Payments made by Check and Cash
As stated in the Basic Controls section, the best system involves making all payments by checks that requires two signatures.
All large commitment of funds (anything above a predesignated dollar amount per the established policies and procedures of the AVO) should be approved in advance by the full board at a board meeting. Other smaller payments and purchases can be made prior to board approval by the designated co-signers of checks. All payments should be listed in the Treasurer's Report that is submitted for approval at each board meeting.
All payments to vendors should be made based only on invoices or bills, not monthly statements. The co-signers of the check should sign it only after matching the invoice/bill to the check amount, verifying correct payee is listed on the check and confirmation by an officer, member or volunteer that goods or services have been received in good order.
- If it is impractical to pay small amounts by getting the signatures of two people, consider two alternatives:A second checking account can be established that requires only one signature, has a present maximum balance (such as $200 or $500) and has printed on the checks: "This check is not valid for amounts over $200." The designated person who makes small payments with this account keeps receipts for what he or she has spent. At a board meeting, or before if the balance in the account gets too low, he or she compiles all the receipts and submits them as evidence for the issuance of a check from the main two-signature bank account to deposit back into the small single-signature account that will bring the balance of the account back up to its preset maximum (again, such as $200 or $500).
- A lockable petty cash box that contains a preset amount of currency and coin (such as $100) can be given to a designated officer, member or volunteer who uses the cash from the box to pay for small purchases and puts in the box receipts/bills for anything paid out of it. At any point in time the cash left in the box and the receipts/bills should total the preset amount (such as $100). At a board meeting, or before if the balance in the account gets too low, he or she compiles all the receipts and submits them as evidence for the issuance of a check from the main two-signature bank account to the petty cash person who can then cash the check and put the cash back into the box to bring the total currency and coin back up to its full preset amount (such as $100).
Never pay for items out of the cash taken in at a food/merchandise stand. Always pay bills using a checking account or the petty cash box.
Never sign blank checks.
Never make checks out to cash.
Keep unused checks under lock and key.
Keep cash on hand under lock and key.
Account for any voided checks. These should be given to the person preparing the bank reconciliation.
The following are actual procedures for handling purchases/payments followed by a youth athletic AVO in Northeastern Pennsylvania (Courtesy of Linda Murphy, Misericordia Accounting Major):
In preparation for the season opening the AVO needs to issue checks for the uniforms, equipment, and signage. The bills are reviewed and approved by all board members with the checks requiring two signors. To supply the snack stand, checks are issued after the invoices are reviewed and approved. All snack stand replenishment invoices and utility bills are reviewed and approved by the board and checks are issued with two signatures.
Next: Bank Accounts