Method of Accounting

There is a wide variety of computerized accounting packages available to assist the organization in accurate financial reporting; manual record-keeping is not the recommended method of reporting. Rather, each organization should adopt an accounting package or computerized accounting method to be used for several fiscal years. Establishing records in a spreadsheet format is perfectly acceptable, although somewhat cumbersome. It is preferable to adopt an accounting package for long-term use. The packages chosen should be reviewed on a biannual basis for the effectiveness and accuracy of financial reporting. Packages should also be evaluated based on their ease of use and overall cost, both financial and training, to the organization.

At a minimum, the membership should be provided with a financial statement and bank reconciliation at each meeting. The financial statement should detail the budget to actual expenditures and receipts. Cash receipts and disbursement reports should be available for review when needed or at the annual audit. Any individuals who actively coach or direct a UIL activity should not have control or signature authority over the organization’s funds.

Cash Receipt Procedures

All cash collections received by the organizations for fees, dues, fundraising, etc. must be deposited upon receipt. All funds must be supported by some type of record documenting the source and amount of funds (tabulation of monies collected form; cash receipt form, ticket sales record, etc.). Such documentation shall be readily available for audit purposes.

Deposits shall be made daily if the total receipts on hand exceed $250. If daily receipts are less than $250, deposits shall be made within one week; even if the receipts for all days combined are less than $250. All money must be deposited prior to holidays and weekends.

Bank deposits should be prepared as follows to ensure the integrity of the financial reporting:

Separate all currency and coins by denomination and carefully count and record them in the appropriate section of the bank deposit form.
A tape may be run of any checks included in the deposit rather than indicating the checks individually on the deposit slip form. A copy of the tape should be retained with your copy of the deposit records.
Total the deposit slip.
Tally the pre-numbered cash receipts and make certain that this total matches the deposit total.
Attach the cash receipt verification with a copy of the deposit slip and file in date order.
For large deposits, have another individual independently count the currency and coins and verify that the amounts have been correctly recorded on the deposit slip.
Both individuals should initial the deposit slip next to the currency amount on the deposit slip.
Seal the deposit in a deposit bag in the presence of the second individual. This is called dual control and places the organization in a better position to challenge any claim the bank may make that the currency received was not correct.

District employees should not count, collect, or secure an organization’s funds. District employees may not have access to an organization’s lockbox.

Petty Cash

Each organization may maintain a petty cash account unless prohibited by the organization’s governing body. Strict controls must be maintained by keeping petty cash in a locked box accessible by only the treasurer and one other officer. Control of the petty cash account by a district employee is not allowed. The petty cash funds should be used for emergency purchases only. All other purchases should be made with a check from the organization’s account.

Upon disbursement through the petty cash account, a receipt for the purchase should be retained. At any given time, the amount of petty cash remaining and the aggregate total of receipts on hand should equal the amount of the established petty cash account.

Bank Account

To open a bank account, the organization must first obtain an Employer Identification Number (EIN) from the IRS. (See Federal and State Reporting section - Application for EIN.)

The school’s name should not be solely used on the organization’s checks or on its literature. The use of the school name only might imply that the school or the District is responsible for any obligations entered into by the organization. The name must include the organization’s name on the bank account. Example: John Doe High School Band Booster Club.
Individuals authorized to sign on the bank account cannot be related by blood or marriage or reside in the same household.
District employees may not serve as the treasurer nor be authorized to sign checks for the organization.
All funds received should be receipted and deposited within 24 hours of receipt. Co-mingling of the organization funds and school activity funds is prohibited.
District employees may not accept loans of funds from organizations.

The Treasurer should reconcile the bank statement monthly and prepare a monthly financial report to the Board of Directors, Executive Board, or Office.

Mailing Address

Establish the organization’s mailing address. (An official mailing address is required on several state and federal forms when creating the identity as a support organization; therefore, it is better to get this step done first.) The IRS and the Texas Comptroller’s Office recommend that each organization obtain a post office box (PO Box) or private mailing box (PMB) to use as the official mailing address of the support organization. The address and box keys can easily be given to the new officers at the beginning of each new year.

Please understand the importance of maintaining a consistent mailing address for the organization.

It will save time since the organization will not have to update the address each year to the district, the Texas Secretary of State, the Texas Comptroller’s Office, the IRS, and bank.
Support organizations receive several important documents from these agencies throughout the year, and if the address changes frequently, some of these documents could be lost or misplaced. If the related school’s address is used as the support organization’s official address, the organization should be aware that it may not receive mail in a timely manner when the school is closed (i.e., summer vacation and some holidays).
The IRS mails forms and other correspondence to support organizations periodically. If these forms are not completed and returned to the IRS within a specific time period, an organization could lose its tax-exempt status, thereby also losing its tax-exemption with the State of Texas and possibly face fines and penalties.

The district does not recommend using a home address since organization officers change frequently.

Disbursement of Funds

All requests for disbursement must be made from established budget line items. If a request exceeds the budget or is for an item not previously included in the budget process, a vote of the membership must be taken prior to expenditure. Direct payments and gifts to employees and alcoholic purchases are not permitted organization funds.

Organizations may not contribute funds in an effort to increase the personnel allocations and/or stipends of a particular program or campus without the express written approval of the appropriate Leadership team member.

A disbursement voucher should be completed for all expenditures regardless of the amount. The appropriate supporting documentation (invoices, receipts) should then be attached to the disbursement form and filed in check number order. At no time should a check be issued without the appropriate supporting documentation.

Methods of Payment

All methods of payment including written checks, electronic transactions, debit cards, PayPal, etc. must be accurately recorded by the organization. The officers responsible for each transaction must also be noted in the financial records of the organization.

Bank Reconciliation

Upon receipt of the monthly bank statement, the balance indicated on the statement shall be reconciled monthly to the bank account balance in the general ledger as of the last day of the month.

Items needed for reconciliation:

Bank reconciliation form
Prior month’s bank reconciliation
Bank statement
Check Register and/or Cash Disbursements Journal
Cash Receipts Journal
General Ledger

To complete the bank side of the reconciliation form, perform the following steps:

Indicate the ending balance per the bank statement.
Check off outstanding checks from prior month’s bank reconciliation using the bank statement.
Determine the outstanding checks by comparing the Check Register to the bank statement, including any remaining checks from the previous month.
Determine the deposits in transit by comparing the Cash Receipts Journal to the bank statement.
Identify any bank charges and/or items that need to be corrected by the bank, such as check printing, returned check charges, and material encoding errors. These items should be grouped together under Other Adjustments.
Total all items and enter the amount on the Adjusted Bank Balance line.

To complete the General Ledger side of the reconciliation form, perform the following:

Indicate cash account ending balance from the General Ledger.
Compare the bank statement to the Check Register and list any cleared checks that were not posted.
Indicate any outstanding returned checks.
Indicate the interest earned per the bank statement. This amount should be immediately posted.
Identify any items that need to be corrected on the General Ledger (such as immaterial encoding errors) under Other Adjustments.
Total all items and enter the amount on the Adjusted Cash Balance line.

Compare the Adjusted Bank Balance to the Adjusted Cash Balance to make sure that they are in agreement. If they are not, the reconciliation is NOT complete. Examine the prior month’s reconciliation to ascertain that all items have been posted and/or corrected.

If possible, a computerized reconciliation program should be used in conjunction with the organization’s financial package.

1099 Requirements

Internal Revenue Service organizations must be reported on a form 1099 on an annual basis. The organization should secure an IRS form W-9 from the provider at the time of service to ensure that the organization has an accurate record of the taxpayer identification number. The organization must then issue a form 1099 to all qualifying vendors for services performed in the calendar year by January 31. The following guidelines can be used to determine if reporting is required:

Risk of profit or loss - Independent contractors realize a profit or sustain a loss based on their success in performing the work or service.
Continuing relationship - The relationship between an independent contractor and employer ends when the job is done.
Compliance with instructions - Independent contractors cannot be told when, where, or how to do the job.
Training - Independent contractors do not go through any type of instructional training period with a more experienced employee to learn how to do the job. Independent contractors specialize in the field in which they have been employed and do not require training.
Personal service required - The right of an independent contractor to substitute another’s services without the employer’s knowledge shows that one particular individual’s personal services are not being required by the employer.
Integration into the business - The success or continuation of the business is not dependent on the independent contractor’s performance of the service.
Control over the hiring, supervising, and paying of assistants - Independent contractors maintain control of their assistants. The employer contacts the independent contractor if there is a problem, and the employer pays the independent contractor for the work done. The independent contractor then pays the assistants directly.
Set hours of work - An independent contractor sets working hours.
A full-time work requirement - An independent contractor has the availability to work for more than one client.
Working for more than one firm - An independent contractor has an established business in which they work for more than one firm.
Worker’s availability to the general public - An independent contractor makes services available to the public on a regular and consistent basis.
Working on the employer’s premises - An independent contractor works off-premises unless the nature of the service to be performed requires attendance at the employer’s work site.
Required work order or sequence - An independent contractor does not need to be told in what order or how to do a job as he/she is considered an expert in the field.
Required reports - An independent contractor is not required to submit oral or written reports.
Payment by the hour, week, or month - An independent contractor is paid in a lump sum fee basis when the job is done. An invoice must be generated to substantiate the payment.
Payment of business or travel expense - An independent contractor is responsible for his/her own business or travel expense. If paid by an employer, the employer must include the expense amount in the independent contractor’s 1099 (unless you can verify an accountable plan).
Furnishing of tools and materials - An independent contractor has the necessary tools and materials to do the job.
Investment in facilities - If the independent contractor maintains an office on the employer’s premises, he/she must pay a rent or lease payment for the office space as well as the overhead.
Employers discharge rights - An independent contractor cannot be terminated as long as he/she is fulfilling the contract.
Worker’s termination rights - An independent contractor may be held financially responsible for any loss the employer may suffer due to an incomplete, inaccurate, or unsatisfactorily completed contract.

The Internal Revenue Service website, www.irs.gov, may be accessed for forms and appropriate 1099 reporting requirements.

GASB 39 Requirements

The Governmental Accounting Standards Board (GASB) Statement #39 requires school districts to consider financial activities of all parent teacher organizations, booster clubs, foundations, and other fundraising entities for inclusion in the district’s financial statements.

In order to determine whether financial information for these groups must be included, it is necessary to gather data regarding the financial activities of these organizations.

This information is needed no later than August 1, annually. The information provided should include financial records year ending June 30. Keep in mind that external auditors who prepare the district’s audit may require additional information. See Appendix for form.

Azle ISD

Booster Club & Parent Organizations

Booster Club/School Support Organization Guidelines

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Federal and State Reporting

Sales Tax

Accounting for Transactions

Fundraising

Donations

Scholarship Programs