topics region treasurer school resources responsibilities funding audit/budget accounting internal...

Topics

Region Treasurer School

ResourcesResponsibilitiesFunding

Audit/BudgetAccountingInternal ControlsFraud PreventionIRS Issues


RESOURCES

RESOURCES


There are a number of resources that are available to all treasurers.• These resources include:

Financial Procedures for Locals and Regions HandbookIEA Board of Director Policy Book and IEA BylawsIEA Website

IEA Secretary/Treasurer – Al LlorensIEA Director of Business Services – Doug BarringerIEA Secretary-Treasurer Support CommitteeOther region treasurers

http://www.ieanea.org/

http://www.ieanea.org/


RESPONSIBILITIES

RESPONSIBILITIES


As the region treasurer, along with the other region officers and region council members you have a fiduciary responsibility to ensure… That proper systems and procedures are in place; Transparency; Ethical behavior/activity by all; and That systems and procedures are monitored for

compliance.

RESPONSIBILITIES


However, by the nature of your position… You will have the greatest responsibilities!

Your responsibilities include:

RESPONSIBILITIES


To work with region’s leadership and/or region budget committee to develop the budget for the year.

Make or maintain suitable banking arrangements.Provide financial reports to region leadership/council.Payment of approved region expenses.Documentation of all financial transactions –

bookkeeping.Ensure region funds are not misused used and/or illegal.Prepare for end of year audit.


FUNDING

FUNDING


Regions get their funds through IEA.• “Region Rebate”• Authorized in IEA Bylaws.• Amount based on preliminary region membership

count and type of membership.• Mid-year adjustment based on the final region

membership will occur.• “In-Region Fund”• Funding provided for costs incurred by the region

chairperson.• A flat dollar amount ($1,400.00).

FUNDING


All region funds are held in escrow by IEA until requested.• Current year money is not available for use until

after the region budget has been submitted and approved by IEA’s Executive Committee.Submission date for region budgets is October 1st.

• Any carry-over funds from the previous year’s budget are immediately available.

FUNDING


Request for transfers need to be in writing to IEA’s Business Services Department.• Emails are an acceptable method. • Katie Cisne – [email protected]• As a matter of policy, ten (10) days should be

allowed for processing.• The preferred method is by electronic

transfer into your region’s bank account.

mailto:[email protected]

FUNDING


By Board of Director Policy – 17.3.D.• After August 31st, region funds that are carried

over from the prior year may be requested at any time, provided requests of more than $4,000 shall include the reason(s) for such request.

FUNDING


By Board of Director Policy – 17.3.F.• After the current year’s audit/budget forms are

approved by the IEA Executive Committee…• Regions may request up to fifty percent (50%) of the

region rebate prior to February 1st.• After February 1st, remaining funds may be requested

at any time thereafter, on as as-need basis.• All request for current year funding in more than

$4,000 shall include the reason(s) for such request.


AUDIT/BUDGET

AUDIT/BUDGET


Per Board of Director Policy• A region’s fiscal year begins on September 1st and

ends on August 31st.• In order to receive current year region rebate

funds, you must complete and submit “Audit/Budget Forms” and they must be approved.• The “Forms” are actually an Excel Workbook with

various spreadsheets.• “Forms” must be submitted electronically with the

signed signature sheets either mailed or electronically returned to IEA.

AUDIT/BUDGET


Information needed to complete “Forms” include:• Current resources on hand at the end of the fiscal year;• Detail estimates of how the region’s funds will be utilized

during the upcoming fiscal year;• A comparison of how the previous year’s funds were

spent compared to the budget for that year; and• A checklist which is used to verify that the region

chairperson and treasurer are familiar with basic accounting guidelines.

Audit FormBudget FormChecklist

Handout

AUDIT/BUDGET


Prior to submission of the IEA “Audit/Budget Forms”, each region should complete an in-house audit of the region’s financial transactions. (Audit Committee)• In order for a region to receive current year rebates

these forms (spreadsheet) must be turned in and approved.

• Audit form require signatures of the region chairperson, the region treasurer, and two members of the audit committee.

AUDIT/BUDGET


Region funds may be audited by the Director of Business Services with or without notice.• At the request of the region chair;• At the request by IEA President or Secretary-

Treasurer; or• As part of a random compliance audit program that is

approved by the IEA Executive Committee.

AUDIT/BUDGET


• In case of an audit, the region chairperson and treasurer will promptly make all requested financial records available as well as any other records which may reasonably be required for the audit.

• The following will be included in any audit performed by the Director of Business Services:• Review of bank statements;• Review of invoices and/or receipts;• Review of minutes, budgets, financial reports, and any other relevant

records; and• Recommendations, if any, for improvement of the region’s accounting

system.


ACCOUNTING

ACCOUNTING


General Objective• Provide for complete and accurate recording of all

financial transactions.• Every cent that goes into and out of your account

should generate an accounting entry that accurately describes the dollar amount and the nature of the transaction.

• Ensure that adequate documentation is maintained and easily located.

• Allows you to create your financial reports easily and effectively.

Registry Spreadsheet

Audit Spreadsheet

ACCOUNTING


Record System• In order to setup your record system, there are

three (3) things you will to decide.• Type of “bookkeeping”• “Basis of Accounting”• “Chart of Accounts”

ACCOUNTING


Bookkeeping• Computer program• Spreadsheet• Paper-based

Charts of Accounts• Merely the list of line items for your financial reports.

ACCOUNTING


Basis of Accounting• “Cash Basis”• Revenue is recorded when cash is received, and• Expenses are recorded when a check is written.

• “Accrual Basis”• Revenue is recorded as soon as the timing and dollar

amount are certain, regardless of when the cash is actually received.

• Expenses are deemed to have been incurred as soon as an obligation to pay has been established regardless of when the check is written.


INTERNAL CONTROLS

INTERNAL CONTROLS


In order to minimize the chances of fraud and the loss of money,

internal controlsare a must!

INTERNAL CONTROLS


Such internal controls should include, but not limited to the following:• All checks received should be immediately stamped “For

Deposit Only”;• Checks and cash should be deposited daily or as soon as

practical, with the date of the deposit indicated in/on all applicable documents;

• The bank deposit slips totals should match the total of all checks/cash deposited; and• Cash should never be withdrawn when making a

deposit.

INTERNAL CONTROLS


INTERNAL CONTROLS• Receipts should be given for all contributions and gifts

received;• All disbursements should be made by checks with proper

documentation;• Checks should always be; payable to a specific person or

company;• Checks should never be payable to “Cash”.

• Signing of blank checks should never be permitted;

INTERNAL CONTROLS


INTERNAL CONTROLS• Checks should be paid from original vendor

invoices/receipts;• Two (2) signatures are recommended on all checks;• Two signatures reduce the possibility of an unauthorized

disbursement.• The bank should be instructed not to accept checks

without two signatures

INTERNAL CONTROLS


INTERNAL CONTROLS• Keep the supply of checks in a secure place;• Pre-printed check numbers should be used in sequence.• If an error is made in writing a check, write “VOID” across

the face of the check and indicate this on all documentation.

INTERNAL CONTROLS


INTERNAL CONTROLS• A person other than the treasurer should receive bank

statements directly from the bank;• This person should review the monthly activity shown on

the statement and then pass it on to the treasurer.• If this is not practical, perhaps the bank can send out

duplicate statements to a second party for review.• It is also possible for someone else to monitor the region

bank account with access to account information through on-line banking.

INTERNAL CONTROLS


INTERNAL CONTROLS• Monthly bank reconciliation should be required.• This is to prove the accuracy of both the region’s records

and those of the bank.• If it is necessary, reconcile and account for any and all

differences between the two balances.

INTERNAL CONTROLS


REGION FUND POLICY• Region Funds should be used to develop programs

and services for members, as well as, fund delegates to the RA’s.• Usage of region funds must be consistent with IEA-NEA

policy.

INTERNAL CONTROLS


REGION FUND POLICY• Region funds may NOT be used in support of the

candidacy of any individual for any local, state, or regional office.

• Region funds cannot be commingled with any other funds.

INTERNAL CONTROLS


FINANCIAL REPORTS• The preparation and distribution of a written

financial report for each business meeting of the region council is an important part of your duties.

• These reports inform your region council of the financial status of the region and are needed for transparency.

Handout

INTERNAL CONTROLS


FINANCIAL REPORTS• An oral statement giving the cash balance is not an

adequate financial report.• Financial reports tell the “story” of your region’s

fiscal activities.

INTERNAL CONTROLS


FINANCIAL REPORTS• This story has the following elements:• Home much money do we have?• How much money has been received?• How much money has been spent?• How does our financial activity compare to our budget?• How does this year’s financial activity compare to last

year’s?

INTERNAL CONTROLS


REIMBURSEMENT POLICY• Since the majority of region funds are used to send

delegates to the representatives’ assemblies and/or other IEA/NEA conferences, each region should have a reimbursement policy in place.• This policy should spell out expectations for

reimbursement for expenses incurred or to claim against any advance of funds.

INTERNAL CONTROLS


REIMBURSEMENT POLICY• A delegate must properly substantiate expenses, noting…• The amount;• Time;• Place; and• Description of expense.

• Delegates/attendees must have and include original receipts for all expenses above $10.00.

• Reimbursement policy needs to state a time limit to submit expenses after they are incurred.

INTERNAL CONTROLS


REIMBURSEMENT POLICY• Any expense not properly substantiated should not be

reimbursed or credited.• The reimbursement policy should clearly state, if a cash

advance was received any uncredited expense and any unused money must be returned.

INTERNAL CONTROLS


REIMBURSEMENT POLICY• The reimbursement policy should also contain

delegate/attendee accountability verbiage.• Must attend all business sessions as well as any

caucuses/briefings, etc.• Unless excused by the region chair or designee,

reimbursement/credit should/could be proportionally reduced.

Handouts

INTERNAL CONTROLS


REIMBURSEMENT POLICY• To be eligible for reimbursement, expenses need to

meet two (2) criteria:• Must be related to the individual’s function as a

delegate or conference attendee.• Expenses should be reasonable in nature and cost.

INTERNAL CONTROLS


REIMBURSEMENT POLICY• Examples that are generally reimbursable, if

properly documented.• Hotel room charges;• Regular airfare;• Taxi;• Meals;• Tips;• Parking;• Mileage.

INTERNAL CONTROLS


REIMBURSEMENT POLICY• Examples of expenses that are NOT generally

reimbursable.• Expenses incurred for family members or others for

whom there is no business purpose.• Personal items• Merchandise• Political contributions• Non-meal food/beverage

INTERNAL CONTROLS


REIMBURSEMENT POLICY• Reasonable as established by BOD Policy.

• When feasible – accommodations will be shared• After close of a meeting overnight accommodations

will not be charged.• Meal dollar amount guidelines...

• Breakfast - $12.00• Lunch - $20.00• Dinner - $40.00

INTERNAL CONTROLS


REIMBURSEMENT POLICY• Reasonable as established by BOD Policy.

• Lodging guidelines excluding tax…• Chicago - $200.00 per night• Elsewhere - $150.00 per night

• Internet service charges are not to exceed hotel internet rate and must be documented.

• Parking and tolls are allowable as necessary – if over $10.00 must be accompanied by receipt.


FRAUD PREVENTION

FRAUD PREVENTION


What is fraud?• Fraud is the theft of funds.

• It can be because of reimbursement for fictitious expenses;

• Diversion into a separate account with reimbursement at a later date;• Stealing the temporary use of the money.

• Misleading financial reporting;• Purchase of goods or services from related parties at an

inflated cost; or • The use of funds for purposes other then what they were

attended for.

FRAUD PREVENTION


Contributing factors to fraud…• Many experts feel fraud becomes more likely when:• Someone had the opportunity to commit fraud, due to

poor controls and/or oversight;• Someone has pressure to commit fraud;

• Trying to maintain an extravagant lifestyle.• An unexpected financial obligation, etc.

• Someone can find ways to rationalize their fraud somehow.• “They owe it to me.”• “The last treasurer did it.”• “I’ll pay it back later”, etc.

FRAUD PREVENTION


Many experts use the “fraud triangle” concept to assess the risk of fraud in any particular situation..

FRAUDTRIANGLE

OPPORT

UNITY

PRESSURERATIONALIZATION

FRAUD PREVENTION


If an “honest” person has the opportunity and a strong incentive (pressure), it becomes relatively easy to take the next step to rationalize a fraudulent act.

FRAUDTRIANGLEOPP

ORTUNIT

Y

PRESSURE

RATIONALIZATION

FRAUD PREVENTION


Why does fraud go unnoticed?• Most people in a position to do something about

questionable business practice do not know how to recognize it.

• Even if they do, and the signs are all around them, they usually refuse to believe or act on them.

FRAUD PREVENTION


Warning SignsDisclaimer – A warning sign or several warning signs does not automatically indicate that fraud is taking place.• They simply indicate that an opportunity for

fraud may be present.

FRAUD PREVENTION


Level 1 Warning Signs• No oversight over the person with the checkbook.• Dual Signatures• Financial Reporting

• Bank statements are not reviewed by someone other than the treasurer.

• Deficiencies in documentation for disbursements.• No documentation• Copies instead of originals

FRAUD PREVENTION


Level 1 Warning Signs• A “wheeler-dealer” personality.• A person who displays an acceptance of dishonest

behavior.• A treasurer who is reluctant to let others examine

the “books”.• Checks written to “Cash”.• Cash withdraws from the bank account.• Cash deducted from bank deposits.

FRAUD PREVENTION


Level 2 Warning Signs• No annual review/audit of the “books” and records.• Signing blank checks.• Purchased of gift cards without adequate

documentation.• Especially in large quantities or amounts.

• No budget or comparison of actual results of the budget.

FRAUD PREVENTION


Level 2 Warning Signs• No written or enforced guidelines on:• Training for treasurer on his/her duties;• Training for officers on financial matters such as controls

and oversight over the bookkeeping function;• Annual region council approval of banking arrangements

and approved signatures; and/or• Strict controls over region credit/debit card use• BETTER YET – NO REGION CREDIT/DEBIT CARD USE

AT ALL!

FRAUD PREVENTION


Level 3 Warning Signs• Delays in depositing checks or cash received.• Large petty cash funds with many transactions.• A credit card is used for transactions that could be

handled by check or reimbursement to an officer.• Use of an ATM or debit card.


IRS ISSUES

IRS ISSUES


Taxpayer Identification Number (TIN)• Every region has a TIN.• It is a nine-digit number – “XX-XXXXXXXX”.• Number may also be referred to as…• Employer Identification Number (EIN)• Federal Employer Identification Number (FEIN)

• This number will be needed to open a new bank account or to file any IRS form.

IRS ISSUES


Tax Exemption Status• As part of IEA, we are categorized by the IRS as tax

exempt labor union (IRC 501(c)(5).• This means – IEA does not have to pay federal income

tax.• It also means as a region you need to pay state and local

sales tax.• Furthermore, individuals can make a charitable donation

to IEA and/or the region, but these contributions are NOT tax deductible.

IRS ISSUES


Incoming Reporting Requirements• You must report payments to individuals to the

IRS for services rendered over $600.00 for a calendar year.

• Generally speaking this can be done with a 1099-Misc.

IRS ISSUES


Incoming Reporting Requirements• A 1099-Misc. should also be used for

undocumented expenses even if under $600.00.• 1099’s• Must be obtained since it is carbonized – you cannot

download.• You will also need form 1096.• Copy to recipient by January 31st.• Copy to IRS by February 28th.

IRS ISSUES


IRS Notice• If you receive any notices from the IRS –

DO NOT IGNORE!!!• Verify it is your region’s TIN.• Seek help.• Be sure to keep copies.


QUESTIONS

topics region treasurer school resources responsibilities funding audit/budget accounting internal...

Documents

region leadershipcouncil

region budgets

region rebateauthorized

region chairperson

region officers

region fundfunding

final region membership

region council members