Taking Care of Business Overview

Transcription

1 Taking Care f Business Overview Bster Club Infrmatin Sheet List f Officers Financial Reprt Infrmatin & Frmats Review Cmmittee Reprt Infrmatin & Frmats Day-t Day Respnsibilities The Internal Auditrs and individuals assciated with the Pasadena Independent Schl District are nt an authrity n tax-related r accunting situatins cncerning Parent Organizatins, Bster Clubs and Exempt Organizatin. Parent Organizatin, Bster Clubs, and Exempt Organizatins shuld btain cmpetent independent cunsel cncerning tax and accuntingrelated circumstances. 113

2 Taking Care f Business Overview Bster Clubs have many respnsibilities t the federal gvernment, the state, the District, and t the students they supprt. Part f this respnsibility is t keep accurate and updated recrds s that the rganizatin may cmplete the necessary filing requirements with the state and the IRS. In additin, these recrds will help yu prepare yur annual Financial Reprt and Review Cmmittee Reprt due t the Principal and the Internal Auditr by September 30 th, f each year. With this in mind, this sectin has been prepared t assist yu in establishing a general recrdkeeping system and a general system f internal cntrls, and t guide yu in preparing the Financial Reprt and related Review Cmmittee Reprt. Establishing a gd recrd-keeping system is an essential step in creating a successful rganizatin. Mst f the reprting requirements f a Bster Club are dependent n the financial recrds kept; therefre, the ffice f Bster Club Treasurer is an extremely imprtant and vital psitin that shuld nt be taken lightly. Even thugh the Treasurer may assign certain duties t anther persn (i.e., Fundraiser Chairpersn Catalg Sales), the Treasurer is ultimately respnsible fr assuring that all financial recrds are maintained accurately fr the Bster Club. Bster Club fficers als have day-t-day respnsibilities t the club, as well as the students they supprt. Sme f these respnsibilities include: Setting up a bank accunt prperly, Accunting prperly fr fund-raiser incme and expenses, Analyzing the utcme f each fund-raiser t determine its financial success/failure, Establishing and maintaining mney handling prcedures, and Becming knwledgeable f District plicies cncerning using District buildings and distributing flyers. In additin, Bster Clubs shuld submit certain infrmatin t the Internal Auditr and t the Principal as sn as the infrmatin changes. This infrmatin is included n the fllwing Bster Club Infrmatin Sheet. 114

3 Parent Organizatin/Bster Club Infrmatin Sheet Send an updated cpy f this frm t the Internal Auditr and t yur Schl Principal r Administratr as new fficers are elected r as infrmatin changes. 1. Official Bster Club Name: 2. Schl Name: 3. Spnsr s Name: 4. Emplyer Identificatin Number (EIN): 5. Official Mailing Address: PO Bx / Street Address: City, State, Zip: 6. Date f Change: / / 7. Current Bster Club Officers fr the Schl Year: Office Held: Printed Name: Mailing Address: Phne Numbers: Hme: Wrk: Cell: Address: Office Held: Printed Name: Mailing Address: Phne Numbers: Hme: Wrk: Cell: Address: By law, infrmatin n this page is public infrmatin and must be released t the public at such requests. 115

4 Parent Organizatin/Bster Club Tax-Exempt Status Send an updated cpy f this frm t the Internal Auditr by September 30 f each year r as infrmatin changes Federal Tax-exempt Status: Fr the Schl Year Determinatin Letter frm IRS granting 501(c)(3) status is already n file with the Internal Audit Department. Received Determinatin Letter frm IRS granting 501(c)(3) status. (Send a cpy f the Determinatin Letter t the Internal Auditr with this frm.) Received Acknwledgement f Yur Request frm IRS stating apprval in prgress. (Send a cpy f the Acknwledgement f Yur Request t the Internal Auditr with this frm.) Mailed cmpleted Frm 1023 & payment t IRS n / /, but have nt received any dcumentatin frm them yet. Currently cmpleting Frm 1023 and will mail t IRS by / /. Cntact persn fr further infrmatin n status is: Printed Name: Phne Number Have nt started the federal tax-exempt prcess. Submitted by: Printed Name Signature Officer Title / / Date Thank yu fr yur respnses!! 116

5 Financial Reprt Infrmatin & Frmats Each year Bster Clubs are required t submit a written reprt f actual revenues and expenditures (Financial Reprt) fr that schl year t the Schl Principal and t the District's Internal Auditr by September 30 th, f the fllwing year. The Treasurer f the Bster Club shuld prepare the Financial Reprt and shuld ensure that the Financial Reprt includes: Name f schl, name f Bster Club, and the time perid cvered in the reprt. Actual revenues and expenditures fr the applicable schl year. The current year reprt shuld start at the pint in time where the prir year reprt ended. Fr example, if the reprt ended n June 30, 2010, then the reprt will begin as f July 1, Since clubs may start their new year at varius times, the time perid used fr reprting actual revenues and expenditures may vary frm club t club; hwever, the individual Bster Clubs shuld try t be cnsistent in the time perid they use frm year t year. Name, title, and signature f persn wh prepared the reprt. Date the reprt was prepared. The Bster Club may want the time perid used fr reprting purpses t cincide with the electin f new fficers. If new fficers nrmally cme int ffice May 1, f each year, the time perid fr the Financial Reprt may be frm May 1, t April 30, f the fllwing year. The fllwing examples f Financial Reprts are included in this handbk: Type 1 - This example is a cash basis financial reprt that includes the beginning and ending cash balances fr the year. Mney received is usually shwn as incme and mney paid is usually shwn as an expense. The beginning cash balance fr the current year shuld agree t the ending cash balance frm the prir year. Type 1 reprt frmat is the simplest t prepare Type 2 - This example is an accrual basis financial reprt that includes assets, liabilities, equity, incme, and expenses. This reprt wuld include the cash transactins, but wuld als shw amunts t be received r amunts t be paid in which mney has nt yet been exchanged, prepayments f expenses that have nt yet been incurred, r receipt f amunts in which incme is nt yet recgnized. The retained earnings amunt shuld agree t the ttal equity amunt frm the prir year. 117

6 XYZ High Schl Spirit Bster Club CASH BASIS FINANCIAL REPORT Frm July 1, 2010 thrugh June 30, 2011 Type 1 Page 1 f 1 Beginning Cash Balance as f July 1, 2010 $ 5, INCOME Cncessin Stand Sales $ 3, Fall Dance $ 2, Membership Dues (225 members) $ 5, Prgram Ad Sales $ 9, Unifrm Incme (212 new unifrms rdered) $ 9, Ttal Incme $ 31, EXPENSES Cmpetitin Trip Expense $ 8, Cncessin Stand Supplies $ 1, Fall Dance Expense $ 2, Miscellaneus Supplies $ Pstage $ Prgram Ad Expenses $ 1, Schl Dnatin (Sund System) $ 4, Unifrm Expense $ 9, Ttal Expenses $ 28, Net Incme (Lss) fr Current Year $ 2, Ending Cash Balance as f June 30, 2011 $ 8, Cash Basis Financial Reprt prepared by: Printed Name Title Signature / / Date 118

7 XYZ High Schl Spirit Bster Club BALANCE SHEET As f June 30, 2011 Type 2 Page 1 f 2 ASSETS BankOne Checking Accunt $ 2, BankOne Savings Accunt $ 5, Accunts Receivable $ 3, Prepaid Strage Rent $ TOTAL ASSETS $11, LIABILITIES & EQUITY Liabilities Accunts Payable $ 3, Deferred Membership Incme $ Schlarship Payable $ 1, Ttal Liabilities $ 5, Equity Retained Earnings $ 1, Net Incme (Lss) Frm Current Year $ 4, Ttal Equity $ 6, TOTAL LIABILITIES & EQUITY $11, Balance Sheet and Incme Statement prepared by: Printed Name Title Signature / / Date 119

8 XYZ High Schl Spirit Bster Club INCOME STATEMENT Fr the Perid f July 1, 2010 thrugh June 30, 2011 Type 2 Page 2 f 2 INCOME Catalg Sales $9, Dnatins $2, Interest Incme $ Membership Dues (100 members) $2, Unifrm Incme (22 new unifrms rdered) $ Ttal Incme $14, EXPENSES Banquet $1, Catalg Sale Expense $3, Pstage $ Schlarships $2, Strage Rental $ Supplies $ Unifrm Expense $ Ttal Expenses $ 9, Net Incme (Lss) Fr Current Year $ 4,

9 Review Cmmittee Reprt Infrmatin & Frmats Each Bster Club is required t have an rganizatinal cmmittee cnduct an annual review f the rganizatin's Financial Reprt and the related financial activity fr the schl year. The review cmmittee may be tw types: internal r external. An internal review cmmittee includes fficers (nt the President r Treasurer) and club members; hwever, the cmmittee shuld have at least half nnfficer members review the infrmatin. A CPA r ther legal cunsel may perfrm an external review at the Club s expense. The rganizatinal review cmmittee, whether internal r external, must prepare a written Review Cmmittee Reprt that cmmunicates the results f the review t the rganizatin. IMPORTANT The Treasurer(s) [and Assistant Treasurer(s), if applicable] shuld nt be n the Review Cmmittee. Since they are reviewees, they cannt als be the reviewers. Hwever, they may meet with the cmmittee r external reviewer t explain their recrds r answer questins. The audit cmmittee shuld nt be made up f the same peple every year. The Spnsr, Spnsr s spuse, r Officer s spuse can nt be the designated nn-fficer member f the Review Cmmittee. They may be part f the Review Cmmittee; hwever, they wuld nt be cnsidered nn-fficers fr the purpse f the review. The audit cmmittee shuld include at least the fllwing number f members, based n the membership in the Bster Club rganizatin: Less than 50: Tw Members 50-99: Three Members : Fur Members : Five Members 300+: Six Members An internal Review Cmmittee shuld use the examples f Review Cmmittee Reprts included n the next few pages. Hwever, an external party shuld shw the results f the review in their wn reprt frmat with their signature and date included. Althugh the examples included shw space fr fur (4) members, the Club may have mre r fewer cmmittee members. Hwever, the same infrmatin must be dcumented fr each cmmittee member (as ppsed t the grup as a whle), regardless f the size f the cmmittee. The Bster Club Review Cmmittee Reprt examples include: Optin A - Review was perfrmed with n exceptins nted; therefre, the Financial Reprt appears prper and crrect. Optin B - Review was perfrmed with immaterial exceptin(s) being nted. The Financial Reprt was either crrected r exceptins did nt have a material effect. Except fr these minr exceptins, the Financial Reprt appears prper and crrect. Optin C - Review was perfrmed with material exceptin(s) being nted. Because f the material exceptin(s), the Financial Reprt is nt prper and crrect. 121

10 In sme instances, due t material exceptin(s), the cmmittee may nt be able t determine whether the Financial Reprt is prper and crrect. When this situatin ccurs, the cmmittee may state that the status f the Financial Reprt culd nt be determined because f material exceptin(s). Suggested Review Cmmittee Guidelines The fllwing suggested guidelines are designed t assist the Bster Club Review Cmmittee in cnducting a thrugh review f the Bster Club's Financial Reprt and the financial activity fr the applicable schl year. Have the Treasurer prepare the written reprt f revenues and expenditures (Financial Reprt) fr yur Bster Club. The reprt shuld include infrmatin fr the full applicable year. The review must cver the perid beginning with the recnciled cash balance frm the previus written Financial Reprt and ending with the recnciled cash balance frm the last day f the time perid reprted by the Bster Club. If the Club is using a retained earnings accunt, then the beginning retained earnings shuld equal the prir year s ending retained earnings balance plus/(minus) net incme/(lss). Review the recnciled bank statements and canceled checks t determine that: 1. Disbursements have been prperly dcumented with an invice r receipt, 2. Disbursements have been prperly apprved, 3. Checks have been prperly signed, 4. Checks have been depsited r cashed by the payee indicated and that n infrmatin n the face f the check has been altered, and 5. Checks have been accunted fr in the prper sequence (n missing checks). Check additin and subtractin n cash receipts and depsits. Cmpare cash receipts and depsits t the bank statement. Verify that receipts and disbursements were recrded t the crrect accunt categry. Review the Treasurer's mnthly reprts and check them fr accuracy. Review the beginning and ending balances n reprts t verify that crrect ending balances were carried frward as beginning balances n subsequent reprts. Determine that nly applicable Bster Club fficers are authrized signers n the bank accunt(s). Frmer fficers shuld nt remain n the accunt(s) as authrized signers. Emplyees f the District, including, but nt limited t, administratrs, administratrs secretaries, and bkkeepers, shall nt have cntrl r signature authrity ver bster club r parent rganizatin funds at the schl at which he r she wrks, including petty cash r miscellaneus discretinary funds. All individuals must have a child in the rganizatin t have cntrl r signature authrity ver bster club r parent rganizatin funds, including petty cash r miscellaneus discretinary funds. Determine that the caches and directrs f UIL academics, athletics, and fine arts were nt given mre than $300 in mney, prduct(s), r service(s) in recgnitin fr caching, directing, r spnsring UIL activities during a calendar year. Obtain prf that all applicable sales tax reprts were submitted t the Texas State Cmptrller s Office and that the related taxes were paid. Determine which tw fund-raisers were chsen t be the ne-day, tax-free sales/auctins, if applicable. Only Bster Clubs that have received a limited exemptin frm the Texas State Cmptrller s Office are allwed tw (2) ne-day, tax-free sales/auctins per calendar year. 122

11 Review the tax-exempt status f the Bster Club t determine that the Club has received and maintained its federal tax-exempt status as a public 501(c)(3) charitable rganizatin r ther tax-exempt status deemed by the IRS. Determine that either 1. Frm 990 r 990-EZ has been filed prperly with the IRS fr the prir schl year if the Club is a tax-exempt charitable rganizatin with at least $25,000 in grss revenues, r 2. Frm 1120 has been filed prperly with the IRS fr the prir schl year if the Club is nt tax-exempt. Determine that a tax-exempt Bster Club has nt used individual accunts, which credit funds raised t individual students r parents. Verify that 1099s were issued, if applicable. In general, yu may have t issue a MISC (Miscellaneus Incme) fr each persn t whm yu have paid at least $600 in rents, services, prizes & awards, attrney fees, and ther similar situatins within a calendar year. Example: High-Kick Drill Team Bster Club hires a cnsultant during the Spring f the schl year fr a $300 fee. The cnsultant is hired again in the Fall f fr a $300 fee. The Bster Club shuld issue a 1099-MISC frm t this persn since the ttal paid within the 2010 calendar year is $600. After the review is cmplete, prepare the applicable Review Cmmittee Reprt (nly ne reprt type may be used per review): Optin A N Exceptins Financial Reprt appears prper and crrect (i.e., errrs, irregularities) Optin B Immaterial Exceptins Financial Reprt appears prper and crrect, except fr sme immaterial exceptins Optin C Material Exceptins Financial Reprt des nt appear prper and crrect because f material exceptin(s) r Financial Reprt status cannt be determined because f material exceptin(s) If exceptins are nted during the review, cnsult with the rganizatin's Treasurer and President (if necessary) t reslve the exceptin(s). The Treasurer is respnsible fr making any crrectins t the recrds, checkbk, and Financial Reprt. If material exceptins have been nted, prepare recmmendatins t prevent the future ccurrence f these exceptins. The rganizatin's Treasurer and President are respnsible fr acting upn the recmmendatins made by the Bster Club Review Cmmittee. Retain the riginal written Bster Club Financial Reprt and the riginal Bster Club Review Cmmittee Reprt n file with the Treasurer f the Bster Club. Submit ne cpy f yur Bster Club Financial Reprt alng with the Review Cmmittee Reprt t the Schl Principal and anther cpy f these items t the District's Internal Audit Department. 123

12 Optin A XYZ High Schl Spirit Bster Club REVIEW COMMITTEE REPORT FOR THE TIME PERIOD July 1, 2010 thrugh June 30, 2011 Page 1 f 1 (prper & crrect with n exceptins) The Review Cmmittee members named belw have reviewed the attached Financial Reprt and related financial activity fr the time perid f July 1, 2010 thrugh June 30, 2011, in detail. These members agree that the Financial Reprt and the related financial activity are prper and crrect t the best f their knwledge. N exceptins were nted during the review. / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date Nte: If a reviewer is a nn-fficer, their title (secnd clumn) shuld be Member. 124

13 XYZ High Schl Spirit Bster Club REVIEW COMMITTEE REPORT FOR THE TIME PERIOD July 1, 2010 thrugh June 30, 2011 Optin B Page 1 f 1 (prper & crrect with immaterial exceptins) The Review Cmmittee members named belw have reviewed the attached Financial Reprt and the related financial activity fr the time perid f July 1, 2010 thrugh June 30, 2011, in detail. These members agree that the Financial Reprt and the related financial activity are prper and crrect, except fr the fllwing exceptins: Check #12586 cleared the bank fr $25.20 instead f $2.52. Check #12688 did nt have 2 authrized signatures as required by the Bster Club by-laws. The check nly cntained 1 authrized signature. The Prgram Ad Expense accunt cntains six expenses that did nt have the related invices as dcumentatin fr the expense. The undcumented expenses ttaled $ / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date Nte: If a reviewer is a nn-fficer, their title (secnd clumn) shuld be Member. 125

14 XYZ High Schl Spirit Bster Club REVIEW COMMITTEE REPORT FOR THE TIME PERIOD July 1, 2010 thrugh June 30, 2011 Optin C Page 1 f 1 (nt prper r crrect due t material exceptins) The Review Cmmittee members named belw have reviewed the attached Financial Reprt and related financial activity fr the time perid f July 1, 2010 thrugh June 30, 2011, in detail. These members agree that the Financial Reprt and the related financial activity are nt prper and crrect, due t the fllwing material exceptins: N dcumentatin f cst existed fr the 100 new unifrms purchased. Checking and savings accunts were nt recnciled during the year. Only ne (1) authrized signature appeared n all checks written instead f the tw (2) required authrized signatures as indicated in the Bster Club by-laws. N dcumentatin exists shwing sales fr the Christmas Cards sld t determine whether the amunt recrded in the Financial Reprt is crrect. T prevent the abve exceptins frm ccurring in the future, the fllwing steps shuld be taken: Dcumentatin f all expenses, such as an invice, shuld be received prir t payment f expense. Dcumentatin shuld be kept with the ther Bster Club recrds. All bank accunts shuld be recnciled n a mnthly basis. All checks issued shuld be signed by at least tw authrized fficers. Fr all fund-raisers, a recrd shuld be kept f the sales and the mney depsited. / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date / / Printed Name Officer Title/Member Signature Date Nte: If a reviewer is a nn-fficer, their title (secnd clumn) shuld be Member. 126

15 Day-t-Day Respnsibilities S far, we ve cvered varius aspects f the majr decisins that Bster Clubs have t make regarding incrpratin, tax-exemptin, financial reprting, and ther District requirements. Therefre, this sectin is dedicated t the many day-t-day issues that face a Bster Club such as fund-raising, mneyhandling, and internal cntrls. These tpics are cvered alphabetically as fllws: 1) Accunting Prcedures 2) Bank Accunts 3) Building Use 4) Cntributins a) Received b) Quid Pr Qu Cntributins Received c) Given 5) Financial Aid Guidelines 6) Flyers 7) Fund-raising a) Bard Plicy b) IRS Regulatins c) Analysis f Fund-Raiser 8) Mailing Address 9) Membership Dues 10) Mney-Handling Prcedures a) Receiving Mney b) Recrding and Depsiting Mney c) Disbursing Mney d) Safeguarding Mney 11) Raffles 12) Recrd Retentin 13) Student Fines and Fees List 14) Vlunteer Hurs Accunting Prcedures Bster Clubs shuld include written instructins n the recrding f accunting transactins in their by-laws, such as accunting methd (cash vs. accrual), number f authrized signers n the bank accunt(s) and number f authrized signatures required fr each check. All transactins shuld be recrded in the Bster Club s financial recrds. The Bster Club bks and bank accunts shuld be recnciled mnthly. Bster Clubs may prvide supprt t their student grup in tw manners: a) Bster Club members raise funds fr a student grup. Funds are depsited int the Club s bank accunt. The Club writes a check t the schl where the student grup is lcated. The schl depsits the funds int the student grup s activity fund. The funds 127

16 then belng t the members f the student grup, t be spent at their discretin (under the supervisin f the Spnsr). All accunting and safeguarding f the funds is the respnsibility f the schl, nce the schl has received the funds. The IRS prefers that 501(c)(3) rganizatins use this methd, since it prvides the cleanest prcedure t track hw the Bster Club spends its revenues. Using this methd, the Bster Club s Financial Reprt wuld shw a clear path f revenues generated and expended exclusively fr its purpse, t supprt a student grup. In additin, this methd reduces the amunt f paperwrk and respnsibility fr the Bster Club related t the accunting fr the revenues and expenses f the student grup. b) Bster Club members raise funds fr a student grup. Funds are depsited int the Club s bank accunt. The Club writes checks t the individual vendrs fr the expenses related t the student grup thrugh their bank accunt. In additin, they cllect amunts due frm the students fr each event/cmpetitin/trip in which the student grup participates. In additin, the Club tracks wh has paid and wh still wes mney fr each event and ensures that all balances are paid in full befre the event ccurs. All accunting and safeguarding f the funds is the respnsibility f the Bster Club. Bank Accunts Bster Clubs shuld set up a bank accunt with the Bster Club s EIN number nly. A persn s scial security number r the District s EIN number shuld nt be used t set up a bank accunt. See the Federal Regulatry Infrmatin sectin fr further infrmatin. Accrding t Bard Plicy GE (Lcal), Emplyees f the District, including, but nt limited t, administratrs, administratrs secretaries, and bkkeepers, shall nt have cntrl r signature authrity ver bster club r parent rganizatin funds at the schl at which he r she wrks, including petty cash r miscellaneus discretinary funds. All individuals must have a child in the rganizatin t have cntrl r signature authrity ver bster club r parent rganizatin funds, including petty cash r miscellaneus discretinary funds. The District recmmends that at least tw authrized signatures be required fr each check written t assist in establishing gd internal cntrls ver check disbursements. If a Bster Club requires tw signatures fr check disbursements, the bank accunt(s) shuld have at least three authrized signers t allw at least ne back-up signer if ne f the regular signers is nt available. Bank accunt(s) shuld be recnciled mnthly. 128

17 Cntributins/Dnatins a) Received Bster Clubs may receive mnetary r nn-mnetary cntributins frm individuals r businesses. In additin, thse Bster Clubs that have received a Determinatin Letter frm the IRS granting 501(c)(3) tax exemptin are allwed t receive tax-deductible cntributins in accrdance with IRS Regulatin 170. T allw the individuals r businesses t deduct these cntributins n their tax returns, the Bster Club must send them a cpy f the Club s Determinatin Letter indicating that the Bster Club is a 501(c)(3) rganizatin. If yur Bster Club is nt a 501(c)(3) rganizatin, cntributins r dnatins are nt taxdeductible. In additin, yu must infrm the individual r business that the cntributins r dnatins are nt tax-deductible. REMEMBER 501(c)(3) is the nly IRS tax-exempt categry that allws cntributins t be tax-deductible n the cntributr s tax return. Fr cntributins received, the Bster Club may want t send a thank yu nte alng with a cpy f the Determinatin Letter. The thank yu nte may indicate what was cntributed r dnated. If the gift is mnetary, yu may indicate the dllar amunt. If the gift is nt mnetary, the estimated value shuld nt be included in the thank yu nte. It is the respnsibility f the individual r business that prvided the gift t determine the value that they wuld reprt n their tax return. Even thugh cntributins r dnatins received will ultimately supprt the student grup at a schl, the gift is still cnsidered t be a gift t the Bster Club and nt t the schl r t the District. b) Quid Pr Qu Cntributins Received Accrding t the IRS, a charitable rganizatin, such as a Bster Club that is a501(c)(3) rganizatin, must prvide a written disclsure statement t dnrs wh make a payment, described as a quid pr qu cntributin, in excess f $75. A quid pr qu cntributin is a payment made partly as a cntributin and partly fr gds r services prvided t the dnr by the charitable rganizatin. An example f a quid pr qu cntributin is where the dnr gives a Bster Club $100 in cnsideratin fr a cncert ticket valued at $40. In this example, $60 wuld be deductible. Because the dnr s payment (quid pr qu cntributin) exceeds $75, the disclsure statement must be furnished, even thugh the deductible amunt des nt exceed $75. Separate payments f $75 r less made at different times f the year fr separate fund-raising events shuld nt be aggregated fr the purpses f the $75 threshld. 129

18 c) Given The required written disclsure statement must: 1. infrm the dnr that the amunt f the cntributin that is deductible fr federal incme tax purpses is limited t the excess f any mney (and the value f any prperty ther than mney) cntributed by the dnr ver the value f gds r services prvided by the charitable rganizatin, and 2. prvide the dnr with a gd-faith estimate f the value f the gds r services that the dnr received. The charitable rganizatin (Bster Club) must furnish the statement in cnnectin with either the slicitatin r the receipt f the quid pr qu cntributin. If the disclsure statement is furnished in cnnectin with a particular slicitatin, it is nt necessary fr the rganizatin t prvide anther statement when the assciated cntributin is actually received. A penalty is impsed n charitable rganizatins that d nt meet the disclsure requirements. Fr failure t make the required disclsure in cnnectin with a quid pr qu cntributin f mre than $75, there is a penalty f $10 per cntributin, nt t exceed $5,000 per fund-raising event r mailing. When the Bster Club cntributes directly t the student grup, the Club shuld receive a Taxexempt Status/Dnatin Acknwledgment Frm frm either the schl r the District. A District emplyee shuld cmplete the frm and give the riginal cpy t the Bster Club fr their recrds. Example: Yippee Bster Club is funding a prtin f a student grup s trip fr a cmpetitin. The trip csts $50,000, and the Bster Club has agreed t pay $35,000 f the expense. Therefre, the students must pay the remaining $15,000. The $35,000 that the Bster Club dnated is cnsidered a cntributin t that particular District student grup and shuld be dcumented n the Tax-exempt Status/Dnatin Acknwledgment Frm. The schl may request that a Bster Club prvide a list f cntributins made t the student grup r schl. The Tax-exempt Status/Dnatin Acknwledgment Frm may reference this list; thus, eliminating the need t have a frm cmpleted fr each cntributin. The schls are required t reprt cntributins received at least at the end f each semester; therefre, yur schl may request the list f cntributins frm Bster Clubs twice a year. The Tax-exempt Status/Dnatin Acknwledgment Frm shuld be kept with the Bster Club s financial recrds. The frm can be used as substantiatin t the IRS that the Bster Club is using the funds raised in the manner apprved by the IRS as a 501(c)(3) rganizatin. The District tracks cntributins received frm individuals and entities such as Bster Clubs. This infrmatin may assist the District in receiving a mre favrable bnd rating and in receiving grants. Public supprt f the District is very imprtant in these areas. 130

19 Financial Aid Guidelines Tax-exempt rganizatins must benefit a grup as a whle instead f benefiting individual members f a grup. Since Bster Clubs usually assist student grups, all members f the student grup spnsred are t be treated equally and receive the same pprtunity t benefit frm the Bster Club s assistance. Therefre, ne student cannt receive a greater benefit than anther unless the criteria fr financial need discussed belw is met. In sme instances, individuals may nt be able t affrd t pay the amunt wed t participate in a particular event. The IRS has indicated that a grup r club may establish criteria that culd be used t determine if a persn is in financial need. If the criteria are met, the grup r club culd prvide the necessary funds t allw the individual t participate. The criteria shuld be established in writing prir t a particular situatin arising. In additin, the criteria shuld be used cnsistently fr all peple, and the criteria shuld nt change every year. Flyers District criteria states that 501(c)(3) tax-exempt rganizatins must submit flyers t the Assciate Superintendent fr Cmmunicatins and Cmmunity Relatins fr apprval. Nte: 501(c)(3) Number is the same number as the Emplyer Identificatin Number (EIN). Fund-raising Befre any fund-raising activity ccurs, Bster Clubs shuld decide whether a fund-raiser is a Bster Club fund-raiser (mney is depsited directly int the Bster Club s bank accunt) r whether it is a schl fund-raiser (mney is depsited directly int the District s student activity fund accunt fr that student grup). If the activity is a Bster Club fundraiser, the Bster Club is respnsible fr handling any and all mney frm the fund-raiser. Likewise, if the activity is a schl fund-raiser, the schl is respnsible fr all mney cllected and depsited frm the fund-raiser. a.) Bard Plicy Bard Plicy GE (Lcal) discusses fund-raising regulatins. Bster Clubs shuld carefully cnsider limiting the number f majr fundraising activities invlving students. All such activities require bth the apprval f the Spnsr and Schl Principal. Bster Club shuld submit the fllwing infrmatin t the designated faculty spnsr at least 30 days prir t the event: 1. Purpse f the fund-raiser, 2. Type f fund-raising activity (i.e., candy sale, carnival), 3. Date(s), time(s) and place(s) f the activity, 4. Name f the spnsring rganizatin, 5. Name and phne number f the rganizatin s representative, 6. Name and phne number f the persn(s) in charge f the fund-raiser, and 7. Name and phne number f the persn(s) wh will be handling the mney fr the fundraiser. 131

20 b) IRS Regulatins The IRS prhibits tax-exempt rganizatins frm requiring peple t participate in fund-raisers. Likewise, Bster Clubs may nt require an amunt be dnated in lieu f participating in the fund-raiser. Peple may chse whether r nt t participate in a fund-raiser and may chse whether r nt t dnate t the Bster Club. Furthermre, if a persn decides nt t participate, that persn cannt be excluded frm having the pprtunity t benefit frm the fund-raiser and cannt be penalized fr chsing nt t participate in the fund-raiser. Furthermre, benefits given by a tax-exempt rganizatin cannt be based n participatin in a fund-raiser r based n revenues raised individually. Therefre, regardless if a persn participates in a fund-raiser and regardless f the amunt f revenue raised, that persn cannt be denied the pprtunity t receive an equal benefit. Example: High Spirit Bster Club is having a car wash fund-raiser t help reduce the cst f a trip t Flrida fr a cmpetitin. The cst f the trip is $20,000 fr 20 peple. Therefre, each persn s cst fr the trip befre the fund-raiser is $1,000. Of the 20 peple participating in the trip, nly 10 peple participate in the fundraiser and raise a ttal f $600. The $600 must be split equally amng the 20 peple ging n the trip, even thugh nly 10 peple participated in the fundraiser. Therefre, each persn receives a benefit f $30 ($600 / 20). Nw, each persn s cst fr the trip is $970 ($1,000 - $30). The IRS prhibits the use f individual accunts by Bster Clubs. Bster Clubs must benefit the grup as a whle, nt its individual members. (See example abve.) "Individual accunts" are thse accunts used by a Bster Club t credit an individual with revenues raised. The Bster Clubs wuld use these accunts t benefit the individual by ffsetting that individual s expenses with the amunt credited t that individual frm the revenues raised. c) Analysis f Fund-raiser Bster Clubs shuld use the Fund-raising Activity Reprt (available n website) t determine the anticipated amunt t be raised by a fund-raiser and then t determine if the fund-raiser was a success r failure. This type f analysis will help a Bster Club decide whether r nt t repeat a particular fund-raiser. Fr yur cnvenience, the Fund-Raising Permissin Request fr Parent Organizatins has been included in sectin Frms Available t Use. 132

21 Mailing Address If the mailing address fr the Bster Club changes, immediately ntify the District, the Texas Secretary f State, the Texas State Cmptrller s Office, and the IRS. T avid frequent mailing address changes, the IRS and the Texas State Cmptrller s Office recmmend that each Bster Club btain its wn pst ffice bx (PO Bx) r private mailing bx (PMB) t be used fr fficial Bster Club mail. This address and bx keys can be given easily t the new fficers at the beginning f the year. Please understand the imprtance f maintaining a cnsistent mailing address fr the Bster Club. First, yu will save time since yu will nt have t update yur address each year t the District, the Texas Secretary f State, the Texas State Cmptrller s Office, the IRS, and yur bank as yu wuld if yu used smene s hme address. Secnd, Bster Clubs receive several imprtant dcuments frm these agencies thrughut the year, and if the address changes frequently, sme f these dcuments culd be lst r misplaced. If the related schl s address is used as the Bster Club s fficial address, the Bster Club shuld be aware that it may nt receive mail in a timely manner when the schl is clsed (i.e., summer vacatin and sme hlidays). The IRS mails frms and ther crrespndence t Bster Clubs peridically. If these frms are nt cmpleted and returned t the IRS within a specific time perid, a Bster Club culd lse their tax-exempt status, thereby als lsing their limited tax-exemptin with the State f Texas and pssibly face fines and penalties. The District des nt recmmend using a hme address since fficer s change frequently. Fr yur cnvenience, IRS Frm 8822: Change f Address has been included in sectin Frms Available t Use. Membership Dues Bster Clubs may charge dues t their members (the parents); hwever, parents d nt have t be members f the Bster Club fr their child(ren) t participate in the student grup that receives benefits frm Bster Club activities. Membership dues are separate frm the expenses incurred by spnsring a student grup (i.e., trip expense, cstume expense). Membership dues are assciated with the parents being part f the Bster Club and are in n way assciated with the expenses related t that parent s child. Mney-Handling Prcedures Mney refers t cash, checks, mney rders, r cashier s checks. The fllwing are suggestins related t handling mney t assist in ensuring prper accuntability. a) Receiving Mney The persn receiving the mney while in the presence f the persn turning in the mney shuld cunt all mney received. The persn receiving the mney shuld give a receipt t the persn delivering the mney (bth parties shuld retain their cpy f the receipt). Any checks received shuld be restrictively endrsed immediately. Pst-dated checks shuld nt be accepted frm any surce. 133

22 Receipts shuld indicate whether cash, check, mney rder, r cashier's check was received; date f the receipt; and signature f persn receiving the mney, Cpies r a list f checks, mney rders, and cashier's checks received shuld be made t assist in recvery f mney if these items are lst, stlen, r returned due t insufficient funds. IMPORTANT If a mney rder r cashier's check is received, the receipt shuld indicate the ttal check amunt; brand name f the mney rder r the issuing bank's name f the cashier's check; and the cmplete check r mney rder number. If a cpy f the mney rder r cashier's check is made, the inclusin f this additinal infrmatin n the receipt is nt necessary. b) Recrding and Depsiting Mney Prir t depsiting mney, at least tw peple shuld cunt the mney. All mney shuld be delivered t the Bster Club Treasurer t depsit funds daily. Receipts shuld be recnciled with all mney turned in and depsited. Mney received shuld nly be depsited in the Bster Club s accunt(s). Depsit slips shuld be retained and recnciled mnthly t the accunt. c) Disbursing Mney Require tw signatures n each check. D NOT sign blank checks. d) Safeguarding Mney Have peple that handle mney bnded. This prtects against embezzlement, but nt theft. D nt keep any mney in an unlcked drawer, unlcked filing cabinet, vehicle, r ther unsecured place. D nt stre the recrds f the mney received (i.e., receipts, cpies f checks) in the same place as the mney. If recrds and mney are stred tgether and a theft ccurs, the recrd f the mney may be taken alng with the mney. Subsequently, determinatin and recvery f lsses wuld be mre difficult. Mney received and nt yet depsited shuld nt be used fr purchases, check cashing, lans, advances, reimbursements, r fr any ther purpse. All unused checks shuld be kept safe and secure at all times. "Blank" checks shuld never be issued and checks shuld never be pre-signed. The sequence f check numbers shuld be accunted fr when recnciling the bank statement t the Bster Club's bks. Issuing checks payable t "Cash" r t the "Spnsr" shuld be avided. The IRS may examine these transactins in mre detail than ther transactins. If a check must be payable t "Cash" r t the "Spnsr," keep detailed dcumentatin f the expense r use f the funds. 134

23 Raffles (The fllwing infrmatin was dwnladed n Octber 13, 2010 frm the Texas Attrney General s website: We have becme aware f a prliferatin f illegal raffle activity in Texas. It is imprtant fr Texans t be familiar with the law befre cnducting r participating in a raffle. Examples f unlawful raffles include any raffle that is: cnducted by an individual cnducted by a fr-prfit business cnducted by a charity that has n members r therwise des nt qualify Texas law allws nly certain charitable and nn-prfit membership rganizatins t cnduct raffles t supprt their charitable causes. Only the fllwing entities which meet certain qualificatins are permitted t hld raffles: religius scieties vlunteer emergency medical service prviders vlunteer fire departments qualified nn-prfit rganizatins In rder t cnduct a raffle legally, a nn-prfit rganizatin must have, amng ther criteria, members wh elect a gverning bdy and an exemptin frm federal taxes under Sectin 501(c) f the Internal Revenue Cde. A qualified nn-prfit must als have been in existence fr three years. The law permits nly tw raffles per year, requires several disclsures printed n tickets, and limits the value f prizes purchased by the rganizatin t $50,000. It is als against the law t hld a raffle in which cash, r anything readily cnvertible t cash, is ffered as a prize, r which is prmted statewide r thrugh paid advertising, including televisin, radi r newspapers. An unlawful raffle culd be cnsidered illegal gambling, which may carry criminal penalties. A cunty attrney, district attrney r the attrney general may als shut dwn an illegal raffle. The Office f the Attrney General is prhibited by law frm prviding legal advice t individuals. If yu cntemplate cnducting a raffle fr fundraising purpses, yu shuld read the Charitable Raffle Enabling Act (which went int effect January 1, 1990) carefully and cnsult a private attrney with any questins. Yu shuld als avid participating in an illegal raffle. Fr mre infrmatin, yu can visit ur Web site and read ur nline cnsumer prtectin brchure n charitable raffles. Greg Abbtt Texas Attrney General 135

24 What des the law permit? The Charitable Raffle Enabling Act, effective January 1, 1990, permits "qualified rganizatins" t hld up t tw raffles per calendar year, with certain specified restrictins. What is a "qualified rganizatin"? In general, a qualified rganizatin is: a) An assciatin rganized primarily fr religius purpses that has been in existence in Texas fr at least 10 years; b) A vlunteer emergency medical service that des nt pay its members ther than nminal cmpensatin; c) A vlunteer fire department that perates firefighting equipment and des nt pay its members ther than nminal cmpensatin; r d) A nnprfit rganizatin that has existed fr at least three preceding years, during which it has had a gverning bdy duly elected by its members and is exempt frm federal incme tax under Sectin 501(c), Internal Revenue Cde; des nt distribute any f its incme t its members, fficers r gverning bdy; des nt devte a substantial part f its activities t attempting t influence legislatin; and des nt participate in any plitical campaign. The language f the law is very technical. If yu are cnsidering hlding a raffle t benefit an rganizatin, yu shuld check the statute t be sure yu qualify. What prizes may be ffered? An rganizatin may ffer any prize except mney. If the raffle rganizers ffer a prize which they have purchased r have given ther cnsideratin fr, the value f the prize may nt exceed $50,000. There is n value limit n prizes dnated t the rganizatin. Texas lttery tickets may be purchased and ffered as prizes, even thugh the tickets' payff may exceed $50,000. The rganizatin must have each raffle prize in its pssessin r must pst a bnd fr the full amunt f the value f the prize with the cunty clerk f the cunty where the raffle will be held. Is an rganizatin required t register with the State befre cnducting a raffle? N. What are the restrictins n hw the raffle may be cnducted? A qualified rganizatin may hld nly tw raffles per [calendar] year and nly ne raffle at a time. Raffle tickets may nt be advertised state wide r thrugh paid advertisements. Each raffle ticket must state the name r address f the rganizatin hlding the raffle, the name f an fficer f the rganizatin, the price f the ticket, and a general descriptin f each prize t be awarded that has a value f ver $10. A prize may nt be mney. Only members f the rganizatin, r student rganizatins recgnized by institutins f higher educatin selling n behalf f the institutin, may sell tickets. N ne may be cmpensated directly r indirectly fr rganizing r cnducting a raffle, r fr selling raffle tickets. The rganizatin may nt permit a nn-member r ther unauthrized persn t sell r ffer t sell raffle tickets 136

25 Hw may the prceeds frm ticket sales be used? Prceeds frm ticket sales must be used nly fr the charitable purpses f the Organizatin. Are there any penalties fr cnducting r participating in an unauthrized raffle? Yes. Only raffles held accrding t the terms f the Raffle Enabling Act are authrized raffles. An unauthrized raffle is cnsidered gambling under the Texas Penal Cde. Cnducting such a raffle is a Class A misdemeanr. Participating in an unauthrized raffle is a Class C misdemeanr. What law enfrcement authrities may stp an unauthrized raffle? A cunty attrney, district attrney r the attrney general may bring an actin in state curt t stp a vilatin r ptential vilatin f the Charitable Raffle Enabling Act. Where can I get mre infrmatin n the requirements fr hlding a raffle? The law is Article 179f; Texas Revised Civil Statutes Anntated. If yu have specific questins abut the law, yu shuld cnsult yur attrney. Cnsumer Infrmatin: Fr mre infrmatin, call the Attrney General's Cnsumer Prtectin Htline at , r cntact yur nearest Attrney General reginal ffice. Lcatin Phne Number Austin Dallas El Pas Hustn Lubbck McAllen San Antni All cnsumer cmplaints must be made in writing. Please call r write fr a cmplaint frm. Write t: Office f the Attrney General Cnsumer Prtectin Divisin/010 P.O. Bx Austin, Texas Cmplaint frms and additinal infrmatin can als be fund in the cnsumer affairs sectin f ur website, at 137

26 Recrd Retentin Bster Clubs shuld establish a recrd file that is passed t the new fficers each year. Sme items need t be kept indefinitely while ther items nly need t be kept fr a certain length f time. The recrd file shuld cntain at least the fllwing items n a permanent basis: Permanent Recrds Internal Recrds: Bster Club Registratin & Apprval Frm Articles f Incrpratin/Articles f Assciatin By-laws/Charter/Cnstitutin Minutes frm meetings State Recrds: Sales Tax Permit Applicatin Sales Tax Permit Certificate f Incrpratin frm State f Texas (if applicable) State Sales Tax Exemptin Ntificatin State Franchise Tax Exemptin Ntificatin (if incrprated) Federal Recrds: Cpy f IRS Frm SS-4, Applicatin fr Emplyer Identificatin Number Cpy f IRS Frm 1023, Applicatin fr Recgnitin f Exemptin, with all attachments Cpy f IRS Frm 8718, User Fee fr Exempt Organizatin Determinatin Letter Request, and cpy f check sent t IRS with this frm Acknwledgement f Yur Request Determinatin Letter Cpy f IRS Frm 8734, Supprt Schedule fr Advance Ruling Perid, and the IRS s ntice granting a permanent exempt status t the rganizatin, if applicable Fr nn-permanent recrds, the Texas State Cmptrller s Office and the IRS have different retentin perids as discussed belw. In additin, certain circumstances, such as fraud, wuld allw the retentin perid t be extended beynd the nrmal requirement. Accrding t the Texas State Cmptrller s Office, this ffice has fur (4) years frm the date the tax becmes due and payable in which t assess the liability. This statute f limitatins may be extended beynd the fur (4) years, if an agreement is made in writing between the Texas State Cmptrller s Office and the Bster Club. In cases f fraud, r if the sales tax returns have nt been filed, the statute f limitatins des nt apply and the Texas State Cmptrller s ffice may assess and cllect taxes, penalties, and interest at anytime. The statute f limitatins des nt apply when infrmatin cntained in the sales tax reprt cntains a grss errr and the amunt f tax due and payable after the errr is crrected is 25% r mre than the amunt initially reprted. In additin, ther exceptins t the statute f limitatins may apply. Accrding t the IRS, Bster Clubs must keep each annual infrmatin return (i.e. Frm 990 r Frm 990-EZ) fr 3 years frm the date the frm is required t be filed r frm the date the frm is actually 138

27 filed, whichever is later. Hwever, if fraud is suspected r if returns have nt been filed as applicable, the IRS culd request infrmatin prir t the 3 year perid discussed abve. IMPORTANT If yur Bster Club has nt received a tax-exempt status as a public 501(c)(3) rganizatin r if yur Bster Club has received nly a temprary apprval f taxexempt status as a public 501(c)(3) rganizatin fr sixty (60) mnths (Advanced Ruling Perid), all recrds shuld be kept until the Advanced Ruling Perid has ended, the IRS frm 8734 (Supprt Schedule fr Advance Ruling Perid) has been prepared, and the IRS has granted a permanent public tax-exempt status t the rganizatin. In cnsidering the requirements f the Texas State Cmptrller s Office and the IRS, the recrd file shuld cntain at least the fllwing items fr a minimum f the current year and the fur (4) previus years: Nn-permanent Recrds Internal Recrds Financial Reprts and Review Cmmittee Reprts All financial backup including checkbk and banks recrds Infrmatin related t dnatins received by a Bster Club frm individuals r businesses Financial Aid Guidelines State Recrds Sales Tax Frms Filed (Quarterly r Annually) Cpy f crrespndence with the Texas Secretary f State and the Texas State Cmptrller Federal Recrds Cpy f IRS Frms 990 r 990-EZ filed Cpy f crrespndence with the IRS Befre discarding any recrds, cnfirm with the Texas State Cmptrller s Office and the IRS that yur rganizatin is in gd-standing and that n pen items r issues exist related t the time perid invlving the recrds that yu wuld like t discard. IMPORTANT Accrding t IRS disclsure requirements, if smene requests t view any f yur tax applicatins, frms filed, r returns, yu must prvide cmplete cpies f the material. Yu may charge a nminal fee fr cpying, nt t exceed the current gvernmental rate f $1.00 fr the first page and $.15 fr each additinal page plus pstage. 139

28 Student Fines and Fees List Bster Clubs may have students r parents wh d nt submit mney fr fund-raisers r expenses, resulting in amunts wed t the Bster Club. Since these amunts relate t Bster Club activities, they cannt be placed n the schl s Student Fines and Fees List. If a Bster Club wishes t pursue recvery f these amunts, they must d s independently frm the District and schl. Example: High Spirit Bster Club held a catalg fund-raiser and $400 is still wed t the Bster Club by Trusty Smith, the father f Jane Smith, ne f students in the grup they supprt. Trusty received the merchandise, but never paid fr it. The Bster Club may pursue trying t recver the mney r merchandise frm Trusty. Hwever, they may nt cntact the schl t include the $400 n the schl s Student Fines and Fees List as an amunt wed by Jane Smith t the schl. Vlunteer Hurs The District values the diversity f vlunteer activity in the cmmunity, whether it is at hme, in the cmmunity, r in the classrm. Accunting fr such vlunteer hurs is essential since it impacts issues such as funding, prgram cntinuatin, and cmmunicatin. Fr example, many grants and federally funded prgrams require an accurate reflectin f vlunteer hurs, and the State f Texas requires public schl districts t facilitate parental invlvement in their children s educatin. 140