It’s Time for Your PTA Mid-Year Audit/Financial Review!

By Laura Ann Hawk-Loya, California State PTA Treasurer

Your bylaws state that you should be conducting twice yearly audits of your financial records. For most PTAs that means you have a mid-year audit coming up (double check your bylaws if you are not on a July 1- June 30 fiscal year). A financial review is required by both our insurance company and the California Attorney General’s office to ensure that PTA funds are being spent on things that the association has approved and that the money is being accounted for correctly and transparently. Failure to perform these reviews can result in the insurance company not paying claims if theft or mismanagement of funds is suspected.

A PTA audit is not a true audit. It is a review of financial procedures and records but does not fall under GAAP (Generally Accepted Accounting Principles) rules and regulations. As a result, we will be changing the terminology in the next few months but the procedures themselves will be largely unchanged.

Who can perform the audit?

Our insurance company requires a qualified accountant to perform the audit but only if they are going to do it without a review committee to double check their work. AIM defines “qualified”  as someone who has been professionally trained/licensed to perform audits such as a CPA or other professional accountant. They do not need to be currently employed in the field. A bookkeeper/bank employee is generally not trained to do auditing.

A person who is not a qualified accountant may still be the auditor. Their findings must be reviewed by an audit review committee. Your audit review committee can be made up of a combination of non-check signers and check signers as long as the majority are non-signers. The treasurer/financial secretary should not be a member of the committee as you cannot audit your own books.

The audit review committee appointment (and the auditor appointment if not elected to the position) must be ratified at the first general association of the year and their names should be recorded in the minutes.

What is the auditor reviewing?

As the auditor, you will use the audit review checklist to examine both the treasurer’s books and those of the financial secretary (if you have one). You will markoff items as you review them and make notes of any missing items. You will add up the total income and disbursements and fill out the audit report form. Make sure you are adding up the actual deposit slips and check requests (and checking receipts) to come up with your totals, and that you are not just going by what it says on the bank statements.

Once you are done, present the report and any findings that need to be taken care of to the executive board if you are a qualified accountant (or to the review committee first if you are not). Once the committee and board have approved it, you will present it to the general association at your next meeting. Copies of the report should be uploaded to MyPTEZ for safekeeping.

For further information check out:

Why Wednesday? 1/29/20: The Importance of Compliance

Compliance, Compliance, Compliance! I know, we sound like a broken record, but unfortunately it is the number one way your non-profit can have big problems. Time for us to explain what the compliance documents are and why they are so important!

Compliance documents are the legal documents required by several governmental agencies in the state of California. These documents include:

  • The 199 – a tax return for the Franchise Tax Board
  • The 990 – the tax return for the Internal Revenue Service
  • A Charitable Trust Renewal (RRF-1) for the Attorney General’s Office
  • An Annual Financial Report for the Internal Revenue Service 

To remain a legal, functioning entity in our state, you need to produce these documents every year, within four months and 15 days of the end of your fiscal year. (Example: If your PTA’s fiscal year runs July 1 through June 30, these documents are due no later than November 15th.)

The Annual Financial Report is an IRS requirement which basically shows how a non-profit earned money and how they spent it. It could also be considered a budget-to-actual report from your accounting records. This report is most helpful when you go to do your taxes, as it should have the major information that you need.  

There are different versions of the tax returns for the IRS and Franchise Tax Board. If you are uncertain about which version of each you are required to file, our Tax Filing Support Center has the most up to date information.

For the 2019-20 tax filing year, the Attorney General has added a new form: the CT-TR-1. Every non-profit in the state which makes under $50,000 will need to fill out this form for this new tax year, to be filed with your RRF-1 – Charitable Trust Renewal. Look at our website and follow us on social media to get the information you need to stay compliant and fill out this new form. We are planning webinars and trainings throughout the coming months to help our PTA units, councils and districts learn how to fill out these forms.

For those of you who think that only PTA’s are required to fill out these forms, that is not correct. Every non-profit in the state of California, from those making as little as a few dollars per year to those earning millions, must be compliant and file these forms. The big difference between PTA and most other non-profits is that you have a support system to help you navigate all these requirements. 

There is one document required from every unit, council and district that is not mandated by the government, but is a PTA requirement (and required by our insurance company), and that is the twice-yearly audit. Every six months, a qualified CPA or a member of the PTA, with a committee, should review the records of the treasurer and produce a report. The audit report should then be presented to the executive board members and then finally adopted at a general association meeting. Full details on the audit requirements are available at

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