Page 34 - The EDGE Spring 2022

FRAUD

BY DAVID DODENHOFF
Protecting Booster Club and PTO Finances

David Dodenhoff

Booster clubs and parent-teacher organizations, organizational business. There should be at least
or PTOs, are a great way for parents to get two non-student signatories on the account, and
involved in their kids’ education. Because signature authority should be reviewed once a
these groups are often engaged in fundraising, year.
it’s important to make sure they have proper
protections in place against financial abuse. In When the organization is ready to start handling
this article, we’ll talk about safeguards that can funds, it should have sound bookkeeping
help PTOs and booster clubs minimize risk and practices in place. These can include all of the
maximize their chances for success. following:

Let’s start with getting the organization set up • Preparing, adopting, and monitoring an
properly. It should have all of its paperwork filed organizational budget.
and in good order with the Arizona Corporation • Establishing procedures for the handling,
Commission, the Arizona Secretary of State’s accounting, and disbursement of funds, such
Office and the Arizona Department of Revenue. as: approval processes for spending; ledger/
Not every group will have to file with each journal entries; check-writing and contract-
of these agencies, but it’s important for new signing authority; payment of vendors,
entities to check filing requirements when suppliers, and routine expenses, etc.
they’re starting up.
• Making sure there is clear, accurate
documentation of every financial transaction
“There should be at least two non- in the organization’s ledger or journal.
student signatories on the account, • Reconciling bank statements with the
and signature authority should be organization’s own financial records once a

reviewed once a year.” month or once a quarter.
• Preparing, reviewing, and approving a
treasurer’s report for each official meeting of
Next, the organization needs to get off on the
right foot with respect to finances. It should the organization.
make sure it has its own tax identification • Establishing policies for maintenance and
number issued by the IRS. Organizations safeguarding of bookkeeping records (these
interested in tax-exempt, nonprofit status will should include policies for access control,
have some extra hoops to jump through. This password updating, maintenance of backup
section of the IRS website, dedicated to charities files, and record retention).
and nonprofits, is a good starting point: https://
www.irs.gov/charities-and-nonprofits. The organization will also want a strong set
of internal controls to reduce the risk of fraud
Another important preparatory step is to set and abuse. This is important not just for the
up a dedicated bank account used solely for obvious reason — protecting organizational
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34 THE EDGE SPRING 2022