PBUSA recommends that school support organizations adopt financial controls. These policies and procedures guide how income and expenses are handled, and protect both the organization and person(s) handling funds.

Financial Controls for the [NAME OF SCHOOL SUPPORT ORGANIZATION]

Annual Budget. An annual budget that shows expected sources of income and line items showing the amount expected from each source, and expected expenses and line items showing the amount of each expected expense, shall be developed by the Executive Committee shortly after their election, and presented to the membership for review and approval. The annual budget may be amended from time to time by the membership as needed.

Purchase Approval. An annual budget that shows expected sources of income and line items showing the amount expected from each source, and expected expenses and line items showing the amount of each expected expense, shall be developed by the Executive Committee shortly after their election, and presented to the membership for review and approval. The annual budget may be amended from time to time by the membership as needed.

Bank Account(s)

1. Bank Accounts. All bank accounts of the organization shall be opened in an FDIC insured institution, approved by the Board of Directors, in the legal name of the organization using the organization’s own EIN (employer identification number). Bank accounts shall not use the school’s EIN.
2. Investments. All investments and investment accounts shall approved by the Board of Directors. Investment accounts shall generally be limited to Certificates of Deposit in FDIC insured institutions.
3. Bill Payment. All bills of the organization shall be paid by check from the organization’s bank account. Online or e-checks are permissible, however all procedures for paper checks be followed, regardless of the banks procedures (i.e., prior approval of processing the online payment should be obtained by way, for example, of email approval by the required number of signatories before processing the payment).
   1. All checks shall be numbered and shall be held in the custody of an officer authorized by the Board, such as the Treasurer.
   2. All payments by check shall correlate to an invoice or receipt, on which the check number and date paid shall be written. If a receipt or invoice is not available, an officer shall write and sign a description of what was purchased.
   3. Pre-signing blank checks is prohibited.
   4. Two signatures are required on any check of $250 or more. The requirement for two checks should be printed on the checks above the signature line as follows, “Two signatures required for amounts of $250 or more.”
   5. All expenses must be pre-authorized by (i) approval in the annual budget, or (ii) subsequent amendment to the budget, or (iii) vote of the Executive Board if authorized by the bylaws.
   6. Bank statements shall be reviewed by treasurer and one or more other officers without signature authority to ensure separation of financial controls.
4. Bank cards. If debit/credit cards are established in the name of the organization, a policy approved by the Executive Board shall be established that includes a list of the authorized users, daily/monthly/annual spending limits, and limits use to charges for the organization. No personal charging on the card by the authorized users shall be allowed.

Cash

1. All cash must be kept in a secure location, such as in a lock box. A cash box ledger shall be kept and monthly cash box reports, including starting balance, expenditures, additions and ending balance shall be provided to the Board.
2. The Executive Board shall establish a maximum amount of cash kept on hand, such as $250.
3. A receipt shall be provided whenever cash is turned over or collected.
   1. Receipts shall be numbered and kept in a bound book, with one copy provided to the person turning in the cash, and one copy kept in the receipt book as a record. Alternatively, a receipt ledger on which the date, amount, and signature of both the giver and recipient of the funds may be used.
   2. Cash should always be counted by two (2) individuals, on the day the funds are collected, and at the site (i.e. school) where the funds are collected. A cash tally sheet showing the date and amount collected, and signed by the counters should be maintained. If the Treasurer is not one of the counters, the Treasurer should recount the funds, and counter-sign the tally sheet,
   3. Cash should be deposited immediately into the organization’s bank account. A copy of the deposit slip shall be immediately forwarded and kept by the Treasurer. The deposit slip should be cross-referenced against the cash tally sheet, and saved for the bank reconciliation.

Financial Reports

The Treasurer should provide a financial report to the officers, and members as appropriate, usually monthly that includes:

1. Statement of receipts and disbursements (also known as a Statement of Activities);
2. Balance sheet (includes cash on hand, other assets, liabilities and equities);
3. A copy of the bank statement, bank reconciliation, monthly cash reports and imaged checks;
4. A copy of the cash tally sheets; and,
5. Any outstanding receipts/expenses/purchase orders/contractual obligations

The monthly treasurer’s reports shall be compiled and kept in the organization’s records for three (3) years. Bank statements, canceled checks, check registers, invoices, receipts, cash tally sheets, investment statements, and related documents should be kept for seven (7) years. The year-end treasurer’s report, annual financial review report, and IRS Form 990 shall be kept permanently.

Financial Review/Audit. An annual audit or financial review of the organization’s records should be completed at the end of the year, and prior to turning records over to new officers. The financial review is intended to ensure that all financial procedures are being followed, and that no financial irregularities exist. The financial review may be completed by an internal audit committee if the organization has gross receipts of less than $100,000 per year. Organizations with gross receipts of more than $100,000 per year should hire an outside financial professional, such as a certified professional accountant, to complete the financial review. Organizations with gross receipts of $250,000† or more should have a full annual audit conducted by an external CPA or accounting firm. The link below provides a guide to conducting an internal financial review.

Financial Review Guide

Audit Committee. An Audit Committee should be established that is made up of at least two officers, board or general members, at least one of whom has enough financial background or experience to understand the organization’s financial statements and records. The audit committee members should not include anyone with bank signature authority or who has been routinely involved in handling the organization’s finances, or any immediate relative of the signers. The purpose of the audit committee is to provide a fresh set of eyes to ensure that the organization is following all appropriate financial policies and practices and reduce the risk of financial irregularities.

†The $250,000 threshold is taken from the June 2005 final report to Congress of the Panel on the Nonprofit Sector, convened by Independent Sector.