA account must have association approval for disbursement.

Records & Supplies Needed for Banking

For each bank account, record the account number, place of deposit, and elected officers authorized to sign on the account inside the front cover of the treasurer's book (Ledger Sample, Forms 409). Keep the passbook in a safe place. Ensure that the secretary records the elected officers authorized to sign on the account in the minutes of the association election meeting or whenever the executive board fills a vacant position.

All supplies listed below are legitimate PTA expenses, reimbursable upon approval of the executive board. Advise all board members of the date the books will close so that they can submit all outstanding expenses before that date.

Bank Deposit Book: Obtain from bank.

Bank Deposit Slips: Obtain from bank.

Checkbook: Order from the bank, imprinted with the name of association, two signature lines, and the following wording: "Void if not cashed within 90 days" and "Two signatures required."

Deposit Stamp: Obtain from bank (includes "For Deposit Only," name of PTA and account number).

File or Envelope: Obtain for filing bills and receipts.

Heavy-Duty Envelope, Locking Money Box or Safe: Obtain for temporary holding of cash.

Numbered Receipt Book: Purchase at an office supply store.

Portable File: Obtain to hold treasurer's current records.

Storage Box: Obtain to hold treasurer's records not in current use.

Treasurer's Book (Ledger Book): Used to keep track of all transactions (Ledger Sample, Forms 409).

Payment Authorization Form: A written request for an expenditure or reimbursement (Payment Authorization, Forms 411).

Computer-Generated Financial Records

Financial records may be kept on a computer, providing PTA procedures are followed and a monthly printed record is kept in a permanent binder. Before using a computer consider the following:

• The records must be such that the next financial officer will be able to continue with the record keeping on the same computer program, a compatible computer program, or by hand.
• The PTA must purchase the financial program to be used so future financial officers will have access to the program.
• The organization must agree on software used.
• A data binder must be used to store the ledger pages permanently.

GUIDELINES FOR COMPUTER USE

Computer files must be stored to a backup disk at least monthly.

Each report generated must show the title and time period covered.

PTA financial records must be kept on a disk containing only PTA financial records.

If an error is discovered prior to printing a report, it may be corrected at that time.

If an error is discovered after the report/file has been printed, correct it by a journal entry adding an explanation. (If printed copies have been distributed, corrected copies with an explanation must be distributed.)

A hard copy of the computer register must be printed on a monthly basis and maintained in a bound book.

Maintain a checkbook with the current balance at all times.

Electronic payments are not allowed. PTA bylaws require two officers to sign all checks.

In preparing the financial records for audit, the same procedures are followed as with records kept by hand. Printed ledgers, reports, deposit slips, bills, minutes, and other records are submitted to the auditor establishing a clear "audit trail" of the financial transactions of the organization.

When financial records are kept on a computer the following must be added to the permanent records of the PTA:

• An information sheet listing all financial institution or bank account names and numbers.
• An information sheet providing the name and version of the software program and type of operating system (Windows or Macintosh).
• Backup disk(s) of financial files.

Bank Statements

PTA bank statements should be sent to the PTA's permanent address, usually the school. The treasurer should check regularly for the bank statements. Try to use a bank that returns canceled checks with the bank statements. This will facilitate the audit process. If canceled checks are not returned, photocopies may be obtained for a fee.

Reconciling Bank Statements

Reconcile the monthly bank statement and compare with the check stub/register balance promptly to ensure that bank and financial records are correct. Identify differences, note outstanding checks and determine the adjusted bank balance at the end of the month. This establishes the funds available against which checks may be written.

It is recommended, for the protection of the PTA, that the auditor or another elected officer who does not sign PTA checks also reconciles monthly bank statements. This can be done before or after the treasurer reconciles the statement.

After reconciliation, place all supporting receipts, details of the deposits, the canceled checks in numerical order and, with the duplicate deposit slips, file them with the statement. Make a notation on the check register of the last canceled check returned, indicating that the account was reconciled. Place all items on file for audit.

Cash Handling

Assign at least two PTA people to count cash. One should be a financial officer or a chairman. Do not publicize the place where money is to be counted.

Have all those involved in counting money verify the total and sign the Cash Verification Form. This form is a safeguard when volunteers are handling PTA funds (Cash Verification Form, Forms 387).

Plan for the safekeeping of money until it is deposited in the bank.

Simple procedures for counting money can keep the PTA safe and ensure accurate reporting of receipts to the membership. If money is collected when the banks are not open, make plans with the bank for a night deposit or with the school principal to use the school safe. Be sure that the amount is documented prior to depositing it in the school safe or lock box. The documented deposit should be placed in a sealed envelope signed by a school administrator and verified by two authorized PTA representatives.

Depending upon the community, a police or sheriff escort to the bank may be provided on request.

Deposits

Prepare deposit slips in duplicate, the original for the bank and the duplicate for the treasurer's records. Follow the bank's directions when recording the checks on the deposit slip. Some banks require listing the bank numbers for each check; some accept an adding machine tape of the check amounts.

Checks should be marked "For Deposit Only" with the PTA account number. A stamp with this information may be secured at the time the bank account is opened. If applicable, record in deposit book. Make duplicate deposit slip with details such as membership, bake sale, gift-wrap sale. Enter amount on check register. Roll coins as directed by the bank. Attach a copy of the deposit slip to the Cash Verification Form (Forms 387).

Checking Account

Each PTA must maintain a checking account in the name of the association. Use the PTA permanent address, usually the school. Use checks imprinted with the name of the association, two lines for the two authorized signatures, and the statements "Void if not cashed within 90 days" and "Two signatures required."

At least three elected officers, one of whom must be the president, should be approved to sign checks and have their signatures on file at the bank. It is advisable that any check made payable to one of the designated signers not be signed by that person (i.e., signed by any two others). The authorized check signers must not be related by blood or marriage or reside in the same household.

A student may be a signatory on a PTA/PTSA account, as long as he/she is an elected officer of the association and it has been noted in the minutes of the association. Contact the bank with questions about this issue.

CHECK WRITING

Always use a check register when writing checks. Record all checks written with the date, check number, payee, and amount. Note the purpose of the payment on the front of the check in the memo section. Do not sign blank checks. Do not pay bills with cash. Checks should be written with care, so that the amount of money cannot be altered (Check Sample, Forms 387).

OUTSTANDING CHECKS

Watch for checks that do not clear the bank within a reasonable time (about 60 days) and investigate. If an uncashed check is lost, a stop payment may be placed with the bank and a new check issued. The bank may charge for a stop payment. If, after investigation, a check still has not cleared and it is 90 days after issue, void the uncashed check and add the amount of the check to the ledger and checkbook for reconciliation. On the monthly report, note any uncashed checks as separate items and subtract or add the amount to the balance on hand.

VOIDING A CHECK

If an error is made on a check, write the word "void" across it on the check register and in the ledger. Then remove the voided check from the checkbook and file it with the financial record. Never destroy a voided check. Tear off and destroy the signature portion of the voided check if it has been signed.

STOPPING PAYMENTS

When a check has not been cashed after 90 days, contact the payee to determine why. Placing a stop payment on the check may be necessary. Inquire with the bank. The original entry was recorded under "Disbursements." Record the uncashed check in the disbursement column again and place parentheses around the amount. This reverses the original transaction and does not add to the gross receipts.Write a new check if payment is requested.

Check Request System:Payment Authorization

The payment authorization should include the following information: date, check number, payee, amount to be paid, and budget line item(s), with the signatures of the secretary or financial secretary and the president authorizing the payment, following association approval.

Budget approval is not authority for the fund expenditure except as stated in the bylaws or standing rules.

Neither executive board nor association approval is required to disburse funds not belonging to a unit (Funds Not Belonging to a Unit 5.2.1a, 219).

After approval by the association, the Payment Authorization Form permits the treasurer to write checks. A payment authorization, with bill, receipt, invoice, or expense statement attached, should be prepared for each check written (Payment Authorization, Forms 411). An authorization may be written and signed by the appropriate parties, once the funds have been released by the association.When the treasurer is presented with a receipt, a check may be written immediately. It is not necessary to wait until the next association meeting to reimburse monies. Do not issue blank checks.Wait until the receipt is presented, write the check for approved amount, and secure the required signatures.

An authorization may be attached to a Request for Advance Form, if the person authorized to purchase items requests an advance (Request for Advance, 5. 2.5, 221; Forms 413).

AUTHORIZATION PROCEDURE

Member presents bills to treasurer with proof of money spent, such as an invoice marked "paid," or a dated cash register receipt, or a signed expense statement.

Treasurer presents bills at a meeting of the executive board or the association and a motion must be made to pay them. Discussion and vote follows. The action of the executive board must be ratified at the next association meeting.

When bills are approved for payment, the secretary records the motion, listing the bills approved for payment in the minutes, which are the legal record of the association.

The secretary, financial secretary, or designee prepares a Payment Authorization Form for each bill and attaches the invoice or receipt. The secretary, financial secretary and/or president sign the Payment Authorization Form (Forms 411).

The Payment Authorization Form is given to the treasurer.

The treasurer prepares the check and records the check number on the authorization for payment.

The Payment Authorization Form is filed for review in the audit.

The treasurer obtains two authorized signatures on the check for the protection of the PTA's funds.

The treasurer distributes the check.

It is important for PTAs to follow proper procedures to guard against misappropriation of funds. The responsibility of establishing and maintaining correct procedures rests with the PTA executive board.

Members must approve all expenditures. If the board decides to spend monies on unauthorized expenditures and then presents an unapproved bill for payment or ratification, the membership may choose not to pay the bill(s). If bills are not approved or ratified by the membership, the executive board is personally liable for any PTA funds owed. If payment for a bill not approved or ratified has been made from the PTA account, the executive board must repay the funds.

Petty Cash

Units may not have Petty Cash funds. All expenditures must be by check and signed by two elected officers.

Savings Account

A savings account may be opened in the name of the PTA, to earn interest on funds not currently needed, by vote of the executive board and recorded in the executive board minutes. For protection, make a motion to deposit or transfer funds from the checking account to the savings account.

The earning of interest does not jeopardize the PTA's tax-exempt status. Earned interest becomes part of gross income. Include the amount of funds in the savings account and any activity for the period in each treasurer's report.

Invested funds should be in a federally-guaranteed and insured account.

EMERGENCY RESERVE

In planning the budget, it is not uncommon for PTAs to have a contingency savings account for the following reasons:

• Efficient management of funds;
• Reserve to carry on programs during the summer and fall until dues are collected; and
• Monies to finance long-term or unexpected but approved projects or programs.

Investments

Some PTAs earn or accumulate enough funds to cover expenses for an extended period of time. Rather than retaining a large amount of money in its checking account, a PTA may place its funds in an interest bearing checking account or may invest excess funds. Excess funds are those not needed for organizational or immediate expenses or to fulfill the unit's obligations related to distribution of membership per capita.

The PTA should investigate potential investments to determine which are safe and yield reasonable returns. The association must vote annually on which investment(s) to make and must vote on whose names shall appear on the PTA investment account and on proposed plans for the use of these funds.

Returned Not Sufficient Funds Checks

Tips for handling checks received by the PTA in payment for goods or services and returned from the bank for not sufficient funds (NSF):

• Call the writer of the check, explain that the check was returned by the bank and provide the reason given by the bank. Remember to state that the writer is now liable for whatever fee the bank has charged for the transaction.
• If the unit still has not received payment 10 days later, contact the check writer again to discuss the matter.
• Thirty days from the initial contact, if payment still has not been received, send the writer of the check a certified letter:
• State in full why the money is owed to the PTA.
• Demand payment in cash plus the bank fee. Do not accept another check.
• State in the letter that according to California Civil Code § 1719, if the unit files with the Small Claims Court, it will sue for the amount of the check plus three times that amount in damages.
• Keep a copy of the letter for the files.

There are some exceptions to the "check plus three times" rule, but the law states that if one follows these rules, one shall receive the triple damages. The judge has no discretion in this matter.

The decision to pursue a money matter in the courts should be decided by a vote of the PTA executive board. If the unit or council is incorporated, check the Articles of Incorporation to determine who should be involved in making such a decision. Remember, this is a confidential matter and should not be discussed outside the executive board meeting.

For proper direction, rules, and procedures for filing in Small Claims Court, check with the clerk of the municipal court in the unit's area. It may be necessary to provide the court clerk with a copy of the minutes that include the motion (resolution) designating certain officers to act for the association in court.

BOOKKEEPING PROCEDURES

When a check paid to the PTA is returned by the bank, note it in the ledger and checkbook along with the charges levied by the bank. Treat the charge as a disbursement.

When funds are recovered, add the amount back into the checkbook and the ledger. Treat this as a deposit.

For each returned check, use a separate deposit ticket for redeposit or circle amount of check redeposited if included with other checks being deposited.

Fundraising Receipts and Expenditures

The treasurer or financial secretary should deposit money in the bank immediately after a fundraising event. The activity chairman must ensure that the treasurer receives all revenue and receipts immediately after the completion of the activity. Two PTA people, one of whom should be a financial officer or a chairman, must count the monies received, and both should sign a Cash Verification Form (Forms 387). The people counting the money shall not be related by blood or marriage or reside in the same household. Copies of the cash verification forms or receipts must be given to the chairman for documentation in his/her activity report. The totals must match the monies deposited for the activity. Even if the project is a continuing one, the money must be deposited daily in the PTA's bank account.

Never deposit any money in anyone's personal account or in the school account. Never leave money unattended in someone's home or in the trunk of a car (Deposits 5.3.5, 223).

PROVIDING DOCUMENTATION TO DONORS

PTA members and contributors often assume any payment they make to a PTA in conjunction with a fundraising event is tax deductible. However, rules and limitations exist for the deductibility of such payments. See National PTA Annual Resources for PTAs.

State and federal law requires that tax-exempt charitable organizations provide donor with receipts or other forms of documentation of contributions that exceed certain thresholds. Failure to comply may result in denial of deductions for donors and the imposition of penalties on the organization.

Cash or in-kind contributions of $250 or more require written acknowledgement from the PTA that includes the PTA's Employer Identification Number.

Upon receiving a quid pro quo contribution of $75 or more,PTAs must provide written acknowledgement that quantifies the value of the donation (cash-equivalent) and documents how the donation was received (cash, goods or services).

In both cases, be sure to thank the donor for her/his generous support (Donation Receipt, Forms, 391).

Quid Pro Quo Contributions

Payments made partly as a contribution and partly for goods and services provided to the donor from the charity are known as quid pro quo contributions. For example, when a donor pays $100 for a concert ticket that would normally be valued at $40, $60 would be tax deductible. The quid pro quo contribution is the total amount paid, not the deductible amount. Therefore, in this case, because the donor paid $100, a disclosure statement must be provided.

NON-DUES REVENUE
National PTA Annual Resources for PTAs

PTAs may need non-dues revenue to carry out the programs that members want. E-commerce and affinity programs are popular non-dues revenue sources. They work by contributing a portion of the sale of a product or service to a particular charitable cause. The amount of the contribution is usually governed by the sales or the usage of product or service.

E-commerce purchases are made through the Internet. PTAs can enter into agreements with companies whereby the companies return a percentage of member and nonmember purchases to PTAs as a contribution. PTAs also can be designated as recipients of charitable contributions whenever a customer is asked to designate a charity.

Affinity programs, such as PTA-logo credit cards, are based on the usage of the card. Each time a holder of the credit card makes a purchase using the card, a percentage of the purchase or a set fee may be received by PTA. PTAs may also receive an enrollment fee for each card issued.

When either type of agreement is formulated, a PTA should verify that the agreement is structured to protect the PTA's tax-exempt status and does not compromise PTA policies. Either agreement can be structured to avoid unrelated business income. The money received by PTAs should be accounted for as contributions on their financial statements.

PTA Funds vs. School Funds

Only PTA funds shall be deposited into the PTA treasury. A PTA shall not act as a depository for funds of other organizations. School funds or funds belonging to outside groups shall not be commingled with PTA funds in any way. If a PTA sponsors a project or program in cooperation with the school, all funds shall be accounted for and separated prior to the immediate deposit of the PTA portion into the PTA bank account. All funds deposited in the PTA account become the property of the PTA, and all expenditures require a vote of the association.

Commingling of Funds

A unit PTA is a nonprofit, private organization. To comply with all requirements, regulations and laws, a PTA must handle only those funds over which it has full control. All PTA monies and other assets are the property of the unit and shall be administered through its own accounts.

A PTA SHOULD NOT

• Deposit funds from other groups or organizations in the PTA account;
• Deposit PTA funds in a personal account; or
• Deposit PTA funds in school or school district accounts.

For tax reporting and filing purposes, the IRS considers all monies deposited to the PTA account as that PTA's gross receipts, excluding funds forwarded through channels (e.g., per capita dues).

Sample Ledger [pdf]

Sample Check [pdf]

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