Transcript Summer Leadership ConferenceMoney Matters…A Lot! Presented by: Sue Kelly and Kim Toman Course Overview • • • • • • • • • • • • Basic Duties of the Treasurer Helpful Toolkits Setting Up Your Books Establishing a.

Summer Leadership
Conference
2007
Money Matters…A Lot!
Presented by:
Sue Kelly and Kim Toman
Course Overview
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Basic Duties of the Treasurer
Helpful Toolkits
Setting Up Your Books
Establishing a Budget
Recordkeeping & Accounting
Systems
Reporting
BREAK!!!
Internal Controls and Fraud
Prevention
% Dues Update
What’s New?
Helpful Links
Q&A
FIDUCIARY DUTY
Treasurers have a fiduciary duty
to safeguard the assets of the
association.
Financial and Operational Standards
of the
Michigan Education Association
And Local Affiliates
As leaders and staff, we are the entrusted fiduciaries of the Association finances. Members
believe in us, support us and trust us with Association finances. We, the governance and staff
of the Michigan Education Association, accept the responsibility to treat Association resources
with the utmost of care and to adhere to the highest ethical standards. To that end, we
acknowledge the principles that will guide us, the internal and external control activities we will
use to protect the resources entrusted to us and our process to monitor those controls.
Code of Financial Ethical Conduct
In fulfillment of our obligation we commit to:
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Exercise appropriate fiduciary responsibilities over Association resources;
Fully and fairly disclose and act appropriately in avoiding conflicts of interest;
Comply with applicable rules and regulations of the Association and government agencies;
Respect confidentiality of information acquired in the course of our work;
Provide Association members with information that is complete, accurate and appropriate;
Carry out activities professionally, with honesty and integrity;
Not knowingly be a party to any illegal activity or breach of fiduciary responsibility;
Report violations of this Code in accordance with all applicable rules of procedure;
Institute due process policies for violations of this Code of Financial Ethics;
Be accountable for adhering to this Code.
How do I make sure I’m
safeguarding our assets?
1. Deposit and record cash
receipts on a timely basis.
2. Document expenditures and
pay all bills timely, including
the remittance of
MEA/NEA dues.
3. Have bank statements
reconciled monthly.
4. Report financial position to
Executive Board.
Other Duties……..
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Update bank signature cards
annually
Verify membership dues billing with
school district payroll list
Prepare annual financial statements
Prepare and file state & federal tax
(and/or labor) forms
Arrange for internal review by an
independent person or audit
committee
Prepare budget for new year
MOST IMPORTANT………
PRACTICE GOOD INTERNAL
CONTROLS OVER YOUR
MEMBERS ASSETS
Getting Started….
• Kits
– Employer ID
– Incorporate
– Tax Exempt Status
Where to find your kits:
• go to: www.mymea.org
• Departments
• Finance
• Scroll to bottom of page
www.mymea.org
So…..
You’ve got your ID
You’ve Incorporated,
And your tax exempt……..
Now what?
NEXT,
• Checking Account
• Verify it’s in your local’s name only!
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Develop and follow a budget
Establish an accounting system
Report as required
And practice good internal controls!!
Checking Account
• Make sure your checks are:
– Pre-numbered for making disbursements
– Are signed by a minimum of two signers
– Each check is supported by an approved
authorization for disbursing
• Make sure current signature cards are on
file with the Bank
• By policy do not allow the use of an ATM
card or counter checks
Establish a Budget
HOW DO WE DO THAT?
• Select a small budget committee
– 6 members is ideal
• Establish a timetable & stick to it
• Develop a method for determining
general desires and needs of your
members
Budget Questions to Ask
• What are the local’s goals?
• How are we going to achieve
these goals?
• What resources does the
local have available?
For additional help:
Visit: www.mymea.org
•Departments
•Finance
•Treasurer’s Handbook
Or
Visit: www.mea.org
•For Leaders
•Financial and Membership Information
•Treasurer Training Tidbits
Develop an Accounting System
• You will need:
– Accounting software or a spreadsheet
application to record transactions
– A chart of accounts
– Disbursement procedures
Accounting Software
• An accounting software package will
help you capture your financial data
– When picking a system, base decision
on:
• The size of your Local
• How many transactions are processed
daily/weekly/monthly/annually
• And your bookkeeping experience
– Examples:
• Excel ($229)
• Quicken ($59.99)
• Quickbooks ($99.99)
Chart of Accounts
What is a chart of accounts?
 A listing of the titles or names of
the various accounts, somewhat
comparable to a table of contents.
– Use your budget to help set up your
chart of accounts.
– Accounts are classified into two
general groups:
• Balance sheet – assets, liabilities and net
assets
• Income statement – revenues and expenses
Disbursement Procedures
• Use disbursement request forms
for ALL disbursements.
• Require back up documentation
– Per the IRS:
• Receipts required for all hotel stays
• Receipts required for all expenses of
$75 or more
• Information required for all meals: who
the attendees are, amount, business
purpose, place and date
Disbursement Procedures
• Keep receipts for
supporting
documentation
• If no receipt,
develop one
• Get proper
approval for all
payments
Recording Transactions
RECEIPTS:
• You received a dues check from
your school district:
– Immediately stamp “For deposit only”
upon receipt
– Record the receipt of the dues
– Deposit the check in the bank
– Do not co-mingle PAC dollars with dues
dollars!
Recording Transactions
DISBURSEMENTS:
• Sue Smith wants reimbursement
for a conference she attended:
– Verify the expenditure was approved
– Have her completely fill out a disbursement
form, sign it and attach receipts
– Have another officer review and approve
the disbursement form by initialing approval
– Write the check with two signers
– Record the disbursement in your check book
and your accounting system
– File the backup documentation
Workbook Sample
Direct Pay Your Dues
•Save time
•Never have to remember to write that
check
•MEA initiated
•Shores up internal controls
•Saves money
•No interest charges
•No postage
•Never have to worry about RA seating
Contact the MEA membership department to
sign up today.
Reporting Requirements
Internal Financial Reports
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Monthly Reconciliations
Monthly Financial Reports
Quarterly Financial Reports
Annual Financial Reports
Yearly Audit
External Reports
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Update Annual Incorporation Info
File annual IRS 990, 990 EZ or
990N
Form 944, if necessary
Mail 1099’s and File w/IRS
Form LM-2, 3 or 4 if required
Form LM-2, 3 or 4
Every labor organization subject to the Labor-Management
Reporting Disclosure Act must file a financial report each
year with OLMS.
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Labor organizations with total annual receipts of $200,000 or
more must file the Form LM-2 for their fiscal year beginning before
July 1, 2004. Labor organizations with total annual receipts of
$250,000 or more must file the Form LM-2 for their fiscal year
beginning after July 1, 2004.
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Labor organizations with total annual receipts of less than
$200,000 and more than $10,000 must file the Form LM-3 for
their fiscal years beginning before July 1, 2004. Labor
organizations with total annual receipts of less than $250,000 and
more than $10,000 must file the Form LM-3 for their fiscal years
beginning after July 1, 2004.
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Labor organizations with total annual receipts of less than
$10,000 must file the Form LM-4.
Miscellaneous
• Lobby Registration and
Reporting Act
– Is a member entertaining a state
public official?
• Elections
– Is the local involved in any nonunion elections?
• Raffles
– Thinking of sponsoring a raffle or
giveaway?
Internal Controls
EMBEZZLEMENTS HAPPEN!
FACTS:
• Over 40 cases in 20 years
• Losses near $1,000,000
• Top of the list nationally –
NOT GOOD!
FACT: MEA HAS HAD OVER 25 REPORTED
EMBEZZLEMENTS IN THE LAST FIVE YEARS!
Role of Internal
Controls
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“Strong Internal Controls” are identified as the
most effective measure in the prevention of fraud.
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To provide reasonable assurance regarding the
achievement of objectives in three categories:
– Effectiveness and efficiency of operations
– Reliability of financial reporting
– Compliance with applicable laws and regulations
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Safeguard assets of the organization
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Best Deterrent
– Internal controls close the door on opportunity
– Certified Fraud Examiners Report
– Deterrent vs. elimination
What is Internal
Control?
• Internal Controls are procedures
that an organization puts in place
that are designed to:
– safeguard assets;
– generate accurate accounting data;
– ensure efficient productivity;
– And PROTECT YOU!!!
Integrity of Internal Controls
A strong internal control structure is fundamental to achieving Association goals. Internal
controls must be designed to provide reasonable assurances regarding the safeguarding of
resources against mistakes, fraud, abuse, reliability of financial information, continued
commitment to compliance with Association policies, applicable laws and regulations, and the
overall accuracy of financial records. Internal controls must be built on uncompromising
integrity, sound judgment and a culture of good control practices.
In fulfillment of our obligation to maintain the highest standards of quality in financial
reporting through effective internal controls, we support:
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A control environment founded on ethical values and technical competence;
The identification and analysis of relevant internal and external risks that can jeopardize
Association finances;
The implementation of control activities that mitigate each identified risk, with the appropriate
focus on prevention, detection and correction;
The creation and maintenance of a communication structure by and between governance and
staff that captures, processes and transmits relevant internal and external information in a timely
manner;
Systems of evaluation and assessment to monitor whether internal controls are adequate,
effective and adaptive;
Adoption of, and adherence to, formal internal control policies and procedures and document
their use;
Outlining the roles and responsibilities of governance and staff within the internal control
structure;
Communicating with and education staff and governance on their internal control roles and
responsibilities.
Internal Controls - THE BIG TEN
1. Dual Check Signers – OR
Authorizations on invoices
2. Require supporting
Documentation for all
disbursements
3. Have bank statements
mailed to someone other
than the Treasurer
4. Issue monthly financial
reports
Internal Controls - THE BIG TEN
5. Deposit Cash promptly
6. Form a local independent audit
committee
7. Submit IRS forms
8. Balance the checkbook monthly
9. Keep PAC funds separate
10.Verify membership monthly
INTERNAL REVIEW
WHAT?
• An internal review is when
an independent person or
audit committee reviews the
financial records of the local
association.
WHY?
• Helps to ensure accurate records are
being kept.
• Accurate records help safeguard
assets.
• Safeguarding assets protects YOU
from liability.
WHEN?
•Annually, or
•When there is a change in Treasurer’s
WHO?
• An independent person who is
familiar with accounting
techniques
– For Example:
• a business school
teacher
• Another local treasurer
• An internal review
committee
Things reviewed during
an internal review:
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Mathematical accuracy
Bank account reconcilement
Disbursements
Basically everything you do
with an emphasis on what may
have been missed!
When do I need an
outside auditor?
• If your internal review
report reveals unusual or
suspicious activity
• If you or someone else
suspects that embezzlement
is occurring
• If you are a large local and
required to file a 990
annually
REMEMBER…..Your members are
counting on you to do the right thing!
ALWAYS REQUIRE:
•TWO SETS OF EYES
•TWO SIGNERS
•SEGREGATE DUTIES
•RECONCILE
•REVIEW & REPORT
Percentage Dues Update
•Enhancements to the system
•What we’re doing now
•What you should be doing now
•Timelines
Percentage Dues Update
•Percentage dues information
•www.iammea.org/percentagedues/
•Read the MEA Voice
•www.mea.org or www.mymea.org
•Check with your local Uniserv Office
•Training
•Summer Leadership Conference
•Webinar
•On line manual
What’s New……
• 990 Update – form changes
• 990N
• Audit committees (part of
new 990 questions)
• New auditing standards
• Department of Labor audits
• Taxability of cell phone
reimbursement
Helpful Links:
www.mea.org
www.mymea.org
www.iammea.org/percentagedues/
www.irs.gov
www.dol.gov/esa
www.toolkit.cch.com
Information Available on
the Web
www.mymea.org
•Treasurer’s handbook
•Treasurer’s tips
•Membership processing handbook
•Various kits, etc.
• MEA budget
•Etc.
Web Addresses
www.mea.org
www.mymea.org
www.irs.gov
www.dol.gov/esa
www.toolkit.cch.com
Questions
&
Answers