A financial reconciliation reviews all financial transactions to ensure that expenditures are properly documented and conform with the approved budget and the PTA's governing documents. Additional information can be found in the BASICS Treasurer Resource Guide.
A financial reconciliation is required, at least annually, at the end of the fiscal year. The review should 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
- The president shall appoint, subject to the approval of the executive board, a financial reconciliation committee consisting of not less than three members, who are not authorized signers.
- 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.
- For the financial reconciliation required at the end of the fiscal year, the president shall appoint the financial reconciliation committee at the last membership meeting of the year.
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 financial reports for the 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 should immediately update the banking signature cards to remove any outgoing signers and add approved signers.
- Checks should only be written in the case of an emergency and cannot be signed by the outgoing treasurer.
- The committee should adhere to the Financial Reconciliation Checklist and Report.
Reporting the Results
- A member of the committee should present a report for adoption at the first membership meeting held after the conclusion of the review.
- A copy of the annual report should be attached to the fiscal year-end financial reconciliation report and maintained permanently by the treasurer and placed in the minutes.
- In the event a complete financial reconciliation cannot be done due to the inadequacy or unavailability of the records, the membership should 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: