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FINANCIAL PROCEDURES. for Locals and Regions (FPLR). Handbook Sections. Administration & Fiduciary Oversight Regulatory Requirements Technical Tasks. Session Overview. FP 101: Survival! FP 102A: Need to Do FP 102B: Need to Know FP 103: Best Practices FP 104: Management Issues.
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FINANCIAL PROCEDURES for Locals and Regions (FPLR)
Handbook Sections • Administration & Fiduciary Oversight • Regulatory Requirements • Technical Tasks
Session Overview • FP 101: Survival! • FP 102A: Need to Do • FP 102B: Need to Know • FP 103: Best Practices • FP 104: Management Issues
Session Overview, continued • 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)
FP 101 Survival!
Pay the Bills • IEA dues- Pay monthly except SEPTEMBER/OCTOBER • Member reimbursement • Vendor bills 45, 50
Bills, continued • Check supply • Types of checks • Record in checkbook/Accounting system
Deposit Checks • Employer dues checks • Make sure you obtain and retain supporting detail! • Other checks • Keep copies and documentation! Appendix 6
Deposit, continued • Deposit slips- Ample supply • Deposit checks when received • Do NOT withdraw cash from deposit!
IRS Issues • Taxpayer ID Number (TIN) • Annual filing requirement • Nonemployee compensation • Unrelated Business Income 26-33, Appendix 13
Taxpayer ID Number (TIN) • “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 27
IRS Annual Reporting • 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! 28, Appendix 13
IRS Annual Reporting,continued • “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. 28, Appendix 13
IRS Annual Reporting,continued • 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
E-Postcard • Must file if not required to file 990 or 990-EZ • “Simple” electronic submission • IEA files on your behalf 28, Appendix 13
Unrelated Business Income • 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 28, Appendix 13
Form 1099-Misc • 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 29-31, Appendix 13
Form 1099, continued • Stipends: officers(W-2 vs. 1099) • Stipends: non-officers • Payment of dues for officers • Undocumented expenses: report even if under $600 29-31, Appendix 13
Form 1096 31
Political Funds • 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! 34-35
More Info for New Treasurers • There are some tips for new Treasurers on the IEA website • Click on RESOURCES • Then FINANCIAL PROCEDURES
FP 102A Need To Do
Documentation • 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 52-57
Funds Received • 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 52
Funds Disbursed • 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 53-57
Funds Disbursed,continued • 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 53-57
Record Your Transactions • 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” 38-43
Accounting Systems • One size does not fit all • Size/complexity of organization • Prior treasurer’s system • Current treasurer’s preference 38-43
Systems,continued • Your system needs to: • Record all transactions in sufficient detail • Allow you to produce financial reports efficiently • Provide a record that others can follow ` 38-43
Systems,continued • Some possibilities • Checkbook/check stubs • Cash receipts and disbursements journals • Excel/Access • Specialized accounting software (Quicken, etc.) 38-43
Bank Reconciliation • Perform and document monthly • Detects errors by the bank and/or yourself 45, Appendix 14
Filing • 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. 58
Filing, continued • 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 58
FP 102B Need to Know
Internal Controls • 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 17-18
CONTROLS,continued • List of controls, Appendix 6 • Please read the example on page 18! 17-18, Appendix 6
Controls, continued • 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 Appendix 6
Controls, continued All disbursements, except petty cash items, should be made by checks. Complete supporting documentation should be maintained. Appendix 6
Controls, continued Checks should never be made payable to “Cash”. Appendix 6
Controls, continued Checks should be paid from original vendor invoices. Appendix 6
Controls, continued Two (2) signatures are recommended on all checks. Appendix 6
Controls, continued Signing of blank checks should never be permitted. Appendix 6
Controls, continued A person other than the treasurer should receive bank statements directly from the bank. Appendix 6
Controls, continued Appendix 6
Dues Billing From IEA • 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 49-52
MEMBERSHIP CONTACT RESPONSIBILITIES • Include home e-mail 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