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The Annual Audit

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: 

h. 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.
  1. Reconcile each month’s bank statements with:
    1. the cancelled checks
    2. the checkbook
    3. the treasurer’s report
    4. the total expenditures of the unit
  1. Verify that every check written is substantiated with a receipt, invoice or bill and a disbursement request form.
  1. If a check was issued and no receipt, invoice or bill can be found, verify the expenditure as an appropriate budget item.
  1. Reconcile each deposit slip with:
    1. the bank statement
    2. the checkbook
    3. the total income of the unit
  1. Verify that a receipt was written (issued) to the appropriate person for all funds received by the treasurer.
  1. Verify that all income and expenditures are allocated into the same categories that      constitute the approved budget.
  1. 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: ______________

  1. Does the PTA unit have its Employer Identification Number (EIN)? __  Yes    Number:______________            __  No             Explain:_________________________________
  2. Does the PTA unit have liability and bonding insurance?   __  Yes   __  No          Explain:__________________________________
  3. INCOME
    1. Was all the income properly allocated and categorized in accordance with the budget?   __  Yes      __  No             Explain:________________________________________________
  4. EXPENDITURES
    1. Were all expenditures properly allocated and categorized in accordance with the budget?    __  Yes        __  No       Explain:______________________________________________
    2. Is there a proper bill or disbursement request/voucher for each expenditure (“paper trail” for each)?       __  Yes       __  No             Explain:__________________________________________
    3. Was each expenditure a part of the budget?             __  Yes             __  No             Explain:
  5. INTERNAL REVENUE SERVICE
    1. Did the PTA unit receive more than $25,000 in gross income?             __  Yes             __  No
    2. If yes, did the unit file a form 990 with the IRS?             __  Yes             __  No             Explain: ________________
  6. CHECKS/BANKING
    1. Did authorized unit officers properly sign all checks? __  Yes __  No Explain: Authorized Unit Officers:___________________________________________
      _____________________
    2. Are all checks sequentially numbered?             __  Yes             __  No             Explain:
    3. Are all checks accounted for?             __  Yes             __  No             Explain:
    4. Were all bank statements properly reconciled on a monthly basis by treasurer?             __  Yes             __  No             Explain:
  7. BUDGET/REPORTS
    1. Is there an approved motion in the minutes for the budget?             __  Yes             __  No             Explain:
    2. Did the treasurer submit regular written financial reports?             __  Yes             __  No             Explain:
    3. Were the financial records maintained in an orderly fashion?             __  Yes             __  No             Explain:
  8. 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 verified 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

  1. the need to file federal tax, Maryland Charitable Solicitations Act, or sales tax forms,
  2. failure to resolve bank statements,
  3. exceeding budget amounts without authorization,
  4. 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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