What?
An AFR report is not a bank statement or bank verification. It is a statement by the officers that their records are correct, or a reconciliation carried out and signed by an “auditor.”
Why?
An Annual Financial Reconciliation (AFR) is required by PTA bylaws.
An AFR of the treasurer’s accounts is for the protection of the treasurer. It relieves the treasurer of responsibility except in case of fraud.
An AFR provides for accountability to the PTA membership.
Who?
“…by an auditor or an AFR committee of not fewer than three members…” (Article VII, Section 6).
“Members of the AFR committee shall be members of PTA/PTSA” (Article VII, Section 6a).
“…appointed by the Executive Committee” (Article VII, Section 6a).
“…shall not be any officer who may sign the checks or be related to, by blood or by marriage, or reside in the same household with, any of the officers who may sign the checks…” (Article VII, Section 6b).
An AFR committee would perform an “internal AFR,” following Utah PTA’s recommended internal AFR procedure (See "Annual Financial Reconciliation [AFR]" sections of this handbook). An outside auditor is not required to perform an AFR “in accordance with generally accepted auditing standards.” “Agreed-upon procedures” (based on the recommended internal AFR procedure) or a “review” is sufficient to fulfill the requirement. A professional auditor who is a member of the PTA could perform an “internal AFR” such as would be performed by an AFR committee.
The qualifications of an auditor are not specified by the bylaws.
Consider the following in selecting auditors:
- Familiarity with PTA and its activities
- Accounting and/or auditing experience, preferably with non-profit organizations
- Diligence and commitment
- Honesty and fairness
- Availability
- Does NOT have to be a member of the PTA being audited
When?
Financial records should be put in order for the AFR process shortly before the end of the fiscal year.
The fiscal year is July 1 to June 30.
The outgoing treasurer should strive to have all transactions completed as early in June as possible. For local PTAs on a traditional calendar, this should be fairly easy. Those on a year-round calendar will have more difficulty, but adequate planning can minimize the number of “last minute” transactions.
Once the books are closed for the AFR, the outgoing treasurer may not complete additional transactions. In no case should the outgoing treasurer make deposits or write checks after June 30!
Outstanding bills are common and can be paid by the incoming treasurer on or after July 1. By way of summary, no transactions should occur between the time the books are closed for AFR, which will be no later than June 30, and the time the incoming treasurer begins transactions, which will be no earlier than July 1.
How?
Once the financial records are put in order–including the preparation of a Year-end Financial Statement–the treasurer shall deliver them to the AFR Committee.
The following items are needed to conduct the audit:
- Copy of last audit report
- Year-end financial statement and monthly treasurer’s reports
- Bank statements and reconciliation reports—including June 30, if at all possible
- General ledger, or transaction report, organized by category
- Check register
- Funds Received Forms, with supporting documentation
- Check Request Forms, with supporting documentation
- Copies of meeting minutes, including the approved annual budget, as well as any amendments that were approved during the year
- Current membership list
- Current bylaws (and standing rules, if any)
- Any other information requested by the auditor/AFR committee
The June 30 bank statement should be included in the materials given to the auditor, if at all possible.
When Complete
“The auditor or AFR committee shall submit its report to the new executive committee no later than August 1” (Article VII, Section 6d).
- Make sure that the AFR report has been signed and dated by the auditor/AFR committee.
- Consider also keeping AFR “working papers” (such as an AFR procedure checklist and suggestions for improving financial policies and procedures) with the records audited.
- The year-end financial statement and the AFR report should be submitted to MemberHub or council/ region treasurer no later than August 1.
- “The [AFR] report shall be presented for adoption at the first general membership meeting of the new school year" (Article VII, Section 6d). It makes sense to present the related year-end financial statement at the same time. The motion to adopt the AFR report is made as follow:
- The treasurer could make the motion: “I move that the AFR report be adopted as presented.” If the motion comes from the budget or finance committee, no second is required. Otherwise, there needs to be a second.
- The president asks: “Are there any (further) questions about the AFR report?”
- After questions, if any, the president calls for the vote: “If there are no (further) questions, we will take the vote on the motion to adopt the AFR report as presented. All in favor, please say aye. All opposed, say nay.”
- The president then reports on the result of the vote: “The motion to adopt the AFR report has passed (failed).”
- The AFR should be filed with the PTA's permanent records, with a copy placed in the subsequent year's file.
Digital Template - Annual Financial Reconciliation AFR (Google Sheets) The file is set to "view only." Download a copy and work from your Google Drive.