Most banks, nowadays, will not allow two-signature accounts, because it is too much trouble and risk for them. Further, they do not review each check before deciding whether to pay it. The key to make sure that the checking account is reconciled every month and to require the treasurer to present a monthly report showing receipts and expenditures. The report should list expenses by check number, and missing numbers should be accounted for. If the check is spoiled, it should be retained, to prove it was not misused.
Our treasurer can sign checks, but we have a two signature policy. In addition, our bank enforces it (we have been called and charged a fee when the second signature was not done). We pay a fee per check written, but to us it's worth it. We try really hard to not have a person sign a check that they receive. It works real well for us. My question to anyone responding to this is ....What's the best way to audit the bank statements monthly?...How do you log in monies received at a fundraiser and compare it to the deposits?
Our treasurer reported last night on his research of area banks and what services/fees were offered for a small non-profit account. Basically it came down to 2 choices, with the differences being:
1) No minimum balance, no fees, but the bank will not take/will not require 2 signature checks.
2) Bank will take 2 signature checks (no assurance on how well it's enforced), requires a minimum balance of $3000 or else $10 per month in fees.
Much as the president hated to give up a two signature policy - it seems silly to pay the extra $120 in fees each year. (This is a middle school PTO, we do little fundraising, and our balance will probably fall below that amount this Spring.)
We decided to go with the free account, the policy that the treasurer prepares - but doesn't sign - checks, and one of the co-presidents must sign it. So two board members are involved in each transaction.
Our account is set up so that cash withdrawls require 2 signatures whether in person or on a check. They have accepted checks with only one signature but never for cash.
The irony of commitment is that it’s deeply liberating-in work, in play, in love. The act frees you from the tyranny of your internal critic, from the fear that likes to dress itself up and parade around as rational hesitation. To commit is to remove your head as the barrier to your life. --Anne Morris
Actually, I'm not in favor of statements being mailed anywhere but the school. I've just been through way too many episodes where PTO documents or materials ended up at someone's house and were hard to get back.
No matter which way we go, it's not failsafe. Since banks don't enforce the two signature rule, a treasurer could conceivably write any checks desired. If the president takes over the checkbook, same thing.
I think we have to look at the entire risk management package. You put in policies, require documentation, AND have the audit each year. Hopefully the combination is strong enough to either prevent or deter someone.
And regarding possible theft, I'm least worried about the checkbook (if we do these things). If someone is going to steal from the PTO it's far easier to misappropriate cash.
I feel funny about giving up a two signature policy, but I see your point. Unfortunately for you, your officers know the bank doesn't enforce the two signer rule. I never told anyone that it's just an internal policy.
We went one year without getting our cancelled checks back because the bank would have charged us a fee. Despite our extensive paper trail for each transaction, I thought we were still missing an important part of the process by not getting our checks back. It would have cost us time and $ to get a hard-copy of a check if we had seen something suspicious. Plus it made the audit a little difficult, since our auditor couldn't verify the 2 signer rule on the actual checks.
The next year when we went bank shopping, one of my criteria was a bank that gave us our cancelled checks back for free. We now get them back each month with our statement, for free.
Our bank sends our monthly statement to the President's (my) home. I look it over, but No, I don't keep a list of every check I've signed, so I don't really know if it's all legit. It's just a second set of eyes that could possibly expose some particularly unusal situation. I initial the statement and then pass it to the Trez.
I assume that even if you drop the 2 signer policy, you'll have two authorized signers (Prez and VP?)from which to choose. I have submitted several reimbursement requests myself and I don't want to sign my own reimbursement check, so the other 2 authorized signers do the honors.
JHB, your last point is the one that bothers me most. All it takes is one future president who gets frustrated with a "slow" treasurer, and demands to take over the checkbook. Maybe in your PTO's case, the statement should be mailed to an officer who ISN'T an authorized signer. The bottom line is no one person should be able to access the money unchecked.
