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For Locals and Regions (FPLR).  Administration & Fiduciary Oversight  Regulatory Requirements  Technical Tasks 2.

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Presentation on theme: "For Locals and Regions (FPLR).  Administration & Fiduciary Oversight  Regulatory Requirements  Technical Tasks 2."— Presentation transcript:

1 for Locals and Regions (FPLR)

2  Administration & Fiduciary Oversight  Regulatory Requirements  Technical Tasks 2

3  FP 101:Survival!  FP 102A:Need to Do  FP 102B:Need to Know  FP 103:Best Practices  FP 104:Management Issues 3

4  All local/region leaders need to be aware of financial concepts Oversight Emergency coverage  Treasurer needs to know in detail  Following these guidelines helps you to avoid problems and be more accountable Note FPLR handbook page references at bottom of slides (centered and green) 4

5 FP 101 Survival! 5

6  IEA dues- Pay monthly except SEPTEMBER/OCTOBER  Member reimbursement  Vendor bills 45, 50 6

7  Check supply  Types of checks  Record in checkbook/Accounting system 7

8 November 110% of obligation December 120% of obligation January 130% of obligation February 140% of obligation March 150% of obligation April 160% of obligation May 170% of obligation June 180% of obligation July 190% of obligation August 1100% of obligation 8 50

9  Employer dues checks ◦ Make sure you obtain and retain supporting detail!  Other checks ◦ Keep copies and documentation! 9 Appendix 6

10  Deposit slips- Ample supply  Deposit checks when received  Do NOT withdraw cash from deposit! 10

11  Taxpayer ID Number (TIN)  Annual filing requirement  Nonemployee compensation  Unrelated Business Income , Appendix 13

12  “Social Security Number” for associations and corporations: 9 digits (xx-xxxxxxx)  Need when opening a bank account  Need when filing IRS forms  IEA has your number on file  IEA will apply for numbers when needed 12 27

13  IRS Form 990-N (“E-Postcard”) “Gross Receipts” under $50,000  “Gross Receipts” do NOT include IEA-NEA dues! All except around 30 IEA locals file this form! 13 28, Appendix 13

14  “Gross Receipts” $50,000-$200,000: IRS Form 990 EZ  “Gross Receipts” Over $200,000: IRS Form 990 Most locals pay a CPA to file these forms , Appendix 13

15  If you tell us that you are filing the 990/990- EZ but fail to do so, after a period of time the IRS will take away your tax exemption! ◦ Serious financial consequences for your local ◦ Significant time, effort and expense to get it back 15

16  Must file if not required to file 990 or 990-EZ  “Simple” electronic submission  IEA files on your behalf 16 28, Appendix 13

17  Income not related to union business Rarely occurs, examples: Rental income Newsletter ads (not sponsorships) Merchandise sales  Need $1,000 in UBI to incur a tax liability 17 28, Appendix 13

18  Must report payments to INDIVIDUALS to the IRS, IF:  Over $600 in total for a calendar year  For Services: Not for products, supplies or expense reimbursements  Gifts and awards don’t count , Appendix 13

19  Stipends: officers (W-2 vs. 1099)  Stipends: non-officers  Payment of dues for officers  Undocumented expenses: report even if under $ , Appendix 13

20 20 30

21 21 31

22  You need to know if your local association is currently filing quarterly reports with the State Board of Elections.  If so, you need to continue to file them in order to avoid penalties.  Keep IPACE funds in separate bank account!

23  There are some tips for new Treasurers on the IEA website  Click on RESOURCES  Then FINANCIAL PROCEDURES 23

24 FP 102A Need To Do 24

25  Every dollar that goes in or out of your bank account needs to be documented Possible audit Fiduciary duty: “Other People’s Money”  Proof of business purpose  Proof of dollar amount  Proof of date/place

26  Where from  What for  Dollar amount  Employer checks- Be sure to retain detailed list of dues deducted, etc.  Other Checks: Copy of check with notes/attachments 26 52

27  IEA dues: Maintain copy of monthly statement  Member reimbursement Travel: Use travel form with receipts attached Other: Need original vendor bill, not a handwritten note  Outside vendors Detailed bill needed No bill (stipends, scholarships, etc.): document in minutes

28  Forms: Use some sort of voucher system (p 54)  Attach bills, etc. to vouchers For travel expenses: USE A TRAVEL EXPENSE FORM!!  Example on page 57  Label receipts and staple them to the forms  No stapled envelopes with miscellaneous random receipts!! If travel funding is provided by another body, make sure there is no duplication of reimbursement

29 29 54

30 30 57

31  Every dollar that goes in or out of your bank account must be recorded  Permanent record Future audits by IRS, etc. Internal questions Financial reporting  What system do you use: “It depends”

32  One size does not fit all Size/complexity of organization Prior treasurer’s system Current treasurer’s preference

33  Your system needs to: Record all transactions in sufficient detail Allow you to produce financial reports efficiently Provide a record that others can follow `

34  Some possibilities Checkbook/check stubs Cash receipts and disbursements journals Excel/Access Specialized accounting software (Quicken, etc.)

35  Perform and document monthly  Detects errors by the bank and/or yourself 35 45, Appendix 14

36  This is the link between “Documentation” and “Recording”  Should be able to look at any item on the bank statement or your accounting system and find the source document easily and quickly

37  Examples: Cross reference vendor bills/vouchers with check numbers Attach bills to bank statements, or File vouchers numerically (chronologically) No envelopes/sacks with miscellaneous random documents 37 58

38 FP 102B Need to Know 38

39  Checks/balances and separation of duties  Helps protect the organization from undetected fraud  Helps protect officers from potential embarrassment and liability  Protects the treasurer’s credibility

40  List of controls, Appendix 6  Please read the example on page 18! , Appendix 6

41  Checks and cash should be deposited daily, with the date of the deposit indicated in the applicable records. The bank deposit slip totals should match the total in the books.  Cash should NOT be withdrawn when making a deposit 41 Appendix 6

42 All disbursements, except petty cash items, should be made by checks. Complete supporting documentation should be maintained. 42 Appendix 6

43 Checks should never be made payable to “Cash”. 43 Appendix 6

44 Checks should be paid from original vendor invoices. 44 Appendix 6

45 Two (2) signatures are recommended on all checks. 45 Appendix 6

46 Signing of blank checks should never be permitted. 46 Appendix 6

47 A person other than the treasurer should receive bank statements directly from the bank. 47 Appendix 6

48 48 Appendix 6

49  Locals are billed at the beginning of the month: November-August  Bill is sent to “Membership Contact”  Penalties for late payment  Need to pay entire amount shown!!  See Appendix 15 for “How to Read the Statement”  Some locals arrange for direct payment by employer

50  Include home addresses for your new members on their enrollment forms  Encourage all of your members to use the “My IEA Profile” portal to update their home e- mail addresses 50

51  IPACE is funded by member contributions  Locals can receive up to $10 per contributing member each year ($15 effective )  Must be used for specific political purposes , 35-36, Appendix 9, 16

52  Must be kept in a separate bank account  May be state reporting requirements  Members’ contributions are not tax- deductible  Unused funds can be returned to IPACE, at the local’s discretion 52

53  DO YOU HAVE TO FILE? One-time threshold: $3,000 spent in any 12-month period Only certain expenses “count” If you exceed the threshold, you must register as a PAC immediately and then file quarterly reports forever  Keep up with state due dates and requirements , 35-36, Appendix 9, 16

54  NEA Fund used for national initiatives  Fundraising rules  No use of local or IPACE funds for contributions – including reimbursement to RA delegates 54 36, Appendix 15

55  Federal/State/Local Income Tax- EXEMPT  Sales Tax - NOT EXEMPT  Exemption requires that your funds are spent for your “Exempt Purpose” You must be able to demonstrate this if audited, hence the importance of documentation!

56  You can, AND SHOULD, make a “profit” Only way to build up funds Must be used for exempt purpose

57  DO NOT IGNORE!  Seek help  Check TIN  Keep copies/proof of delivery

58  Not likely, but... Random audits Reported by disgruntled members

59  Articles of incorporation, bylaws, IRS determination letter  Board/Committee meeting minutes  Conflict of interest policy  Copy of expense reimbursement plan  General ledger, cash receipts journal, cash disbursements journal 59

60  List of all bank accounts  Copies of bank statements and cancelled checks  Credit card statements and receipts  Invoices and receipts  Schedule of donors to the organization  All expense reimbursement requests, including documentation 60

61  Copy of any contract of $5,000 or more  Documentation of process to determine compensation of officers, including committee minutes  Copies of Forms 941, W-2 and 1099-MISC  List of officers  Breakdown of dues received: IEA-NEA vs. local  Copy of two newsletters 61

62  Copy of union handbook  All workpapers used to prepare the annual tax return (990-EZ)  Charter  Document retention policy  62

63  Are regular Board meetings held? Describe.  How often are dues paid to IEA-NEA?  What portion of the dues are for political activities?  How are members notified that part of their dues are used for lobbying activities?  What geographic area do you cover? 63

64  Describe your history and activities.  Describe your internal controls over your financial transactions.  Do you have a budget?  Is your 990-EZ shared with your governing body?  How large is your governing body? 64

65  Do you have an annual general meeting of the membership?  Do you have an audit? If so, provide copies of reports.  Who maintains the books?  Do you provide monthly financial reports? What is in them?  How are your officer stipends computed? 65

66  How do you report stipends (W-2, MISC, etc.)?  What are your sources of income?  How are your convention delegates chosen?  How many delegates do you have? What do they do? How long do they serve? 66

67  Do you have special events, if so, describe.  Do you give gifts? Describe.  What is the length of your contract with your employer?  Do you track your valuable assets, e.g. computers? Provide list.  67

68  Sleep well: Keep your books and other documentation in order, and follow the rules  Seek help  Let us know 68

69 FP 103 Best Practices 69

70  Regions - Annual Budget is Required in Order to Receive Rebate  Locals - No Specific Requirement, but a Budget... Ensures Proper Financial Planning Discussion of How to Use Member Resources Qualification for Financial Assistance

71  Check constitution/bylaws for requirements  Get Member Input  See Budget Training Video on IEA Website , Appendix 2, 3, 4, 5

72  Large Organizations: Outside CPA “Audit” vs. “Review”  Smaller Organizations: Audit Committee Independent of Governance Start with a Checklist (Sample on page 62) Final Report to the Board  Share Report with Members , Appendix 1

73 TO: ____________________ President (or Region Chair) ____________________ Education Association (or Region) We have performed the procedures enumerated in the checklist for review of financial records. Based upon completion of those procedures we have satisfied ourselves that the Association’s (Region’s) cash basis transactions for the twelve‑month period ending ____________ ____, 20__, are accurately and reasonably recorded in the books and records, are adequately documented, and were for authorized purposes. _______________________________ Audit Committee Chair _______________________________ Date 73 11

74  Have a written policy on documentation and reimbursement Overall expectations What is covered/not  All expenses must be documented (detail on 53-56)  Donations to FCPE are not reimbursable  Region vs. Local funding , 55-57, Appendix 8

75  Should produce monthly  Statement type and detail depend on the size of your organization, but A verbal report or just a report on the bank balance is never sufficient  Should include a comparison to budget  Share with broad audience

76 76 48

77 FP 104 Management Issues 77

78  Don’t think “It can’t happen here” Numerous cases at IEA locals in past few years Usually involves people in positions of trust  Pressures/Opportunities Many factors can induce someone to commit fraud Lack of good controls presents an opportunity , Appendix 7

79 , Appendix 7

80  If you see the signs... DON’T ASSUME THE WORST!!! They could just signify substandard practices Check with your UniServ director Don’t ignore the signs; doing so can end up reflecting on you , Appendix 7

81 One person does all of the work related to financial and membership matters. Worst case is someone who serves as president, membership chair and treasurer. 81 Appendix 7

82 No oversight over the person with the checkbook (controls such as dual signatures are missing, there is no monthly financial reporting, etc.). 82 Appendix 7

83  Deficiencies in documentation for disbursements: No documentation Use of copies instead of originals Multiple erasures/whiteouts on any kind of financial records (checks, deposit slips, invoices, etc.) 83 Appendix 7

84  Checks written to “Cash”  Cash withdrawals from the local’s bank account  Cash deducted from bank deposits 84 Appendix 7

85 The local is consistently behind in paying its IEA-NEA dues. 85 Appendix 7

86 No annual review of the books/records by an outside body. 86 Appendix 7

87 Signing of blank checks. 87 Appendix 7

88 Bank statements are not reviewed by someone other than the treasurer. 88 Appendix 7

89  How much cash to maintain? Plan for worst case scenario May have to phase in the increase or decrease as part of annual budget  Investment of funds-look at alternatives Liquidity Net income (interest minus fees)

90  List of Common Items (provided by NEA)  Call for Items Not on List 90 24, Appendix 12

91  Be familiar with constitution, bylaws, other governing documents Administrative requirements (budget, audit, fiscal year, etc.) Accounting requirements (check signing, reporting, etc.) 91 9, 38

92  Avoid perception of personal gain from role as local/region leader  The organization must come first 92 21

93  Treasurer candidates should be “qualified”  “Full Disclosure” of job requirements  There should be an orderly transition of treasurers Demonstration/Instruction Written procedures/Calendar Books/Records in good order  More info in FPLR handbook and on the website

94  Randy Welch  Al Llorens  Annual training sessions 94

95  IEA Website  Financial Procedures for Locals and Regions handbook  Financial procedures video  Membership processing video  Budget video  NEA online treasurer training 95

96 CLICK “RESOURCES” 96

97 CLICK “FINANCIAL PROCEDURES” 97

98 CLICK here for the handbooks CLICK here for workshops & webinars 98


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