1. For Locals & Regions

2.  Administration & Fiduciary Oversight  Regulatory Requirements  Technical Tasks 2

3.  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) 3

6.  How to choose a bank ◦ Financial ◦ Service ◦ Location ◦ Auditability 44-45

7.  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.  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.  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.  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.  See info in the book- pages 43-44  If you have IPACE funds, this requires a separate bank account 43-44

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

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

17.  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 17 22-23, 35-36, Appendix 9, 13 &16

18.  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

20.  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 20 49-52

21. 21 November 110% of obligation December 120% of obligation January 130% of obligation February 140% of obligation March 150% of obligation April 160% of obligation May 170% of obligation June 180% of obligation July 190% of obligation August 1100% of obligation 50

22.  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.  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.  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.  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

27.  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” 27 38-43

28.  One size does not fit all Size/complexity of organization Prior treasurer’s system Current treasurer’s preference 28 38-43

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

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

31.  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 31 52-57

32.  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 32 52

33.  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 33 53-57

34.  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 34 53-57

35. 35 54

36. 36 57

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

38.  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 38 58

40.  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.  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

43.  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.  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.  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.  Check constitution/bylaws for requirements  Get Member Input  See Budget Training Video on IEA Website 46 12-15, Appendix 2, 3, 4, 5

47.  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.  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 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! 49 28, Appendix 13

50.  “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) 50 28, Appendix 13

51.  If you tell us that you are filing the 990/990- EZ but fail to do so, after a period of time the IRS will take away your tax exemption! ◦ Serious financial consequences for your local ◦ Significant time, effort and expense to get it back 51 28, Appendix 13

52.  Must report payments to INDIVIDUALS to the IRS, IF:  Over $600 in total for a calendar year  For Services: Not for products, supplies or expense reimbursements  Gifts and awards don’t count 52 29-31, Appendix 13

53.  Stipends: officers (W-2 vs. 1099)  Stipends: non-officers  Payment of dues for officers  Undocumented expenses: report even if under $600 53 29-31, Appendix 13

54. 54 30

55. 55 31

56.  D-2 (State Board of Elections) ◦ ~30 large locals registered with the State ◦ More may be required to file due to increase in the IPACE rebate amounts!  Your financial system must produce reports showing receipts and payments needed to complete the D-2 Appendix 13

57.  DO YOU HAVE TO FILE? One-time threshold: $3,000 spent in any 12-month period Only certain expenses “count” If you exceed the threshold, you must register as a PAC immediately and then file quarterly reports forever  Keep up with state due dates and requirements 57 22-23, 35-36, Appendix 9, 16

58.  Local leaders  Regulatory agencies  General public  Members

59.  Internal controls  Signs of fraud  Audit  Policies  Monitor deadlines

60.  Checks/balances and separation of duties  Helps protect the organization from undetected fraud  Helps protect officers from potential embarrassment and liability  Protects the treasurer’s credibility 60 17-18

61.  List of controls, Appendix 6  Please read the example on page 18! 61 17-18, Appendix 6

62.  Don’t think “It can’t happen here” Numerous cases at IEA locals in past few years Usually involves people in positions of trust  Pressures/Opportunities Many factors can induce someone to commit fraud Lack of good controls presents an opportunity 62 18-21, Appendix 7

63. 63 18-21, Appendix 7

64.  If you see the signs... DON’T ASSUME THE WORST!!! They could just signify substandard practices Check with your UniServ director Don’t ignore the signs; doing so can end up reflecting on you 64 18-21, Appendix 7

65.  Having an “independent” person or group examine the financial records is a good internal control ◦ Deters shenanigans ◦ Catches honest mistakes ◦ Shows your members you are concerned about safeguarding their money\  Don’t create a false sense of security! 9-11, Appendix 1

66.  Large Organizations: Outside CPA “Audit” vs. “Review”  Smaller Organizations: Audit Committee Independent of Governance Start with a Checklist (Sample on page 62) Final Report to the Board  Share Report with Members 66 9-11, Appendix 1

67.  Have a written policy on documentation and reimbursement Overall expectations What is covered/not  All expenses must be documented (detail on 53-56)  Donations to FCPE are not reimbursable  Region vs. Local funding 67 21-22, 55-57, Appendix 8

68.  Having a calendar with all significant deadlines, and having this monitored by your governing body, ensures; ◦ Reporting deadlines, with possible financial penalties for noncompliance, are not missed ◦ Promotes awareness of what goes on at the local ◦ Everything gets done!

70.  If you are required to file reports, ◦ They will be reviewed and followed up on ◦ If you miss a filing date it may be costly ◦ The reports may be audited  These agencies can also audit other areas within your operation, for compliance with laws  They may send you “Notices” requesting information  Solution: KNOW THE RULES; GOOD RECORDKEEPING!

71.  DO NOT IGNORE!  Seek help  Check TIN  Keep copies/proof of delivery 71 32-33

72.  Federal/State/Local Income Tax- EXEMPT  Sales Tax - NOT EXEMPT  Exemption requires that your funds are spent for your “Exempt Purpose” You must be able to demonstrate this if audited, hence the importance of documentation! 72 26-27

73.  You can, AND SHOULD, make a “profit” Only way to build up funds Must be used for exempt purpose 73 26-27

74.  990s, 990-EZs, LM-3s, and virtually all info filed with the State Board of Elections are available online to anyone  Anyone can walk in and demand a copy of your 990 or 990-EZ, and you are legally required to provide it  Anything you post on the Web is fair game

75.  Financial reports  Budget  They are part of the “General Public”

76.  Failure to remit IEA-NEA dues will result in scrutiny and possible audit  Regions must follow protocol in submitting budgets and other documentation  Random audits of regions

77.  Questions  Online resources  On-Site training

78.  Randy Welch randy.welch@ieanea.org randy.welch@ieanea.org  Al Llorens al.llorens@ieanea.org al.llorens@ieanea.org  Annual training sessions 78

79.  IEA Website www.ieanea.orgwww.ieanea.org  Financial Procedures for Locals and Regions handbook  Financial procedures video  Membership processing video  Budget video  NEA online treasurer training  Tips for new Treasurers 79

80. 80 CLICK “RESOURCES”

81. 81 CLICK “FINANCIAL PROCEDURES”

82. 82 CLICK here for the handbooks CLICK here for workshops & webinars