Financial Review Assistance

A financial review (formerly known as an audit) is required at least twice a year for elementary & TK-8th units - at the end of the fiscal year, ending on 6/30 and mid-term on 12/30. Middle and high schools are required to produce a report annually at the end of their fiscal year. A financial review is also required when check signers are changed mid-term. CAPTA has their guidelines online for an in-depth review but a general overview below is included.

These reports are either completed by your board's Financial Reviewer or by trading books with another school by committee with one board member completing the review and two others verifying the work and signing the report before returning the book to the unit. CAPTA guidelines note the person conducting the financial review 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 financial reviewer is often a member of the budget, programs, or fundraising committees, but is never authorized to sign the PTA’s checks. They do not handle or count money at anytime for the unit they are reviewing, though they are financially trained. 

The financial reviewer 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 review the finances.

The president may be a part of the financial review committee, if necessary, as long as the majority of the committee are non-check signers.

General Overview:

To conduct a CAPTA (California State PTA) financial review, you must systematically examine all financial records, verify bank statements against ledgers, and present a signed report for formal adoption. CAPTA outlines the steps here: https://capta.org/toolkit/home/finance/pta-financial-review/ in greater detail.

1. Gather the Required Documents

Collect all financial books, records and reports from the treasurer, including:

A copy of the last financial review report;
Current bylaws and standing rules;
Originals of checkbook register, whether handwritten or computer generated, and canceled checks (including voided checks);
Originals of bank statements, bank book for each bank or savings account;
Deposits and supporting documents for the cash receipts;
Authorizations for payment with attached receipts;
Itemized statements and receipts of bills paid;
Monthly Treasurer’s Reports;
Original treasurer’s books/ledgers including back-up files (external storage device) if books are kept on a computer;
Financial Report by category for the period of the financial review with or without budget comparison;
Copies of board, executive committee and association minutes, including an adopted budget, any amendments that were approved during the year, approval of expenditures, and ratification of payments;
Committee reports from chairmen (e.g., fundraising, membership, etc.);
Any other information requested by the financial reviewer;
Copy of PTA-required Workers’ Compensation Annual Payroll Report form;
Copies of all required state and federal report forms if PTA hires employee(s);
Copies of all required federal report forms if PTA hires independent contractor(s);
Copies of the most recently filed IRS Form 990;
Copies of the applicable State Form 199 and RRF-1 and CT-TR-1 form if applicable.

2. Verify Transactions and Accounts

Use the official Financial Review Checklist to inspect the books:
Check off items in red ink as they are reviewed. Do not correct errors. Ask the responsible financial officer to correct errors. After errors have been corrected, and the financial reviewer is satisfied that the financial accounts are correct, the financial reviewer needs to denote the ending date of the financial reviewer. If a manual ledger and check register exists, draw a double line across the ledger and checkbook register where the audit concludes and sign and date using red ink, “Reviewed by (name) on (date).” If a computerized accounting program is used, attach a copy of the cash account and the last page of the check register to the financial review report filed with the secretary minutes, sign and date using red ink, “Reviewed by (name) on (date).”

The financial reviewer ensures that the association’s financial transactions have been accurately recorded:

• Include bank name, bank address, type of account and the account number on each report.

• Start review with records posted after the last financial review. Verify the amount shown on the first bank statement (adjusted for outstanding checks and deposits per the prior financial review) corresponds to the starting balance recorded in the checkbook register, ledger, and treasurer report, and the ending balance of the last financial review.

• Confirm bank statement was reviewed by another non-check signer if the financial reviewer had not been assigned that task.

• Verify there have been no ATM transactions.

• Make sure every check issued for the review period is substantiated with an authorization for payment, the reason and budget line item for the disbursement, appropriate payee and a receipt or bill. Each authorization should be signed by the president and the secretary. If the check has cleared the bank verify that there are two signatures and that both were from authorized check signers. 

• Verify authorization/ratification in the minutes. Note: Checks issued for pass-through funds do not require pre-authorization but should be ratified.

• Check that all bank charges and interest earned are recorded in the checkbook register, ledger and treasurer reports.

• Trace each deposit slip to bank statement and checkbook entries. Verify deposits are properly supported and that a Cash Verification Form (Forms, Chapter 9) or equivalent was used for each deposit. Verify that at least one of the signers of the form was an officer or committee chairman. 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. Verify returned checks have been properly reported.

• Verify deposits and checks have been properly recorded in the treasurer’s reports.

• Verify the deposits and checks have been properly posted to the ledger and check register. Note: Request computer reports that show all the various accounts affected by the transaction.

• Verify that all income and expenditures are allocated into budgeted categories.

• Make certain that council, district, State and National PTA portions of the membership dues have been kept separate from other receipts.

• Make certain that the number of memberships agrees with membership chairman’s report, and verify that membership monies collected correspond to membership monies forwarded.

• Remember that Totem memberships do not have a corresponding amount 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 event reports to verify receipts and expenditures have been properly reflected in the financial records.

• If an advance has been given, verify that receipts and/reimbursements have been received and properly recorded. If money was returned, verify it has been redeposited into the PTA account.

• Compare figures on monthly treasurer and financial reports against ledger for accuracy.

• Ensure proper tax returns have been filed.

• Verify that the PTA-required Workers’ Compensation Annual Payroll Report form has been filed.

• Verify that all required state and federal report forms have been filed if PTA hires employee(s) or independent contractor(s).

3. Complete and Sign the Report

Document any discrepancies or missing items on your checklist. Do not alter the treasurer's original entries; instead, list corrections or recommendations for the treasurer to address.

Complete the Financial Review Report form.

If a committee is used (non-check signers), all committee members must sign the report. A qualified CPA or professional accountant may sign individually.

For more information about PTA financial review procedures, refer to Bylaws for Local PTA/PTSA Units, Article VI, Section 8

The financial reviewer should feel free to contact the treasurer if there are questions or issues needing clarification. If an error in recording a transaction is found, the financial reviewer needs to recommend the entry be corrected. Any corrections made as a result of the review need to be listed on the next treasurer’s report.

The financial reviewer should not be punitive in the report/recommendations. Difference of opinion as to process should not result in a recommendation if the treasurer’s records are correct.

Some examples of recommendations are:

• Cash must be counted by two PTA members and each must sign the Cash Verification Form. On xxxx, xxxx, xxxx, and xxxxx there was only one signature.

• Authorization for expenditure must be voted on by the executive board or association before checks are issued. Check numbers xxx, xxx, xxx were issued before authorizations were approved.

• Authorization forms must be signed by the secretary and president for check numbers xxxx, xxx and xxxx.

• Check numbers xxx, xxx and xxx were issued more than six months ago. They should be voided, and investigated and reissued if necessary.

4. Adopt and File the Report

Present the completed review to the executive board for approval.
Present the report to the general association membership for a formal adoption vote (e.g., "I move that the financial review report be adopted").
Record the dates of approval in the meeting minutes and upload copies to your document retention system and upload a copy to Future Fund.