Finance feedback

Earlier this week, you received an email with some financial “best practices,” collected and compiled by chapter leaders from across the country. In case you missed it, here it is again:

SPJ CHAPTER FINANCES:

BEST PRACTICES

As a board member it is your legal responsibility to keep tight oversight on chapter funds – even if you aren’t the treasurer.

By understanding and implementing some of the following recommendations, you can greatly decrease your exposure to misappropriation of chapter funds and other problems.

BUT REMEMBER:

BEST PRACTICES WORK ONLY IF YOU USE THEM! IN OUR EXPERIENCE, PROBLEMS OCCUR WHEN BOARD MEMBERS SIMPLY DON’T TAKE THE TIME TO REVIEW ACCOUNTS!

INCOME & EXPENSES

  • Require two signatures on all checks. Designate another officer/board member or two as online banking administrator(s) to routinely review the account(s).
  • Circumstances may dictate that only one person, the treasurer, sign the check, but having a separate online banking administrator or two is still highly recommended.
  • Require officer approval of any expenditure over $25; board approval of any expenditure over $100.
  • Income and expenditures should remain separate in your records. If you receive $100 for a pizza party and spend $50, you received $100 and spent $50, not received a net of $50.
  • Avoid credit/debit cards; they are too easily abused.
  • If a card is necessary, check with your bank to see if you can restrict the card’s use for large expenses only. For example, more than $100 but not more than $500 or only for bills above $500.
  • Have the treasurer transfer funds from the chapter PayPal account to the chapter’s general checking account after each event for which the PayPal account is used. Have someone else monitor the account.
  • If the board votes on a money matter directly affecting a board member, that board member should recuse themselves, even leave the room to allow a full and frank discussion.
  • When depositing funds in the chapter bank account, use a “For Deposit Only” rubber stamp on the back of checks. No individual should sign a check made out to the chapter.
  • One person should fill out a deposit slip. Someone else should actually make the deposit and return the slip to the person who filled it out.

THE TREASURER’S DUTIES

The treasurer maintains the following financial records:

1.)                A paper check stub for each check written, or copy of self-duplicating check.

2.)                A computer record (Excel or Quicken) of each check written, with a detailed breakdown of specific amounts for various purposes.

3.)                Electronic and printed copy of each monthly bank statement.

4.)                A file of receipts, each notated with the check number for payment

5.)                Information needed for financial section of the annual chapter report to national.

6.)                The chapter’s federal (and state, if required) tax records, including Employer Identification Number and letter verifying tax-exempt status. SPJ chapters typically are subordinate entities of the national organization and are tax-exempt nonprofits, typically under Section 501(c)(6) of the IRS code. Some chapters are 501(c)(3). Know the difference.

The treasurer prepares and/or files these reports:

1.)                Monthly report to the chapter board, detailing income and expenses.

2.)                Financial section of annual report to national.

3.)                Annual Form 990, EZ 990 or E-card 990 with the IRS.

4.)                Any state or local forms required of nonprofits and tax-exempt organizations.

We recommend keeping critical records in a single three-ring binder as well as on your computer.

BUDGETING

  • Create a budget, using the last 5 years of expenses as a guide. Plan for the worst year.
  • Examine whether you’re on budget each quarter. Spending/fundraising over or under?
  • Monthly treasurer’s report should discuss the state of the budget. Do you need an

emergency fundraiser or cut back on spending?

  • Scholarships are an ongoing commitment. Do your best to have 10 years of funds on hand.

ABOUT THE ANNUAL REPORT

The annual report to national headquarters of your chapter’s activities requires a brief synopsis of your chapter’s finances.

  • Appoint a committee of three to review the financial section of the annual report and have its members sign a statement attesting to its accuracy.
  • The three reviewers should include the chapter president (or designee), a member of the board who is not an officer and a third party with some financial experience (e.g., a local financial reporter, a senior accounting major or local accountant willing to provide pro bono service).
  • The regional director will review the annual reports and verify with at least one member of the review panel that the chapter’s finances were reviewed.

After she had a chance to look it over, Liz Enochs, the President of the Northern California chapter, had a few important thoughts. Here’s what she had to say:

On this:
One person should fill out a deposit slip. Someone else should actually make the deposit and return the slip to the person who filled it out.

That item strikes me as impracticable. It’s challenging enough to get one person to go to the bank and make a deposit — having to coordinate w/yet another person seems like an unnecessary obstacle.
Here’s what our chapter does: We have two signers on our account – the president (me) and the treasurer. Anytime I make a deposit I have our bank email a copy of the deposit slip to myself and the treasurer, and if further explanation is warranted, I email that to the treasurer.
On this:
Require officer approval of any expenditure over $25; board approval of any expenditure over $100.

I understand the sentiment, which is that oversight and constraints are needed, but that has to be balanced against the possibility of nickel-and-dime approval requirements turning things into a bureaucratic nightmare. Rather than following a specific-dollar-amount mandate from national, I would say the important thing here is for the full board to be involved in monitoring finances and setting limits and guidelines on how chapter money is to be spent.

Do you have thoughts you need to share? Post a comment here! We’d love to hear from you.

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