FINANCIAL PROCEDURES

1. FINANCIAL PROCEDURES For Locals & Regions

2. HANDBOOK SECTIONS • Administration & Fiduciary Oversight • Regulatory Requirements • Technical Tasks

3. WHY ARE YOU HERE? • All local/region leaders need to be aware of financial concepts • Oversight • Emergency coverage • Treasurer needs to know in detail • Following these guidelines helps you to avoid problems and be more accountable Note FPLR handbook page references at bottom of slides (centered and green)

4. WHAT ARE “FINANCIAL PROCEDURES”??

5. BASIC FINANCIAL TRANSACTIONS

6. BANK ISSUES • How to choose a bank • Financial • Service • Location • Auditability 44-45

7. OPENING A BANK ACCOUNT • Banks are required by regulation to collect various information • Every bank interprets these regulations in their own way: CALL FIRST! • You will definitely need: • Drivers license for all signers • Taxpayer identification number of your local DO NOT OPEN AN ACCOUNT WITH SOMEONE’S SOCIAL SECURITY NUMBER, YOUR SCHOOL’S TIN, ETC.

8. TAXPAYER ID NUMBER • 9-Digit number assigned by the IRS • Unless you are a new local, you already have a number • If you don’t know your number, contact IEA Accounting • If you are a new local, contact IEA Accounting; they will apply for one • Do NOT apply for a number yourself! 27

9. SIGNATURES • We recommend that all bank accounts require two signatures • So you will want at least three and perhaps four-five people with the ability to sign 45, 76

10. OTHER NEW ACCOUNT ISSUES • You are an unincorporated, not for profit labor union • If the bank wants your articles of incorporation, you don’t have them • If they want your “IRS Determination Letter,” you don’t have one • If they want proof of your tax exempt status, IEA Accounting can provide this

11. HOW MANY ACCOUNTS DO YOU NEED? • See info in the book- pages 43-44 • If you have IPACE funds, this requires a separate bank account 43-44

12. IPACE ACCOUNT • Must be separate from regular checking account • Only deposits- From IPACE • Only disbursements- For local political expenses 35, 82

13. DEPOSITS

14. DUES FROM EMPLOYER • Make sure all checks are received • Maintain supporting detail, e.g. dues deduction registers and check stubs • Deposit as soon as received! • Someone needs to verify amounts (Treasurer or Membership Contact) 51-52

15. IPACE REBATES • Deposit into (separate) IPACE bank account • Deposit as soon as received • Keep documentation on file (copy of check, check stub, etc.) 35-36, Appendix 9, 16

16. IPACE REBATES • IPACE is funded by member contributions • Locals can receive up to $15 per contributing member each year • Must be used for specific political purposes 22-23, 35-36, Appendix 9, 16

17. IPACE REBATES • Must be kept in a separate bank account • May be state reporting requirements • Members’ contributions are not tax-deductible • Unused funds can be returned to IPACE, at the local’s discretion 22-23, 35-36, Appendix 9, 13 &16

18. OTHER DEPOSITS • Deposit as soon as received • Keep documentation on file (copy of check, check stub, etc.) • Five years from now, must be able to demonstrate what each deposit was for (payee, reason for payment, etc.) 52

19. CHECKS/DISBURSEMENTS

20. Dues Billing From IEA • Locals are billed at the beginning of the month: November-August • Bill is sent to “Membership Contact” • Penalties for late payment • Need to pay entire amount shown!! • See Appendix 15 for “How to Read the Statement” • Some locals arrange for direct payment by employer 49-52

21. DUES TRANSMITTAL SCHEDULE (Some Exceptions Apply) 50

22. IPACE • Must be for local political purposes: See info from IPACE • Do not spend IPACE funds for local operations • Documentation is especially important Appendix 9, 13 & 16

23. TRAVEL • For many locals this is their biggest expense • Documentation is especially important due to IRS issues • Your local/region can set guidelines, but these need to be based on IRS rules (your rules can be more restrictive, but not less) • Above all, travel expenses must be reasonable and necessary 53-56, Appendix 8

24. TRAVEL • NORMALLY YES: Hotel, mileage, airfare, meals at meeting location, parking, tolls, taxi, car rental • NORMALLY NO: Expenses for family members, gasoline (unless with car rental), gifts/clothing, entertainment, contributions to NEA FCPE • MAYBE: Tips, alcohol 53-56, Appendix 8

25. OTHER PAYMENTS • Must be reasonable and related to your local/region’s status as a not for profit labor union • Beyond that, local rules may apply • Again, local rules may be more restrictive, but not less • Documentation! 53-54

26. ACCOUNTING/FILING

27. ACCOUNTING SYSTEM • Every dollar that goes in or out of your bank account must be recorded • Permanent record • Future audits by IRS, etc. • Internal questions • Financial reporting • What system do you use: “It depends” 38-43

28. WHAT SYSTEM TO USE • One size does not fit all • Size/complexity of organization • Prior treasurer’s system • Current treasurer’s preference 38-43

29. SYSTEM GOALS • Your system needs to: • Record all transactions in sufficient detail • Allow you to produce financial reports efficiently • Provide a record that others can follow ` 38-43

30. EXAMPLES • Some possibilities • Checkbook/check stubs • Cash receipts and disbursements journals • Excel/Access • Specialized accounting software (Quicken, etc.) 38-43

31. DOCUMENTATION (GENERAL) • Every dollar that goes in or out of your bank account needs to be documented • Possible audit • Fiduciary duty: “Other People’s Money” • Proof of business purpose • Proof of dollar amount • Proof of date/place 52-57

32. MONEY DEPOSITED • Where from • What for • Dollar amount • Employer checks- Be sure to retain detailed list of dues deducted, etc. • Other Checks: Copy of check with notes/attachments 52

33. MONEY SPENT • IEA dues: Maintain copy of monthly statement • Member reimbursement • Travel: Use travel form with receipts attached • Other: Need original vendor bill, not a handwritten note • Outside vendors • Detailed bill needed • No bill (stipends, scholarships, etc.): document in minutes 53-57

34. PRACTICAL ISSUES • Forms: • Use some sort of voucher system (p 54) • Attach bills, etc. to vouchers • For travel expenses: USE A TRAVEL EXPENSE FORM!! • Example on page 57 • Label receipts and staple them to the forms • No stapled envelopes with miscellaneous random receipts!! • If travel funding is provided by another body, make sure there is no duplication of reimbursement 53-57

35. Sample Voucher 54

36. Sample Travel Form 57

37. FILING • Should be able to look at any item on the bank statement or your accounting system and find the source document easily and quickly. 58

38. PRACTICAL ISSUES • Examples: • Cross reference vendor bills/vouchers with check numbers • Attach bills to bank statements, or • File vouchers numerically (chronologically) • No envelopes/sacks with miscellaneous random documents 58

39. FINANCIAL REPORTS

40. FINANCIAL REPORTS • How much money do we have? • How much income have we received? • How much has been paid for expenses? • How does this compare to the budget? • How does this compare to prior years? 47-48

41. FINANCIAL REPORT • Primary audience is probably your governing board (may be shared with general membership) • Get in the habit of doing a WRITTEN report every month • Include the budget • Include explanations of large variations from budget • Line items depend on your local’s major activities 47-48

42. SAMPLE REPORT 47-48

43. BUDGET • Your budget should be included in your financial statements • Of course, this means that you should have a budget! 12-15, Appendix 2, 3, 4, 5

44. BUDGET • Why have a budget? • Ensures proper financial planning • Discussion of how to use members’ resources • Qualification for financial assistance 12-15, Appendix 2, 3, 4, 5

45. FINANCIAL ASSISTANCE FOR MEDIATION, ARBITRATION, ETC. • IEA policy provides for significant financial assistance, IF: • Local dues at least $15 • Your budget includes a line item for Mediation, etc. with at least $3/member budgeted • This can mean thousands of dollars of potential assistance 14-15

46. BUDGET PROCESS: LOCALS • Check constitution/bylaws for requirements • Get Member Input • See Budget Training Video on IEA Website 12-15, Appendix 2, 3, 4, 5

47. AUDIT • All but the smallest of locals should consider an annual audit • The audit should address the accuracy of your financial reports, among other things • More details under “Oversight” 9-11

48. OUTSIDE AGENCIES • 990/990-EZ (IRS) • ~30 Large locals • LM-3 (Dept. of Labor) • Small number of higher ed locals • For these reports, your accounting system must report your transactions in the same line items as shown on the reports Appendix 13

49. IRS ANNUAL REPORTING • IRS Form 990-N (“E-Postcard”) • “Gross Receipts” under $50,000 • “Gross Receipts” do NOT include IEA-NEA dues! All except around 30 IEA locals file this form! 28, Appendix 13

50. IRS ANNUAL REPORTING • “Gross Receipts”$50,000-$200,000: IRS Form 990 EZ • “Gross Receipts”Over $200,000: IRS Form 990 Most locals pay a CPA to file these forms (complexity/public disclosure requirements) 28, Appendix 13