Financial Review – So much fun, why not do two?

By Wendy DeLong

As a non-profit organization in the State of Washington, PTAs are legally required to conduct an annual review of the financial records after the close of each fiscal year (after June 30). As a best practice it is recommended that a PTA also conduct a mid-year financial review around the end of January.

There are three common reasons given for not doing a mid-year review:

#1: It is inconvenient & takes too much time to prepare

Truth: While a little extra work might be necessary to prepare for a financial review, the books and records should be kept up to date at all times, ready for examination. The only additional steps should be generating an up-to-date, interim financial report, a list of outstanding checks and making copies of the Financial Review Checklist for the committee – about 30 minutes of work.

#2: The treasurer feels this is a sign of mistrust

Truth: A treasurer should never view a financial review personally. It is simply standard practice for any business or organization, assuring everyone concerned that the finances are being handled properly and that all obligations are being met in a timely manner.

#3: It is too hard to find volunteers twice a year

Truth: It should be easier to solicit volunteers for two shorter reviews than for one that is only conducted annually. There is only half as much material to look through each time.

TOP TEN REASONS FOR CONDUCTING A MID-YEAR FINANCIAL REVIEW

1. By breaking the year into halves, each review committee only needs to look at approximately 6 months of records, shortening the time needed per financial review.
2. Any discrepancies are more easily identified when there are fewer records to check.
3. Discrepancies or glitches can be caught and corrected earlier.
4. Any money-handling procedures that might put the PTA at risk can be discovered and corrected sooner, limiting the time that a PTA is exposed to potential theft.
5. Inadequate or confusing record-keeping can be changed so that, at the end of the year, the PTA is left with clear, complete documentation of its finances.
6. Ensures that other legal obligations (taxes, corporate registration, etc.) have been completed on time so that the PTA’s non-profit status is not jeopardized.
7. Provides a cross-check on payment of membership service fees commensurate with the number of registered members.
8. Examination of income and expenses to date shows if both fund raising and programs are on track to meet goals. If not, there is still plenty of time in the year to make adjustments.
9. Participation on a mid-year financial review committee is an excellent way for a potential treasurer to gain insight into the position.
10. A glowing report from the financial review committee is a great boost to a treasurer’s self-esteem, especially for one new to the position. It says, “You are doing a great job!”