Question: Executive Board accused of breach of fiduciary duties

Please help. Our board was recently accused of being in breach of our fiduciary duties and an article of our incorporation. This came after our last meeting was canceled because two of the board members had given notice of resignation due to problems with a parent(whom is a former board member from last year) . The resignations had not been voted on and accepted yet because the remaining board was trying to first find replacements. The two that had resigned were the treasurer ant the vp and they have check signing authority. Without replacements in place there is no one else to sign checks along with the president(2 signatures required on checks) rendering the PTO helpless in being able to do anything. The parent who is causing all the issues is a former vp from last year who does not like this years president and has been slandering her since the end of last year. She gave a letter to the principal of the school basically state the pto is misappropriating funds and wants to examine all pto records and a full financial accounting. She even sited state statute for non for profit organizations. If we do not reschedule our meeting that was canceled for last month by one of the two dates this letter is stating then the letter states "subsequent action will be taken" We have done nothing wrong...This all comes down to one person not liking this years president whom was president last year. Rumor also came back to us that some of the parents who signed this letter are claiming that they only signed a letter requesting another meeting not accusing the board of theft...PLEASE HELP US..WHAT DO WE DO!!!!!!!

Asked by Anonymous

Answers:

Advice from PTO Today

Craig writes:
Don't panic -- you know the actions you've taken have been in good faith and to the best of your ability. Approach it with that attitude, and don't let yourselves be bullied. If you think legal action legitimately is being threatened, you should consult an attorney, preferably one with experience with nonprofits. The school district attorney might be able to offer some advice or at least point you to someone who can help.

You do have to make your financial information available, but that doesn't mean you have to let anyone who wants to thumb through your receipts and deposit slips. It just means you have to make your financial statements available to the public. Ask the attorney, or call the state (corporations office and/or attorney general) to get the details of your state's requirements. It sounds like doing a thorough review of your books might be a good idea -- appoint a neutral review committee (not include the person threatening you) to go through your records and make sure the books are correct.

Regarding the two-signature rule, you can vote to change the rule, or you can appoint someone else as an additional signer (school secretary or principal, for instance). And by the way, banks don't actually check for two signatures on a check -- it's just an internal control.

Good luck, and please let us know how it goes!

Community Advice

FreedomFalcon writes:
Thank you Craig, I will bring this information back to the board. Given the severity of the situation, the treasurer who's resignation has not been accepted or voted on has rescinded her resignation to help prove that we the board have done absolutely nothing wrong. We have been completely transparent the whole year and have provided financial accounting reports at every months meeting, with the exception of last month because it was canceled and the meeting was scheduled in the middle of the month because of Thanksgiving break. Since the meeting was supposed to be in the middle of the month the report would not have been valid because the month had not finished yet business wise for us.