The Role of the Auditor
All associations must conduct two audits a year. An audit is a formal examination of the financial books and records the PTA. An audit serves to certify that receipts and expenditures, as authorized in the minutes, are in conformity with Bylaws, Standing Rules, and budget limitations. The PTA audit serves as an official examination of the financial records conducted by the auditor or appointed audit committee at the times specified in the Bylaws for Local PTA/PTSA Units,Article VI, Section 8 and when there is a change in financial officers.
For audit and financial report forms, go to ninthdistrictpta.org/pta-leaders/forms/
The Audit schedule is in your bylaws. In general you will need to conduct an audit mid year (usually December or January) and at the end of the fiscal year (usually May, June or July) and any time there is a change of financial officers. Audits are reported to the board and adopted by the association. At an association meeting (meeting of all the members) the auditor presents the findings of the audit and a motion is made to adopt the audit. The procedure for a motion is followed, any questions are answered, and there is a vote of the membership.
Purpose of an Audit
An audit determines the accuracy of the books, detects inconsistencies or errors, provides recommendations for corrective action, protects the financial officers, verifies that funds were sent through channels as appropriate, and assures the membership that the association’s resources were managed. The person conducting the audit should always be impartial and not related by blood or marriage nor reside in the same household as the president or other financial officers or any chairmen handling funds.
The auditor is often a member of the budget, programs, or fundraising committees, but is never the one authorized to sign the PTA’s checks. It is permissible for the PTA to hire a professional to conduct the audit. The auditor may be an elected officer, appointed individual or committee, or a professional hired by the PTA in accordance with the procedures listed in the Bylaws. The president, treasurer, financial secretary, secretary, or committee chairmen handling funds may not audit the finances.
- Audit the books and financial records of the association semiannually.
- Prepare a mid-year and year-end audit in the months stipulated in the bylaws.
- Prepare and present written reports to the executive board in the months stipulated in the bylaws.
- Prepare and present written reports for adoption by the association in the months stipulated in the bylaws.
- The outgoing auditor is responsible for conducting the audit at close of term
Audit each account separately. Check off items in red ink as they are reviewed. Do not correct errors. Ask the responsible financial officer to correct errors after presenting the report. After errors have been corrected, and the auditor is satisfied that the financial accounts are correct, draw a double line across the ledger and checkbook register where the audit concludes and sign and date using red ink, “Audited by (name) on (date).”
The auditor ensures that the association’s financial records are accurate:
- Check to be sure all financial materials requested are available.
- Include bank name, bank address, type of account and the account number on each report.
- Start audit with records posted after the last audit. Check to see if the amount shown on the first bank statement (adjusted for outstanding checks and deposits) corresponds to the starting balance recorded in the checkbook register, ledger, and treasurer report, and the ending balance of the last audit.
- Check to see that the ending balance of the last bank statement, checkbook register, ledger and treasurer report agree.
- Confirm reconciliation of each month’s bank statement to the checkbook register by someone other than the treasurer. Make sure every check is substantiated with an authorization for payment with reason for disbursement, appropriate payee and a receipt or bill. If no authorization can be found, verify it was a transfer payment, such as council dues. Note missing checks. (Void checks are filed.)
- Check that all bank charges and interest earned are recorded in the checkbook register, ledger and treasurer reports.
- Ensure that checks (see bylaws) and authorizations are signed by approved officers.
- Reconcile each deposit slip with bank statement and checkbook entries. Ensure money was deposited promptly.
- Ensure collection process is in place for returned checks that includes reimbursement of applicable bank charges. A returned check is treated as reverse income and reimbursed bank charges are treated as reverse expenses.
- Reconcile checkbook register to the ledger. Check each month’s ledger entries for error, and cross-check against checks issued and receipts posted. Cross-reference checkbook register with checks issued.
- Verify that all income and expenditures are allocated into the same categories that constitute the approved budget.
- Make certain that council, district, State and National PTA portions of the membership dues have been kept separate from other receipts and forwarded immediately.
- Make certain that the number of memberships agrees with membership chairman’s report, and verify that membership monies collected correspond to membership monies forwarded.
- Ensure payment for insurance premiums.
- Make certain the money collected for a specific purpose (special projects, Founders Day, scholarship funds, council dues, etc.) has been so disbursed.
- Check association and executive board minutes to see if expenditures were authorized. No motion is required for payment of transfer funds – per capita, Founders Day freewill offering, and insurance premiums.
- Verify that the PTA-required Workers’ Compensation Annual Payroll Report form has been filed through PA channels.
- Verify that all required state and federal report forms have been filed if PTA hires employee(s) or independent contractor(s).
- Verify that all tax forms have been filed, if required.
- Each audit committee member must sign the report. If questions are raised by the membership, the president should state that a committee has been appointed to look into any problem, and that the members will report back to the association at the next meeting. The audit report is adopted by the association with the motion “I move that the audit report be adopted.”
- Ask the responsible financial officer to correct errors after presenting the report.
- After any errors have been corrected and all are satisfied that the financial accounts are correct, draw a double line across the ledger and checkbook register where the audit concludes and sign and date using red ink “Examined by (name) on (date).”
At the completion of the audit, meet with the financial officers and president to discuss recommended corrections. When errors have been corrected by a financial officer and accounts are accurate, draw a double line in red ink where the audit concludes. Sign and date the ledger (Audit Report Form, Forms 383).
If you have any questions contact your council auditor or call our Ninth District office to get in touch with the Ninth District Auditor.
If you suspect mismanagement or any serious problem with the PTA funds, contact the District President immediately. The District President will include your council and will guide you through a process to evaluate and determine what should happen next.
Never, under any circumstances accuse anyone of stealing. Never make re-payment arrangements for money that is missing. The only re-payment arrangements that should be made are in the event of a cash advance – money not spent should be returned to the association right away.
California State PTA Resources