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Year-End and Mid-Year Audits: The Paperwork
As specified in the bylaws, all units must have a complete financial audit conducted on a semi-annual basis. Since the fiscal year runs from July 1 to June 30, this means all units should have their year-end audits complete prior to the first unit board meeting (mid-year audits should be completed during January with the cut-off date of December 31). The completed audit must be adopted by the association at a unit meeting by way of motion; and the adoption date must be indicated on the audit. A report form for the audit is in the “Forms” section of the Toolkit.
During the audit process, the auditor:
* prepares an audit report for each account. The report should include: beginning balance (ending balance from last audit), all expenditures, all deposits, outstanding checks, outstanding deposits, and an ending balance. (See audit examples in California State PTA Toolkit, and National PTA’s Annual Resources for PTAs.)
- should include a statement at the bottom of the report (See statement in the Toolkit). The auditor should sign the report.
- should attach any recommendations to the report. List errors in arithmetic or posting. List unpaid bills, payments authorized but not paid.
- should request that the audit report be formally adopted with a motion: “I move that the audit report be adopted,” and that the action be recorded in the association minutes.
- should have the secretary attach a signed copy of the audit to the minutes.
If assistance is needed, contact the council or district PTA.
In any question of mismanagement of funds, assistance should be sought immediately from the council and district PTA officers. Do not make any implicit, explicit written or verbal statement or accusations. Such actions could result in a lawsuit for libel or slander.
The completed audit report is then forwarded to the council auditor. Council audits are forwarded to Fourth District.
Due dates (Council to Fourth District PTA)
AUDITS FOR COUNCIL AND UNITS ARE DUE TO FOURTH DISTRICT PTA ON THE FOLLOWING DATES: tbd
Units are required to submit two copies of their semi-annual and final audits to their council (who will then forward one copy to Fourth District PTA along with a copy of the council audit). This is now one of the requirements of being a unit or council in good standing. If your audit report is not forwarded, you could have your charter revoked, just as for not paying your membership dues or insurance payment.
What is an audit?
An audit is a formal examination of the financial books and records of the financial officers of the PTA. It serves to certify that receipts and expenditures, as authorized in the minutes, are in conformity with Bylaws for Local PTA/PTSA Units, Standing Rules, and budget limitations. The PTA audit serves as an official examination of the financial records conducted by the auditor or appointed audit committee at the times specified in the Bylaws for Local PTA/PTSA Units,Article VI, Section 8 and when there is a change in financial officers.
What is the purpose of an audit?
An audit determines the accuracy of the books, detects inconsistencies or errors, provides recommendations for corrective action, protects the financial officers, verifies that funds were sent through channels as appropriate, and assures the membership that the association’s resources were managed in a businesslike manner within the regulations established for their use.
There are two main reasons for performing an audit—for the peace of mind of the officers and members, and for verification of the PTA’s financial integrity. The members will have confidence in their local organization when they know that their finances are in order. California State PTA requires units to perform twice-yearly audits to remain in good standing.
Who must conduct an audit?
All PTA districts, councils, and units must conduct an audit.
Is it hard to do an audit?
It takes a little bit of time, but California State PTA provides a form which greatly simplifies the process.
When should the mid-year audit be done?
You should check your bylaws for the exact time. Most PTAs begin their fiscal year in July 1, so the mid-year audit covers the six-month period between July 1 and December 31. It is time to perform the audit once the bank statement which covers the December time period has been received.
Who can be an auditor?
The only qualification for an auditor is to enjoy looking at numbers. The auditor is often a member of the budget, programs, or fundraising committees, but is never the one authorized to sign the PTA’s checks. It is permissible for the PTA to hire a professional well-versed in the tax requirements for nonprofit organizations to conduct the audit.
The auditor may be an elected officer; appointed individual or committee; or a professional hired by the PTA in accordance with the procedures listed in your bylaws. The president, treasurer, financial secretary, secretary, or committee chairmen handling funds may not audit the finances. The auditor should not be related to the president or treasurer by blood or marriage.
Where can I find the audit forms?
Audit report forms can be found in the California State PTA Toolkit.
What do I do when the audit is completed?
The audit needs to be formally adopted at an association meeting with a motion, and then it should be signed by the auditor and attached to the minutes. It will then be stored as a permanent document of your PTA.
How many copies should I make?
Make copies for your president, treasurer, financial secretary (if you have one), auditor, secretary (for permanent filing with the minutes), and your next level, be it council or district.
Where can I find more information regarding details of the PTA audit and the auditor’s specific duties?