An audit is an examination of the financial records, business transactions, accounting practices, and internal controls of an organization. It is performed to assess the accuracy of an organization’s financial records, the quality of its record keeping practices, how well the organization is safeguarding its assets, and its compliance with applicable laws and policies. An audit can be a useful tool to help your PA/PTA identify holes in the protection of its funds and uncover fraud or theft.
Although CR A-660 does not require audits, it recommends that PA/PTAs conduct an internal audit once every year and whenever there is a change in the office of treasurer. When a PA/PTA decides to conduct an internal audit, an audit committee must be formed. This committee must be selected by the general membership and the majority must be general members. Signatories of PA/PTA checks may not serve on or guide the work of an audit committee. The regulation recommends that PA/PTAs with over $50,000 in revenue hire a CPA or person with professional expertise in accounting or business to conduct their internal audits. This individual cannot be a member of the PA/PTA, a relative of any PA/PTA member or have any direct or indirect interest in PA/PTA funds.
Your bylaws should include a provision for conducting internal audits. The PA/PTA Bylaws Template includes suggested language about the composition and role of the audit committee, and the structure of the audit process. For example, it states that the audit committee, upon completion of its review and investigation, shall prepare a written audit report to be presented to the membership at a general membership meeting, and that this report shall be included for review and discussion during the June transfer of records.
External PA/PTA audits may be conducted under certain circumstances: if serious allegations of financial impropriety are raised, or a grievance or complaint is filed relating to the financial practices of PA/PTAs, the Chancellor or the Chancellor’s designee may conduct an audit. In such cases, the Chancellor and/or the designee must have access to all PA/PTA financial records.
If an audit reveals financial discrepancies or wrongdoing, a written statement by the audit committee or auditor must be forwarded to FACE, and copies of the statement must be presented to the membership. PA/PTAs must also send copies to the principal and the Presidents’ Council. The Chancellor and/or the Chancellor’s designee may order corrective or disciplinary action pursuant to section IV of CR A-660.