Don’t Get Burned: Essential Financial Controls for Treasurers
Parent-teacher groups do a lot of good for schools. But every now and then, a board member does something wildly unethical, like misusing funds. Unfortunately, this is more common than you’d hope. If you Google your local community along with terms like “parent-teacher group” and “embezzlement” or “misappropriation of funds,” you’ll find more results than you’d expect.
While you can’t control who sits on future executive boards, you can put strict financial controls in place now to make your group’s bank account a hard target.
The goal? Emphasize accountability and ensure transparency.
First, let’s all agree that we need more than a PTO-of-one. Consolidating the treasurer’s role and the president’s role is a recipe for disaster. You need oversight, and the treasurer is there to provide that.
In this article, we’ll explore different approaches to handling financial controls for parent-teacher groups, each with its own pros and cons. Here’s a look at common strategies, with a special focus on the treasurer’s role. Figure out what approach works best for your group and then enshrine it in your bylaws.
1. Treasurer as Check Writer and Reviewer
This approach is common but also leaves your organization the most vulnerable to abuse.
- Description: The treasurer has both the authority to write and sign checks, as well as the responsibility to review expenses for legitimacy.
- Treasurer’s Role: The treasurer reviews and approves all expenses and is also authorized to write and sign checks.
- Process:
- Expense Review: The treasurer reviews each expense and verifies its legitimacy before writing the check.
- Check Writing and Signing: The treasurer writes and signs the check once they’ve approved it.
- Periodic Oversight: The board or a finance committee conducts periodic audits or reviews to ensure that all checks are legitimate and that no fraud is occurring.
- Pros: This approach is efficient because the treasurer can handle the process from start to finish, making it faster to process payments. It also allows PTGs to use their debit cards instead of being limited to check-writing.
- Cons: There is a higher risk of fraud or error since the same person is reviewing, writing, and signing checks. This approach relies on periodic oversight for accountability.
2. Dual-Signature Requirement
This approach keeps the board informed of all financial decisions.
- Description: This approach requires two signatures for each check, ensuring that payments are legitimate and approved by more than one person.
- Treasurer’s Role: There are two ways to implement this approach. Option 1 allows the treasurer to write the check, sign it, and get another board member to sign it. The other option allows the treasurer to write the check but requires signatures from two other board members.
- Process:
- Expense Verification: The treasurer reviews expenses and prepares checks as needed.
- Check Signing: Both the treasurer and another officer (often the president) sign each check.
- Record Keeping: The treasurer maintains records, and both signatories review these periodically.
- Pros: Requiring two signatures strengthens financial control by ensuring that payments are approved by multiple people, reducing the risk of fraud.
- Cons: The process can be slower since it requires coordination and clear communication. Additionally, an unethical treasurer could circumvent the process by using a debit card.
3. Treasurer as Reviewer Only (No Check Writing)
This is my preferred approach since it offers the most protection for your parent-teacher group.
- Description: The treasurer does not write or sign checks but focuses on reviewing expenses for legitimacy and budget alignment.
- Treasurer’s Role: The treasurer reviews all expenses, but another officer is responsible for writing and signing checks. You can even require two signatures.
- Process:
- Approval Process: The treasurer reviews all expenses for legitimacy and budget alignment.
- Check Writing: A different officer or finance team member writes and signs the checks.
- Ongoing Oversight: The treasurer reconciles bank statements and oversees the financial process without being involved in check writing.
- Pros: This structure allows the treasurer to focus on oversight, ensuring checks are legitimate without being involved in writing or signing. It provides a clear segregation of duties and works well for groups that use a debit card.
- Cons: It can create delays if there’s not a clear process for check requests and approvals, and it requires effective communication.
Which Approach is Best?
Implementing financial controls may feel like a hassle, but it’s a necessary one. A freewheeling treasurer is a recipe for disaster. We simply cannot anticipate the moral fiber of future executive boards, so it’s crucial to set up a parent-teacher group that makes unethical behavior as difficult as possible.
The real question isn’t which approach is easiest but which provides the most protection for your group. By implementing robust financial controls, you not only safeguard funds but also uphold trust and transparency, ensuring the long-term health of your organization. Don’t be the board member who left the door open for abuse—be the one who locked it tight.