I belong to two PTOs. In the first one, the school district auditor audits our books for free during the summer. We have to give up the checkbook for several weeks while he fits it in, but that's no big hardship.

In the other, we have a small audit committee. I agree with the others that it would be better not to have the treasurer present. Even with the best of relationships, it's hard for it not to be awkward.

One of the advantages of conducting the audit away from the treasurer/treasurer's domain, is that it ensures that the treasurer gets the files organized enough to be able to physically hand them over to the auditor. Knowing someone else will have to negotiate through a year's worth of paperwork forces the treasurer to do a through year-end clean up.

Since the audit is done on closed business, we just print all the transactions for the year off the computer, and provide that report to the auditor. The way we've done it, the auditor doesn't need direct access to our computer system. We hand over the cancelled checks for the year, the bank statements with reconciliation reports, the check register (but not the blank checkbook), all our financial transacation forms, the treasurer reports, our bylaws, and the minutes from the year's meetings.

Sometimes it sounds like an audit is something a group of people can do in one sitting. That's not been our experience at all, and we keep pretty good financial records. It usually takes our volunteer several hours over the course of a couple of weeks to complete the process. I'm curious how PTOs who have audit committees are able to get everyone together and/or delegate the work.

To "almost" - Even though we are a registered 501c3, I don't recall any specific requirement from the IRS that we need to have our books audited at all. However, it is a very sound financial practice, and should be done by any group that handles money. Your bylaws and members should demand it. Normally, an audit is conducted shortly after the end of your PTO's fiscal year, and whenever there's a change in treasurer's mid-term.

Thanks Goalie for your reply. I've served on an audit committee once, and the treasurer just supplied us with the information/files they weren't present. I felt we could discuss any possible changes in the system without upsetting or insulting the current treasurer.

Assuming you have neutral auditors, I don't see a problem with having the treasurer present. In a lot of ways, it would be helpful to have him/her there. That way, if there are questions, they can be answered immediately. Also, if you exclude the treasurer from being there, you could create an atmosphere of distrust.

For our group, I believe it would be easier to do at my house (I'm the treasurer) since that is where all of the files are and all of the data is in Quicken on my computer.

When companies are audited, the accounting and finance staffs are typically kept very busy working with the auditors to get them what they need. It would be very difficult to conduct an audit without assistance from the people/company being audited.

[ 06-14-2005, 11:03 AM: Message edited by: Goalie220 ]

Question: Our PTO just finished applying for 501 (3)C status with the IRS. We will hear back in the fall if it has been accepted. Once you have that, what are the legal requirements for auditing books? Does the IRS do it or are we supposed to get an outside auditor to do it and submit to the IRS?
If the latter, then when during the year should this happen?

If parents do the audit, is the treasurer usually present during the audit? Our treasurer wants the audit done at her home, I think it should be done without her present. Any comments?