1. I'd do an internal audit and have results in hand.
2. I'd speak to him (very professionally) about his concerns and goals.
3. I'd speak to district superiors and take the high road, but I'd make sure they know that parents at your school want to be involved and -- for the sake of the klids and the school -- want to make sure that parent involvement doesn't go away (or get suspended -- geesh!).
Closing down parent involvement is a very iffy move these days, both politically and public relations-wise. I assume you do great work for your school and the kids. Tough for anyone to win a public relations battle where they are "against" parents being involved at their own school.
Play that card subtly, and make it known at all times that you'd love to help make the principal look like a hero (provided he encourages and supports involvement).
We have a new prinicpal that likes to micro manage. He wants to have a PTA on campus instead of a PTO. He met with us in October with a list of paperwork he wants us to submit prior to fund raisers, movie nights, skating parties, year book etc... he also submitted a request to the city shcools buisness services to have us audited. They declined ,so he told us that he is just going to suspend all PTO functions for the rest of the year. Do we surrender all funds and financial papers and just give up? We have been a PTO since 2001 and never had any problems with prior principals. Please help.