Financial practices for units: Bank accounts

In the first article in this series, I offered some recommendations on being prepared financially through creating and following an annual unit budget. In this post, we’ll look at some banking best practices for your troop or pack.

Let me first say that I am not a lawyer or a CPA. The points that follow are gathered from reliable past practices as well as my understanding from folks who do know better. As always, check with your own people if you’d like definitive advice that applies to you (it’ll probably cost you, though).

The bank account

  • Every unit should have its own bank account so unit funds can be received, disbursed and accounted for.
  • The only people who should have signing authority are the unit leader (Scoutmaster or Cubmaster), committee chair and the unit treasurer. You may also want to include the chartered organization representative – after all, the chartered organization “owns” the unit and its property, including funds.
    • Take steps to remove access by those adults no longer in these positions.
    • Financial best practices also dictates that no two signers should be husband and wife!
  • For all checks, or checks above a certain amount, two signatures should be required.
  • The bank should not send the monthly statement directly to the treasurer. Rather, the committee chair or chartered organization representative should receive and review it, and then pass it along to the treasurer for reconciliation.

With these restrictions, how do you efficiently handle paying bills or conducting business? If it takes two signatures, how do you handle a last-minute need for a check?

The answer to these concerns is proper planning. Nothing should really come to us by surprise! We already have an annual budget and program plan, and we should know when payments are due, be they campsite fees, rank advancement patches or reimbursement for groceries.

  • All disbursements should be paid by check.
  • Requests for funds should go to the treasurer. Monies already spent (such as on a personal credit card) are accompanied by a receipt and justification.
  • The treasurer, as part of the monthly report to the committee, reviews these requests. Upon approval, checks are written. Since the committee chair is also present, he or she can co-sign the checks.
  • All members should be aware that reimbursements are normally made monthly, and plan accordingly. (If your workflow allows and your treasurer and committee chair are available, reimbursements for budgeted or approved expenses could be made at weekly troop meetings as well, so as not to keep people waiting for their money.)
  • Avoid keeping petty cash on hand. Cash can be difficult to account for.
  • For expenses undertaken by youth, such as purchasing groceries for their patrols, the allowance per person should be agreed upon in advance. The treasurer can withdraw enough cash to give to the Scribe to distribute to the patrol leaders for their groceries.
    • If a patrol goes over budget or wants to spend a bit more on something special (like steak & eggs for breakfast), they are responsible to make up the difference. That’s part of the learning process!
  • On an outing where a final payment is due on arrival, the treasurer can discuss the expected amount with the Scoutmaster, who can then take a check with the treasurer’s signature payable to the camp, fill in the amount and co-sign at the event. Always obtain a receipt.
  • When receiving money, such as for fundraising sales, checks should be made payable to the unit rather than to an individual.
  • Try to avoid handling cash; if you do accept cash, be sure to immediately write a receipt showing the payer, amount and purpose. Date and sign the receipt, give one copy to the person tendering the cash, and keep a copy for your records. (A triplicate receipt book is useful for this purpose; the original goes to the remitter, the second copy can be paper-clipped to the cash, and the triplicate copy remains in the receipt book.) This isn’t a bad idea for checks as well.
  • All money received (cash and checks) should be deposited intact. Don’t reimburse expenses out of cash received. It’s easier to track expenses later if checks are written to cover them, and you maintain your two-signer authorization for disbursement of funds.
  • A person who is authorized to sign checks should not co-sign his own reimbursement check.

Most units already have a bank account established, but it pays to look at your banking arrangements from time to time to see if your banking institution is meeting your needs.

  • Does your bank charge fees? If so, shop around. Some smaller banks and credit unions will offer no-fee accounts to non-profits and community service organizations like ours. Make sure there are no charges for going below a minimum balance or depositing a large number of items, such as you might encounter during membership renewal or fundraising.
  • You may find it desirable to maintain a separate savings or checking account for long-term capital savings or for Scout accounts, to avoid commingling the funds. See if your bank can support this.
  • Is the bank conveniently located? One that’s convenient for your treasurer may be preferable to another that may be across town. Not only does it make it easier on one of the hardest-working people on your committee but it can reduce the delays between receipt and deposit of funds.
  • Online banking makes managing your account convenient and allows you to access statements and balances, check clearance information and to transfer funds. (Access should be restricted to those on the signature card.)
  • The bank statement should at least include cancelled check images, if not the actual checks themselves. (Most banks now “truncate” checks during the clearing process so the actual check may no longer be available.) This can be helpful in proving that a reimbursement was made or that a check was actually cashed.
  • Another helpful feature is having images of the checks you deposit. Some banks will give you a deposit receipt with check images, while others may include them with the monthly statement. In the event yours doesn’t, make photocopies of checks you deposit along with a notation of the date of the deposit.

Our next article in this series will consider non-profit status of units and tax considerations.

Image: courtesy of Ken Teegardin / (Flickr Creative Commons license)

This post first appeared on Bobwhite Blather.
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