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Treasure for Treasurers

Treasure for Treasurers . Elaine Wiant LWVUS Secretary/Treasurer Susan Wilson LWVUS Budget Chair Greg Leatherwood LWVUS Director of Finance Convention 2010. What “ treasures”are we going to talk about?. Part 1: The e-Postcard return Part 2: Stewardship of League finances

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Treasure for Treasurers

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  1. Treasure for Treasurers Elaine WiantLWVUS Secretary/Treasurer Susan WilsonLWVUS Budget Chair Greg LeatherwoodLWVUS Director of Finance Convention 2010

  2. What “treasures”are we going to talk about? Part 1: The e-Postcard return Part 2: Stewardship of League finances Part 3: The annual audit or review Part 4: Using education funds effectively

  3. Form 990-NThe e-Postcard

  4. My League is small. Do we need to file the e-Postcard? • Yes. • There are only two exceptions: • Leagues that file Form 990 or Form 990-EZ • Leagues that are included in a group return. • The Form 990 cutoff increases to $50,000 in 2010.

  5. Filing is an Easy Four-Step Process • Obtain an FEIN for your League, if it doesn’t already have one. • NEW!! Telephone the IRS to inform them that your League is a tax exempt organization. • Register as a new user on the e-Postcard website. http://epostcard.form990.org/ • Create and submit your League’s e-Postcard.

  6. Does my League need its own Federal Employer Identification Number? • Yes. • The only exception is Leagues covered by a group exemption. • DO NOT use your state League’s FEIN to file your local League’s e-Postcard return.

  7. What’s Involved in Getting an FEIN? • Applying for and receiving an FEIN only takes a few minutes; it doesn’t cost anything. • You can apply by mail, but applying online is much quicker and easier -- https://sa2.www4.irs.gov/modiein/individual/index.jsp • You must wait up to two weeks after receiving your League’s FEIN before you can use it to file the e-Postcard return.

  8. What Information Will I Need to Provide? • Your League’s name • The name, Social Security Number, mailing address and phone number of a responsible contact person • The month and year your League started • A short phrase describing your activities • Whether your League has any employees

  9. Step 2: Call the IRS • An officer of your League must call the IRS eight weeks before your League files its first e-postcard. • This is a separate requirement from applying for an FEIN. • The IRS phone number to call is 1-877-829-5500, option 2, option 4.

  10. Questions the IRS Will Ask • Are you an officer? • Is your League a distinct legal entity with a governing document? • What is your League’s purpose (mission)? • Are your League’s gross receipts normally less than $25,000? • When does your tax year end? • Is your League covered by a group exemption? • The name, title and contact information of an officer who will serve as the primary contact.

  11. Filing the e-Postcard

  12. What Information will my League Need to Provide? • Its Federal Employer ID number • Its tax year-end date • Its legal name and mailing address • Its website address, if it has one. • Confirmation that its annual gross receipts are $25,000 or less.

  13. When is the e-Postcard due? • The 15th day of the fifth month following the end of your League’s tax year. • The first e-Postcards were due for tax years ending on or after December 31, 2007. • There is no monetary penalty for filing late. • Three strikes and you’re out – Organizations that fail to file for 3 consecutive years will automatically lose their tax-exempt status.

  14. Tips • Get started right away. Filing your League’s first e-postcard normally takes 8 weeks. • Complete the following tasks in order: • First apply online for an FEIN; • Second, telephone the IRS; • Third, wait eight weeks; and • Fourth, complete your League’s e-postcard.

  15. More Tips • When applying for an FEIN, specify that your League is a tax-exempt volunteer group. • Use a post office box for your League’s mailing addresses. • ????

  16. Still More Tips • If you need help with the e-postcard form, contact IRS tech support at (866) 255-0654 or epostcard@urban.org. • Ed funds must file a separate e-postcard return unless they are part of the state or national education fund.

  17. Stewardship of League Finances

  18. Responsibilities of the League board • Make sure that appropriate internal control policies and procedures are in place. • Recommend adoption of a detailed budget. • Review and understand treasurer's statements. • Make sure that bills are being paid on time. • Approve unbudgeted expenses. • Provide for an annual audit or review. • Consider fidelity bond coverage for those handling money.

  19. Responsibilities of the League board --Development! • The League must be adequately financed. • Financial support comes primarily from members. • Support can also come from the community – individuals, foundations, businesses. • Fundraising is a year-round effort built into every activity and project. • Appreciation and recognition help to ensure repeated gifts.

  20. Responsibilities of the League board – Budget • Provide input to the committee charged with budget development. • Review the proposed budget prepared by the committee. • Revise it as necessary. • Recommend its adoption by the annual meeting/state convention.

  21. The League’s Budget • Reflects all anticipated income and expenses for a fiscal year. • Shows planned growth in members, dues, contributions and League activities. • Includes funds for sending delegates to state and national conventions. • Reflects the League’s obligation to support the League as a whole through the per member payment (PMP) system.

  22. Liability Insurance

  23. What is It? Insurance against: Negligent acts or omissions • Bodily injury • Property damage • Warranties and exclusions vary

  24. Do We Need It? • Evaluate the risks and benefits. • Auditoriums, malls and other public places may require Leagues to have coverage. • Federal law protects volunteers.

  25. What Does It Cost? $500 to $750 buys: • $1 million per occurrence • $2 million annual aggregate • $1 million non-owned auto • $10,000 of personal property • $10,000 of employee dishonesty

  26. Where Can We Get It? • Shop around. Most insurance companies and agents offer general liability coverage. • Willis HRH Insurance Telephone: (800) 800-2860 Karen Earp or Robin Rider

  27. The Treasurer • Chief financial officer of the League. • Establishes fiscal management procedures. • Collects and disburses all League funds. • Makes reports to the board and members. • Keeps a record of all income and expenditures. • Serves as member of budget committee. • Forwards PMP to LWVUS and state League. • Deposits tax-deductible funds with the appropriate Education Fund.

  28. New Treasurer • Receives records from previous treasurer. • Reviews records with previous treasurer. • Registers signatures of treasurer and president at financial institutions. • Learns use of relevant software. • Promptly deposits receipts and pays bills. • Anticipates large expenses. • Assists with annual audit or review.

  29. Your League should have WRITTEN financial policies and procedures

  30. Internal ControlsProcedures toincrease likelihood that: • Financial information is reliable • Assets and records are not stolen, misused or destroyed • Policies are followed • Laws and regulations are complied with

  31. Internal controlsWhat kinds? Trust is NOT a control

  32. Internal controlsWhat kinds? • Authorization and approval • Proper documentation • Physical security • Early detection

  33. Recommended Controls • Segregation of duties -- the same person should NOT: • Deposit funds AND record deposits • Write checks AND receive and reconcile bank statements

  34. Recommended Controls for income • Open mail promptly. • Record, copy and endorse checks upon receipt. • Prepare deposit and deliver to bank promptly. • Deposit all cash received (don’t use receipts to pay bills or replenish petty cash). • Reconcile income with deposits (not the same person).

  35. Recommended controls for expenditures • Board authorizes check signers. • Require more than one signature for checks over a certain amount. • Obtain approval for each transaction, either through the budget or through the board. • Provide and maintain documentation for each check written.

  36. Security measures • Checks: • Pre-number checks. • Secure blank checks with a lock. • Limit access to blank checks to authorized person(s). • Computer records • Limit access and protect with passwords. • BACK UP records on a regular basis. • Store backups at another location.

  37. The Annual Financial Review or Audit

  38. What is the difference between a financial review and an audit? During a financial review, an accountant (or other financially astute person) • Asks questions, • Reviews the financial statements, • Does NOT examine the underlying records.

  39. The duties of an auditor include • Verifying that a sample of dues and contributions agrees with the corresponding deposit slips and records • Verifying that a sample of recorded expenses agrees with the corresponding bills and checks • Reviewing internal control systems

  40. Steps for Financial Review • Bank statements: • Check recorded receipts against the deposits on bank statements • Investigate discrepancies • Verify bank reconciliations • Account for all checks by number

  41. Steps for Financial Review • Dues: • Check dues collected during the year against the current membership total. • Investigate discrepancies (life members, scholarships, etc).

  42. Steps for Financial Review • Vouchers • Check records against vouchers. • Are expenses backed by an invoice or voucher? • Are items debited to the proper account?

  43. Steps for Financial Review • Budget • Compare income and expenses with budget. • Education Fund • Compare deposits of tax-deductible funds with the records of state or national Ed Fund. • Check transactions with the state or national Ed Fund.

  44. Steps for Financial Review • Sample Month • Verify income and expense totals. • Verify individual categories. • Check beginning balance and ending balance. • Make necessary adjustments.

  45. Steps for Financial Review • Return to bank statements • Check beginning and ending balances in each account. • Make necessary adjustments.

  46. Steps for Financial Review • Prepare report: “We have reviewed the books of the League of Women Voters of _____ as of ______, examined the records of revenue and expenditures and traced beginning and ending cash balances to bank statements. The books are an accurate reflection of the financial condition of the League of Women Voters of _____ as of ______ and the results of its operations and cash flows for the year.”

  47. Using Education Fund Money Effectively

  48. What is the League’s tax status?

  49. The LWVUS is a 501(c)(4)social welfare organization. • The LWVUS carries out lobbying and membership activities. • Dues and contributions to the LWVUS are not tax deductible.

  50. The LWVEF is a 501(c)(3) charitable organization. • Its primary activities are educational: • providing election information • hosting public forums • conducting international exchange programs, etc. • Contributions to the LWVEF are tax deductible.

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