A financial reconciliation is a review of a PTA's records to ensure that the governing documents are followed and that income and expenditures conform with the approved budget. The appointed committee follows the Financial Reconciliation Checklist and Report. Additional information can be found in the BASICS Treasurer Resource Guide.

A financial reconciliation is required at the end of the fiscal year. The review shall also be performed:

• when any authorized check signer is added or deleted on any bank account; and
• at any time deemed necessary by the president or three or more members.

Committee information and discussions are confidential; therefore, meetings should be conducted in a private location and only include appointed committee members. The committee may contact the outgoing treasurer and outgoing president for any clarification required, all findings should remain confidential until the report is delivered. All members of the committee should sign a confidentiality agreement.

Financial Reconciliation Committees

• For the required year-end financial reconciliation, the president shall appoint the financial reconciliation committee at the annual meeting. For any other financial reconciliation, the president shall appoint, subject to the approval of the executive board, a financial reconciliation committee within 10 days of the request for the reconciliation, and the reconciliation must occur within 20 days of formation.
• Members of the financial reconciliation committee shall not be the current secretary, incoming treasurer or be related by blood or marriage and shall not reside in the same household as the authorized signers or current secretary. Members under 18 may not constitute a majority of this committee. 

Preparing for the Financial Reconciliation

The outgoing treasurer presents the following financial records to be reviewed by the committee:

• Current year annual report (budget vs actual) or budget vs actual for period under review
• Balance sheet (to show sales tax or state/national dues liability balances)
• General ledger (all transactions for period under review)
• All receipts/invoices for expenditures with PTA Funds Request Forms
• All bank receipts with PTA Deposit Forms
• All checks for all accounts - cleared, voided, and unused (check images from bank suffice)
• Bank statements and reconciliations for all accounts
• Electronic payment collection system documentation (reports from PayPal, Square, merchant account, etc)
• IRS Form 990-N confirmation of acceptance or a draft of the appropriate 990-EZ or 990
• Sales and Use Tax permit and returns
• All correspondence with any taxing authority

The outgoing secretary presents the following records to be reviewed by the committee:

• Minutes from membership and executive board meetings (including presented financial reports, last financial reconciliation report, Statement Review by Non-Signer forms, etc.)
• Current membership roster and executive board roster
• All bylaws, standing rules, and/or policies in effect during the period under review
• Confidentiality, Ethics, and Conflict of Interest Agreement
• Current contracts

During the Financial Reconciliation

• Incoming and outgoing treasurers shall immediately update the banking signature cards to remove any outgoing signers and add approved signers.
• Checks shall only be written in the case of an emergency and cannot be signed by the outgoing treasurer.
• The committee shall adhere to the Financial Reconciliation Checklist and Report.

Reporting the Results

• For the required year-end and check signer addition/deletion financial reconciliation:
  • provide a copy of the report to the treasurer immediately following the conclusion of the reconciliation;  
  • qpresent the report findings and recommendations at the next executive board meeting;
  • present the report for adoption at the next membership meeting; and 
  • file the financial reconciliation report and annual/budget vs actual report permanently with the secretary. 
• For a reconciliation deemed necessary by the president or three or more members:
  • hold the report until the report is adopted by membership; 
  • present the report for adoption at the next membership meeting; 
  • file the financial reconciliation report and annual/budget vs actual report permanently with the secretary;
  • provide a copy of the report to the treasurer; and
  • present the report findings and recommendations at the next executive board meeting.
• In the event a complete financial reconciliation cannot be done due to the inadequacy or unavailability of the records, the membership shall be notified and the report should include recommendations to correct the situation.

Irregularities in the Records

If the Financial Reconciliation Committee finds irregularities in the records of the treasurer:

• Contact the treasurer to secure additional records or information.
• If the matter cannot be settled to the committee’s satisfaction, contact the Local PTA president to determine what additional steps need to be taken.
• The Local PTA president can request additional guidance from the Council PTA or the Field Service Representative.
• A Council PTA can request additional assistance from the Field Service Representative if the matter cannot be resolved by the Council PTA.
• When evidence that theft, fraud, or embezzlement has occurred, the PTA must follow the Texas PTA Theft and Fraud Policy.

Watch SPOTLIGHTS Financial Reconciliation video here.