Unit Administrative Necessities What you need to know !

1. Unit Administrative NecessitiesWhat you need to know ! • Duties of Unit Treasurer • Duties of Unit Secretary • Financial Controls, Policies and Best Practices • Helpful Tips for Operating a Sound and Successful Auxiliary Unit

2. Duties of the Unit Treasurer -Responsible for all money belonging to the Unit and to account for them • Maintain and keep all ledger/financial documents • Funds should be maintained as General & Restricted. • Maintain a record of all expenses & maintain receipts where possible • Maintain a record of all funds received and issue receipts where possible • Provide a monthly financial report(income, expense, and account balance) and any other required reports deemed by the Unit.

3. Duties of the Unit Secretary -Responsibilities include: • Record the proceeding and transactions at all meetings of the Unit. • Act as custodian of all Unit books, records, minutes and documents. • Maintain records of names and addresses of members • Maintain records of Unit membership eligibility source • Correspondence to Unit membership and correspondence received from outside organizations to include Department and National Hqs • Document in minutes were expenditures were voted on and provide copy during the Units annual audit

4. Financial Controls, Policies and Best Practices • Segregation of Duties • Controls for Cash and Checks • Bookkeeping • Budgeting • Audits • EIN • 990’s • Fraud • Bonding • Incorporation

5. Separation of Duties To reduce any one person’s opportunity to both commit and conceal errors, at least two people should have responsibility for the following: • Authorizing transactions, purchase and contracts • Use a Unit voucher for all transactions which require two signatures. • At lest two people should review the general ledger and bank, credit card and investment statements • Ask bank to send a duplicate statement sent to someone other than the Unit treasurer.

6. Controls for Cash and Checks • Require receipts be maintained for anything over $25.00 • Bills should be paid in another form other than cash. A paper trail should be created wherever possible • Voided checks should be defaced and retained for Unit Audit • Secretary should be opening mail, not treasurer • List of checks incoming should be maintained so it can be compared to deposit • Bank reconciliations should be conducted every month • Review of the reconciliation should be documented and include an examination of cancelled checks

7. Bookkeeping & Budgeting • Develop a bookkeeping system that records, document and retains all financial transactions in a timely manner • Allocate revenue/expenses to the general ledger in the same manner they were budgeted or directed via written documentation • Prepare a detailed annual budget that plots out when you anticipate receiving revenue and making expenditures • Consider operating a reserves, critical to the sustainability of your unit. Reserves must be maintained with unrestricted funds and are to be used for operating and program expenses when there is a shortfall in revenue. • Review biannually the actual to budget financial reports to monitor that you are operating within the framework of the budget. Remember that a Budget is just a guideline and there are times you will have to fray from the budget.

8. Additonal Financial Controls, Policies and Best Practices • Have more than one signer on the bank Account • Bank Statements should go to someone other than the Unit Treasurer • Keep Copy of Items sent to Department and National • Maintain all financial records for a minimum of 7 years • All Unit expenditures should be covered in writing either by Policy, Standing Rules, Unit Minutes or other form of documentation. • Units are NOT sales tax exempt

9. Audits • External Audit • External Financial Review • External Compilation • Internal Audit Unit Audit: • Audit of the Unit’s General Ledger, Bank Accounts and Documentation should be conducted annually and any time the Unit Treasurer is replaced with a new volunteer. • The Audit Committee can be made of members and non-members that are appointed by the Unit President or the Unit Excutive Committee based on what is determeed in the C&B or Standing Rules

10. UNIT EIN#s • American Legion Auxilary Units that are compliant wit the IRS are under the ALA National Exemtion Number and are a Section 501 (c) (19) • Group Exemption # GEN 0964- Determination Letter • Units must obtain a Federal Identification number from the IRS; also known as a Tax ID Number or Employer Identification Number(EIN) • This must be the Unit’s ONLY. A unit can not operate under the Legion’s EIN # and cannot report under the Legion. • All Unit EINs are maintained on record at Department HQs. • Should your Unit loose its exempt status the unit may have to apply for a new EIN #.

11. Unit 990 Filing • The Unit is Required to File the 990 ePostcard online. • Create and User Name and Password • Make this report part of the Secretaries or Treasurer’s Report so more than just one person is responsible for ensuring this is completed • Form8822 –B Change of Address of Responsible Party- This must be completed if you change the person responsible for filing the 990. The IRS will only communicate with the person listed as the Responsible Party

12. Unit 990 Filing • What happens if you put your Head in the Sand and Don’t File ? • The Unit will loose is Exempt Status • The Unit will have to pay penalties and fees to reinstate its EIN. • STEPS TO REINSTATEMENT: • Call the IRS to determine you are following the proper procedures. • Complete form IRS Form 1024 • Consider using a Professional Account • Send Final Determination Letter and Inclusion Letter to Dept. HQs The deeper you hide your head in the sand, the more defenseless your butt is….

13. Fraud at the Unit • Fiduciary Responsibility=the Responsibility of Trust- To act in the best interest of the members with the highest standard of care to protect the assets and reputation of the organization. • Duty of Care- golden rule • Duty of Loyalty-put the interest of the organization above that of your own • Duty of Obedience-do what you say you will do, follow your C&B, Standing Rules and Policies Failure to fulfill these duties could result in financial liability for the Unit and personal liability for its officers and executive committee. Transparency is the Best Practice

14. When Fraud Occurs or is Suspected • The Unit must conduct an investigation • Evidence must be provided to ensure loss has occurred. • Once there is evidence, the Unit must decide how to proceed. • Notification to the Unit & to the Member • Give a Deadline • Certified Letter Stating the balance owed and date upon which the money should be returned & explain what will happen should the money not be returned • Legal Obligations of the Unit • Options: Filing Theft Charges • Filing a Bonding Claim • Membership of the Accused

15. Unit Bonding • National HQs procures a Fidelity Bond • Provides coverage for ALA Unit Members • Department, Districts and County Councils are not included. • Each Department is Billed in a Three Year Cycle for every Unit under the Department • Limits of the coverage to Unit Officers, Unit Members volunteering for the ALA Programs and Operations is $10,000 per claim with a deductible of $250.00 • Covers loss thru larceny, embezzlement, theft, forgery, misappropriation, and any other act of fraud or dishonesty caused by any member

16. Unit Bonding • As Soon as Loss is Discovered an Audit should be conducted to establish “Proof of Loss” • Notice of potential clam should be given in writing, at the earlies practical time after discovery. • It should be reported to Dept. Sec • Name of Person Suspected • Date or dates of each fraudulent or dishonest act • Brief Outline of Events, including weather it has been reported to law enforcement • Detailed Statements of items of loss • Copy of all Statements and any other evidence. • Dept. Sec will provide all information to National Hq. in writing • National HQs will forward to Insurance Agency they forward to bonding company • Investigator is assigned, and they will communicate with the Unit on the progress of the claim

17. Incorporating Your Unit The Benefits • Protects members from lawsuits against the corporate or a particular member • Protects members from being sued themselves for damages and cannot be personally to cover debts • Incorporating is not the same as tax-exemption • File For Incorporation thru the Sec of State office. There is a Fee and you must renew every 5 years.

18. Question and Answer Session