Theft and fraud are relatively rare in PTA, but it does happen. For PTAs that are using best practices when handling money, making deposits, and writing checks, they are even less likely to occur. By being proactive and examining your PTA’s processes and controls, your PTA can better avoid being a victim of theft or fraud. However, if you suspect your PTA has mishandled finances, here are ten steps to take.

1. To protect from being accused of defamation or libel, do not make any premature accusations. Start with a discreet investigation of the facts, including an audit, documenting any funds that can’t be properly accounted for or that have been misused.
2. Freeze bank accounts. Conduct no further activity until all facts can be gathered.
3. Notify your insurance company of suspected theft or fraud. Provide them with the facts you have gathered.
4. Do not make an offer to not report the theft or fraud if the money is paid back. Such an offer is extortion.
5. Contact your police department and provide them with the information they request. Do not wait to do this, as PTAs are accountable for reporting theft or fraud. A delay on reporting could be construed as being complicit with the fraudulent activity.
6. Now let the insurance company and police department do their work and report to you on their findings.
7. If your PTA is currently required to file an Annual AG-990 Report to the Illinois Attorney General’s Office, you must report any theft or fraud on Item 10 of that report and file an attachment describing the details of the case. Item 10 on that report appears as follows:

10. WAS THERE OR DO YOU HAVE ANY KNOWLEDGE OF ANY KICKBACK, BRIBE, OR ANY THEFT, DEFALCATION, MISAPPROPRIATION, COMMINGLING OR MISUSE OF ORGANIZATIONAL FUNDS?

8. In the case of findings of theft or fraud, your PTA must use Form 990 or 990 EZ to disclose the dollar amount involved and your corrective actions. You may not use 990N in any year your PTA is a victim of theft or fraud.
9. During the time an investigation of theft or fraud is being conducted for your PTA, please be careful to manage all communications to protect your PTA image. Use positive messaging such as:

The situation is being handled in a lawful manner. Anytown PTA has already made changes in procedure to reduce the risk of anything like this happening again in the future.

10. Be extremely discreet about any information naming the suspect(s) to protect any of their children from suffering any negativity or bullying from other kids at school.

Also remember that your Illinois PTA District or Region Director is there to help you through this process, so don’t hesitate to reach out to them.

The budget and finance committee develops a budget to meet the needs of the PTA’s programs and activities. After the PTA has adopted the budget, the budget and finance chairman (usually the treasurer) is responsible for assuring that PTA money is disbursed in accordance with the budget, presenting necessary amendments to the budget at executive board and general meetings, and keeping all expenditures within the line item amounts of the budget. Remember that any changes to the budget must be approved (voted on) by the general membership.

Composition of the Committee

Refer to the bylaws to determine whether the budget and finance committee should be elected or appointed. The committee usually consists of members knowledgeable about the PTA’s needs, proficient in bookkeeping and accounting, and experienced in planning a budget. The treasurer, past treasurer, and standing chairmen should be members of this committee. The president is an ex-officio member.

Budget and Finance Committee Procedures

1. The budget committee should meet and plan the budget prior to the close of the current fiscal year. If this was not done, do so as soon as possible at the beginning of the school year.
2. Treasurer’s records and copies of last year’s budget should be available for guidance in planning the new budget. However, do not let past practice limit your planning for the new year’s budget.
3. The committee should take into consideration the funds needed for approved programs and projects, leadership development, and committee and officers’ expenses.

Adopting the Budget

1. Present the proposed budget to the executive board meeting for input and approval for presentation to the general membership.
2. Present the proposed budget at the first general membership meeting (after adoption of audit report) for consideration and adoption by the PTA members. This presentation must be made at a meeting where a quorum is present. A majority vote of the members present and voting is required for adoption. The budget and finance committee chairman says, “I move the adoption of the proposed budget for the _____fiscal year.” [Note: The fiscal year is identified by the calendar year in which it ends, so the budget your PTA adopts this fall is for the 2019 fiscal year.] The chairman then presents the budget line by line for explanation, discussion, and possible amendments. A vote is then taken to adopt the final version of the budget.

Remember, the executive board (officers and chairmen) approve the budget for presentation, but the general membership is the group that adopts and amends the budget. Illinois PTA has created a Local Unit Sample Budget.

Photo by Nick Youngsonvia Alpha Stock Imagesunder Creative Commons license.

It happens to almost every PTA every year. A check for membership, spirit wear, or a fundraiser gets returned. Depending on what the check was for, the PTA can be left responsible for full payment on merchandise already received. Here’s how to handle bad checks.

Your PTA’s check handling policies should go in your PTA’s standing rules. Your policy should cover these key points:

• All checks should have the name, address, and telephone number of the person signing the check so you can contact them if the PTA receives a bad check.
• Require the check writer to pay a service charge in addition to any bank charges the PTA receives from a bad check.
• Only accept checks with the current date. Pre- or post-dated checks often indicate that the check writer does not currently have sufficient funds in their account to cover the check, and different date does not necessarily mean that the funds will be there then.
• If someone has written a bad check to the PTA, do not accept additional checks from them unless they have made a timely repayment of the check amount, bank charges, and PTA service charge. Everyone can make a mistake, and banks have been known to process checks faster than deposits. However, if someone has written a bad check but resolved the situation promptly, they deserve a little forgiveness from the PTA.

When your PTA receives a check back from the bank, contact the check writer by phone or e-mail, asking them to make good on the check and pay the bank charges and PTA service charge promptly. In many cases, this is sufficient to get the check writer to fix the problem. However, if this does not resolve the issue, your PTA may want to consider legal action, particularly if the check amount was significant.

In Illinois, bad checks are covered under the deceptive practice law. A person commits a deceptive practice in Illinois when they write a check that they know they don’t have enough money in the account to cover. As the party to whom the check was written, your PTA may infer that the person writing the check knew this if you attempt to cash the check on two occasions at least seven days apart. It is also a deceptive practice in Illinois if someone writes a bad check for more than $150 that doesn’t correct the situation within seven days of being informed that their check was declined.

If your PTA must pursue the legal approach, make sure you inform the person who wrote the bad check by certified mail and include the following information:

• The date the check was written, the bank the check was from, the check number, the amount of the check, and who the check was made out to.
• A request for repayment and additional charges (bank and PTA) within a set time frame.
• A citation of the deceptive practice law regarding bad checks.

Keep a copy of the letter you sent as well as information regarding the PTA’s attempt to receive the funds through the bank and the check writer. If the issue remains unresolved, you can file a police report with your local department. The police may also direct you on how to file a case in small claims court.

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