Michele Morrow610-837-9499

mtmorrow1@gmail.com

Unit Finances

Responsible Financial Habits

& Protecting Your Funds

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Whose money is it??Remember: The Charter Organization owns all funds/assets of

your unit

All funds fall under the same IRS regulations as your Charter Organization

Refer to your Charter Organization Rep for specifics when it comes to their EIN, bank accounts, filing taxes and such

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But we’re just volunteers…

Why should we

worry about it??

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Volunteer groups typically: are made up of friends &/or family

have easy-going & laid-back financial procedures

keep few records

completely trust their officers

include groups such as:ScoutsPTAs/parent groupsSchool Booster ClubsYouth Sports ClubsChurch GroupsEtc.

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Remember : Volunteer organizations are businesses and must

run responsibly

ALL volunteers have a fiduciary responsibility to protect the assets of their organization

The following information is provided to help ALL parties involved

And Because:

It happens – These examples appeared in one local paper, in just the last few years:

$1,700 from a local Girl Scout troop$3,200 from a youth racing league$4,700 from a Cub Scout pack$5,200 from a Cub Scout pack$10,000 from the youth football league$17,000 from a youth athletic association$18,800 from a middle school PTA$19,000 from an elementary school PTA$24,400 from a youth soccer league$34,000 from an elementary school PTA$37,000 from a little league association$40,000 from local volunteer fire department$50,000 from a small karate school$108,000 from a baseball league$120,000 from a youth soccer club

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Remember:

Incidents like this happen everywhere– not just in this one area.

Can you prevent theft from happening in the organization?

No, you can’t – but what you CAN do is take simple measures to minimize the risk of your group being financially victimized.

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“A Scout is Trustworthy”

Questioning and double-checking the treasurer’s records is not being “untrusting” – it’s simply being responsible. And it also helps catch the occasional honest mistakes.

And as true as this is, financial foul play is afoot more often than you’d think in small volunteer groups!

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3 Simple Steps

To Preparing

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Step 1

Plan the Program

What are we going to do for the year??

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Sample Program Items Meetings Campouts/Outings Summer Camp Advancements/Awards Courts of Honor/Banquets Special Events Other Activities

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Step 2

Preparing the Budget

How much is it all going to cost?

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Sample Program Related Expenses

Registration fees

New equipment purchase

Equipment replacement

Food & supplies

Banquet decorations

Banquet entertainment

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Annual Registration/Insurance/Boys Life fees ($24/2/12 per person)

Annual Unit Recharter Fee ($40/unit)

Advancement Accessories (Badges, Pins, Cards, etc.)

Leader Training

Operating Reserve

Other

Sample Administrative Related Expenses

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Step 3

Determine how to raise the funds

Where will the money come from?

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Sample Income Sources Dues

Popcorn Sales

Donations

Fundraising

(Remember that for all non-Popcorn sale fundraising activities a “Unit Money-Earning Application” must be completed & turned in to council for approval.)

Dues Why are dues important ?

Do families understand what is and isn’t covered by dues & why dues aren’t enough to run the program?

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Why Sell Popcorn?

Earns funds for the Scouts

Earns funds for the Unit

Supports District & Council (which supports your unit & Scouts)

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Donations

Can donations be accepted?

What can donations be spent on?

Can donations be solicited?

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Remember to plan program/activities FIRST!Then plan how to raise funds to do it

Don’t raise funds, just to raise funds!Have a purpose for the money

(Remember – With the exception of Trails End Popcorn, a Unit Money-Earning Application must be submitted to council for all fundraising activities.)

Fundraising

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Unit’s money-earning projects must be:

Approved by Charter Organization

Approved by Council*

Consistent with BSA policies

* Approval is obtained by submitting a Unit Money-Earning Application to council service center well in advance of the proposed date of your money-earning project. Form 34427 can be found on-line at www.scouting.org/filestore/pdf/34427.pdf

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Fundraising(Unit Money-Earning Projects)

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What types of fundraising events are appropriate?

How much time should be spent fundraising?

How much money can be raised?

Fundraising

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How Much Money Can You Make and Keep?

Simply put…Raise what you need to meet your budget

Spend what you raise

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How Much Money Can You Make and Keep?

It is acceptable to keep extra money in savings, checking, CDs, etc.

The amount can be anywhere from a half to a full year’s operating expenses

Regularly raising more than budgeted will jeopardize the non-profit status (if a non-profit)

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Be Mindful of Online Scams

When searching online for fundraising companies be sure to ask yourself:

Is company well-known?

Do they request proprietary information?

Are there any up-front commitments?

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Use of the UniformThe official Scout uniform is only to be worn in conjunction with Scouting activities; however, when wearing as part of BSA fundraising events the executive board of the local council may authorize wearing of the uniform for council-sponsored product sales programs.

Also refer to the Rules and Regulations of the Boy Scouts of America.

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Plan for timing of:• Income• Significant expenditures

Are there potential gaps / shortfalls due to timing of cash flows?

BalancingIncome & Expenses

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Make sure that everyone involved understands costs associated with running a quality program

Unit Committee Members

Scouts

Families

Charter Organization

Communication

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Who controls the money?

Now that you have the funds…

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$ Never have one person in charge of all assets

$ Never have one person hold both the treasurer and another office

$ Make sure that ALL volunteers attain their clearances (especially now that it’s required by law in Pennsylvania)

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Check Writing

NEVER- NEVER - NEVER sign blank checks

AWAYS require two (2) signatures on ALL checks…

Have three (3) signatures on file at the bank –make sure files are up to date!

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NEVER have a married couple or relatives be two of the signatures

Purchase checks with two (2)signature lines

NEVER - NEVER - NEVER sign blank checks …(ever!!!)

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Debit or Credit?Debit: Not enough controls

If lost – all funds in account at riskSignatures not requiredNo purchase details on receipts

Credit: Far easier to controlStatements more detailedReceipts are detailed

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Checks or Cash ? Checks are easier to work with

Checks can be traced if needed

Cash is at times unavoidable, however has no paper-trail, is far more susceptible to theft

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Try to avoid collecting cash

If it’s not possible – follow these simple steps to better protect the funds… and the organization’s leaders:

Always have two people count cash

Fill out and sign “Cash Turned In” form (see sample on next slide)

Handling Cash

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Sample Cash Turned In Form

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If available, treasurer counts cash with event chair or other members

Receipt for cash received is given and a copy is kept for the treasurer’s records

Deposit slip is filled out immediately and funds deposited the same day!

Handling Cash

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Petty Cash

Very specific guidelines should be spelled out in Standing Rules as to what it can be used for.

Should be approved at meetings before being issued

Require receipts and unused funds be turned in to the treasurer in a timely manner.

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Advances Advances should be approved at meetings prior

to being issued

Very specific guidelines should be spelled out in Standing Rules as to what it can be used for

Require receipts and unused funds be turned in to the treasurer in a timely manner

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Receipts are to be provided for ALL purchases – small and large

No reimbursements should be made without receipts

Reimbursement Forms should be used (see sample on next slide)

Receipts should be attached to Reimbursement Form

Paying Bills & Reimbursements

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Sample Reimbursement Form

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Personal checking accounts should NEVER be used to pay organization’s bills. Always use Unit checks!

Avoid using an on-line “bill-pay” system (paying on-line does not allow for dual signatures).

Paying Bills & Reimbursements

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What Can The Money Be Spent On?

According to the IRS…All money spent should be within the mission of the organization.

Funds can not be spent on (if a non-profit) Donations to other organizations (except to other

non-profits with the same mission)

Donations to individuals

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Treasurer’s Reports Treasury records are the property of the

organization and should be available for review whenever requested

Treasurer should provide a written report at EVERY meeting

If unable to provide a particular month – be sure to provide it the following month

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Report period should be from meeting to meeting and should include:

1. Disbursements (dates, amount, check #s, to whom checks were written)

2. Deposits (dates, amounts, what money was from)

3. Balance at time of report

If using a computer program – print out the register for that period.

Treasurer’s Reports

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Treasurer’s ReportsYear End Report

Report should include:

Starting balance

Breakdown of expenses by line item

Breakdown of income by line item

Ending balance

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Paper vs Online Banking

On-line banking

Can view/print statements at any time

More secure than receiving in mail

Can control who has access to it

Allows for more than one person to access

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Paper vs Online Banking

Paper Bank Statements

Statements should be mailed to someone other than the treasurer… OR…

Have treasurer give them to someone else each month to review

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Account Reconciliation

Records should be reconciled MONTHLY

Catches honest mistakes

Catches “foul play” more quickly

Makes monthly/yearly audits much easier

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IRS & TaxesFederal Income Tax ExemptionNon-profit organizations are not required to pay

federal income tax

HOWEVER… they ARE required to file the IRS Form 990 form. It used to be that you had to file only if your grossreceipts exceed $25,000.

(Remember – your since your unit is owned by the Charter Organization, it is their responsibility to file, not the unit’s)

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IRS & TaxesSales Tax Exemption Pennsylvania state sales tax exemption number

must be applied for (Check with your Charter Organization, they may already have an exempt status and may let you use it.)

Sales tax exemption ONLY applies towards items to be used by your organization.

Resale items are not exempt from sales tax.

Sales Tax at the Scout Shop IF your unit has an account at the Scout Shop,

MTC sales tax exempt # can be used

IF paying by check, debit, or credit Sales Tax must be paid – or Charter Organization’s sales tax exempt #

must be provided if applicable

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IRS & Taxes

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Individual Scout Accounts

Great for tracking Scout/Family fundraising activities

Having individual accounts at bank not advisable –use one bank account but allocate funds separately

Far easier to track if using financial software

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Books & Records:What to Save & For How Long

Not law… but good practice

Bank receipts – – until statement reconciliation

Check duplicates (if used) – 1 year Invoices, receipts, cancelled checks – 7 years Bank statements, treasurer’s reports,

bank ledgers – ForeverIf fraudulent activity is suspected, records can be requested back to original charter date of organization

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Books & Records:Where to Keep

Checkbook & bank slips In treasurer’s possession In secure location (locked file cabinet, etc.)

Records (bank statements/ treasurer’s reports In easily accessible location, but Safe from elements, misplacement, theft (storage

closet, file cabinet, etc.)

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When to audit books Within one month of the end of each fiscal year

Before new treasurer takes possession of accounts

Who should audit books At least 2 people who are NOT eligible to sign checks

should audit books

Hire an accountant – may give break to volunteer groups

Audits

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AuditsWhat should be provided to audit committee:

For the current fiscal year: Treasurer’s reports Bank statements & deposit slips All receipts Checkbook & register Previous audit report Budget

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How to audit books1. Match receipts against expenditures and make

sure ledger and checks issued all agree

2. Match deposit slips with cash received receipts

3. Total of balance from previous audit, plus cash deposits, less expenditures and any outstanding checks should equal the balance in the book at time of audit

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Never Sign Blank Checks!

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Reduce risk of fraud by:

Following proper fund handling procedures

Never signing blank checks

Having written money handling and control policies in place

Checking insurance policy to see if it requires prosecution in order to recover a loss

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Top reasons treasurers do not provide regular reports or turn over their records:

1. Poor record keeping – they’re embarrassed that it got out of hand - but nothing was stolen

2. No money was stolen, but no records were kept either - again, embarrassed by poor record keeping

3. Money was stolen and they’re trying to cover it up

Where are the records ?

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Suspect fraud or embezzlement?

Warning Signs Treasurer’s reports delayed or non-existent

Delayed receipts showing cash deposits

Missing supporting documents

Multiple corrections made in the bank registers

Checks bounce when there should be available funds

Lifestyle or behavior changes of staff or volunteers

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If fraud is suspected1. Do not make accusations (you may be wrong)

2. Document all allegations

3. Gather all facts

4. Identify all bank accounts involved – consider closing or freezing accounts

5. Follow the steps in your standing rules

6. Contact the authorities

7. Contact the insurance company

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Most common rationales for not to pursuing legal action

when theft is suspected We don’t want to embarrass their children

We don’t have the time to put into pursuing it

We don’t want the attention put on our organization

Maybe we should just meet privately with the individual

We can just allow them to repay the money

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Be sure to: Separate business from friendship!

Use common sense!

Take simple steps to protect your funds!

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Checklist - have in placeBefore Fraud Occurs

Follow proper fund handling procedures

Never sign blank checks

Check insurance policy to see if it requires prosecution in order to recover a loss

Have a written money handling and control policy in your standing rules

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Did I mention to …

Never Sign

Blank Checks

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