1. Start With a Budget
Start the year with a budget, approved by your members. A budget is simply a good guess at how much you will raise and how you will spend it. Even if it only includes a few broad categories, it gives you a starting point from which to judge your progress. An approved budget also gives committees the ability to spend up to a budgeted amount without a separate vote of the membership. For unbudgeted expenses that sometimes arise, it helps to create a bylaw that lets your board spend up to a specific amount (typically somewhere from $200 to $500) without requiring a vote.
2. Create a Paper Trail
Many treasurers can relate to the frustration of being handed a stack of receipts by a volunteer requesting reimbursement after an event. Not only does this lack of procedure present an unnecessary headache for the treasurer, it can also wreak havoc on future budgeting if the expenses aren’t properly logged on the budget. To prevent confusion, it’s important to have reimbursement and check request forms for volunteers to use. Also, develop a cash deposit receipt for use after a money-generating event, when volunteers need to record the money collected. It can be helpful to use a different color paper for each form or have them printed in duplicate, so the requester can keep a copy. Many groups put the forms online so volunteers can download them, as well.
3. Review the Bank Statement
The single most important financial control that you can adopt, and one that many groups skip, is to have more than one person review the bank statement each month. Give someone who is not a signer on the account the responsibility of looking over the statement. The reason groups skip this step is that they trust the treasurer. But this isn’t a matter of trust—it’s a matter of putting procedures into place that protect your assets, now and in the future. Without this simple step, you have no way to verify your financial situation from month to month and in some cases even from year to year.
4. Reconcile the Account Each Month
Just as it’s important to reconcile your personal checking account each month, it is essential to make sure your PTO records align with the bank balance. Reconciling is the process of verifying the balance in your account based on the transactions posted against your account at the bank. Most financial accounting software programs include a reconciling option, but it can be done by hand, as well. It’s important to reconcile monthly as both you and the bank can make mistakes. If you don’t, you must rely solely on what the bank reports as your balance, even if that amount differs widely from what you think it should be. Your bank may be willing to help if you find a discrepancy, but don’t be afraid to recruit a volunteer to double-check your work if needed.
5. Prepare Monthly Reports
The treasurer should prepare a monthly report for the executive board and members. It should show the balance at the start of the month, plus receipts (cash in) and less disbursements (checks out), with the ending balance at the bottom. If your parent group operates under a preapproved annual budget, it is helpful to provide year-to-date performance against the plan for each budget category. The report should be filed for future reference. Most groups keep financial records in a computer-based system, which can often generate the report automatically.
6. Run Through Financial Procedures With Event Chairs
Provide a short training for all event chairs on the dos and don’ts of handling money, including receiving money, how to count deposits, and how to use the deposit form. Require more than one person to be present whenever money is counted, and establish a deadline for depositing money—no more than 24 hours after an event. The longer money sits around, the greater your risk. It is most helpful to review the procedures immediately before the event so they are fresh in everyone’s minds.
7. Review Your Books
An annual review of your books is an essential financial control. It’s a double-check that expenses and receipts have been logged correctly and that your records are in order. It’s easiest to do this in summer after you’ve closed your books for the year and are opening them for the new year. A committee of two or three volunteers, not including the treasurer, can complete your group’s audit. The more organized your records are, the easier it will be to complete the review.
8. Require Two Signatures on Checks
Requiring two signatures on checks divides accountability for the check request and provides a check and balance for the treasurer. If you adopt the cosigner policy, it might be tempting to have an officer sign a few checks just in case. Resist the urge to do this as it is a bad practice to ask the officer signing the blank check to authorize the payment without knowledge of the expense. Not only does it negate the dual signature control, it also places an unfair risk on the officer—and an extra burden on the treasurer.
9. Address Bounced Checks or Declined Cards
With hundreds of families in a typical school, every group has checks bounce or credit cards declined once in a while. Having a plan in place before this happens will save you time and headaches. Handle each matter with discretion, and keep the information on a need-to-know basis. Often, if you approach the person quietly and directly, you can work toward a solution and work out an alternate form of payment. You’ll get the best results if you start off by assuming the situation was caused by an innocent mistake.
10. Find the Right Checking Account
Banks can charge fees for any number of things, from going under a minimum balance to depositing more than a certain number of checks. Any fee paid out means less money to spend on programs to benefit the students and the school. Charges differ greatly from bank to bank, so shop around for an account that fits your group. Sometimes local banks will waive the fees for a nonprofit organization, so it’s important to ask for favorable terms for your checking account.