The IRS examines the records of PTAs on a random sampling basis.
The notification of an IRS audit of the PTA records will include a
list of items that must be made available. If a PTA letter of exemption
is required, the state office will furnish a copy upon request.
Do not make any implicit, explicit, oral or written statements or
accusations.
A notification of intention to audit from the IRS should not be cause
for panic. All PTA financial records should be kept up-to-date, so
that an audit can be conducted without a problem. If contacted for
an IRS audit, notify the council and NC State PTA treasurers. After
the audit is completed, provide the NC State PTA treasurer with the
results.
Mismanagement of funds refers to the potential loss of PTA funds
and raises questions about the integrity of the individual(s) in charge
of the PTA funds. PTA funds are protected by following correct financial
procedures. The PTA executive board must safeguard the association’s
assets and potentially clear the individuals who may be involved.
There are several signs of possible mismanagement: lack of receipts
and/or treasurer’s reports; payments made in cash rather than
by check; missed meetings by financial officers; and unanswered phone
calls or mail. However, these are merely signs, not proof of wrongdoing,
so be discreet. Do not make any implicit, explicit, oral or written
statements or accusations. Such actions could result in a lawsuit
for libel or slander.
PROCEDURE
With guidance from the council and NC State PTA, review the information,
and determine the appropriate course of action.
Call a special meeting of the unit executive board and principal
to confidentially review the facts and determine the actions to be
taken.
Exclude the individual(s) who might be involved in the mismanagement
of funds.
Notify the council PTA president of the scheduled meeting date,
so they can attend. The president will invite the council PTA treasurer
to attend, if necessary.
Convene the meeting.
Instruct the secretary to take minutes of the special meeting. These
minutes must reflect all actions authorized by the executive board.
However, be careful not to accuse any specific individual. File these
minutes with the minutes of the executive board.
Review the information presented. Conduct the discussion. A motion
and vote are needed to authorize any proposed action(s), which could
include:
- Obtaining the books and financial records from the treasurer;
- Requesting the bank to freeze the account pending the results
of an audit. Provide the bank with a statement from the executive
board authorizing the bank to take such action;
- Appointing appropriate person(s) to audit the books and records
of the unit immediately and thoroughly; or
- Adjourning the meeting. Remind all present that the matter is
confidential and must not be discussed.
When an audit is authorized, obtain a written report from the auditor
and call a second special meeting of the executive board and the principal
to review the audit findings. Evaluate the audit findings to determine
if there are indications of carelessness or inaccurate or improper
record keeping or the more serious matter of missing funds.
If the results of the audit indicate that money is missing from
the account, the executive board shall notify the council or district
PTA president immediately and file a complaint with the local law
enforcement agency or district attorney’s office requesting
an investigation.
- Provide copies of all substantiating documents;
- Request appropriate legal action; and
- Request direction as to the next steps, including meeting with
the individual(s) concerned to discuss the results of the audit.
Do not make a direct accusation. Do not accept any offer of direct
repayment from an individual, unless so instructed by the district
attorney’s office.
REMOVING THE OFFICER
Consult with the council and NC State PTA prior to beginning the
following process.
If removing the officer from office is a consideration, the executive
board must make a formal request through channels to the council/state
PTA for assistance in determining whether a hearing should be conducted
to remove the officer from office before proceeding with any action.
The council/district PTA hearing panel following a two-thirds (2/3)
affirmative vote, may recommend that the executive board meet and
remove the officer from office.
PROSECUTING THE CASE
The district attorney’s office will weigh the evidence and
determine whether to proceed with the case and whether to detain the
alleged suspect.
Embezzlement, the stealing of money entrusted into one’s care
by means of fraud for one’s own use, is considered to be the
same as theft under the law. Criminal charges must be filed with the
police or sheriff’s department.
If it is determined that embezzlement or misappropriation has probably
occurred, be careful not to commit a crime known as compounding. Compounding
is a form of extortion that occurs when one says to someone, “I
will not turn you into the police provided that you do the following”.
Seek advice from the district attorney’s office on ways to avoid
compounding.
Guidelines for the Local Unit PTA Treasurer