I think it is "unusual" for the principal to be a signer for the PTO account. It may be helpful in some cases, but I don't think it's at all common.
We let our principal spend money in advance of his income -- school picture "revenue share" came in this month, we knew it was coming, so we reimbursed him for expenses earlier in the year. But no one should be borrowing funds for personal use.
Looks like CPA and I posted at the same time. I don't necessarily agree. The principal should not control the PTO account. Nor should he be using it as his own slush fund. But acting as secondary signer - that's up to the group UNLESS the school district prohibits an employee from holding that role.
One of the advantages is continuity. If your offices walk out or if the newly elected treasurer moves over the summer, you have someone already on the account that can help get changes made. (Note there are other ways to do this.)
Let me also add that our principal was a voting board member and thus held a very active, key role in our organization.
Also - no matter who is or isn't on the account, you need good financial controls.
Yes, it is not unusual for a PTO to buy and donate assets to the school. Generally, it should be a true gift. While the PTO may have expectations of how the item will be used, the school becomes the full owner - responsible for the item and all future maintenance.
PTO accounting is typically pretty simplistic. It would be included with the other items reported on the 990 (if PTO needs to file an annual 990).
The principal being on the checking account is purely a choice of that group. Some find it very convenient. Others feel it is a conflict of interest. In my elementary school PTO, the principal often served as the second signature for us. The treasurer still handled the accounts and all proper paperwork was required for any transaction. It worked very well. In middle school, the principal had nothing to do with PTO finances.
Borrowing from the PTO?? I'd have to question that one. When our elementary PTO owned both school fundraisers, we would give the principal some of the funds each year. (Not a loan.) This was a check that went into his activity fund for use on supplies, field trips, teacher workshops, etc. Once in awhile, he'd find this discretionary fund was getting low (compared to the needs) and if the PTO was in good shape, he might ask for more.
The only "borrowing" I think we might have approved might have been a rare budgetary issue. Our state has an odd cycle in that the fiscal year (and thus the year's budget) began 3-4 weeks after school started. This mean the principal had to budget for his whole year, plus enough to start the first month of school the next year. Sometimes expenses were unpredictable and that was hard.
Had he needed help during that odd month and asked, we've have probably have loaned the funds - but more likely we'd have just given them.
1) Get the By-laws
2) Get the By-laws
3) The principal SHOULD NOT BE A SIGNATURE ON THE ACCOUNT for their own sake at the very least.
4) Trust your instincts, they are spot on.
I am a bookkeeper who works with a for profit private school. I have also begun working with the PTO for that school. I have not seen the bylaws so I'm not sure if they answer my question or not. I'm not sure if I need to push to see them or not.
Question one is can the PTO give things like capital items to the school (bleachers, floors for the gym etc.) and if so, how is that accounted for?
Question two is, is it normal for the principal of the school to be on the checking account for the PTO, and to have the ability to borrow funds from the PTO (which do get repaid quickly)? Even if it's not normal, is it wrong? He doesn't do anything inappropriate with the funds, I'm just not sure if this is an ethical matter or not. You know how your stomach will feel alittle odd when you hear something that you think might not be quite right? It's like that. But then, the little information I have could be taking me down a totally wrong thought process. A little information is sometimes very dangerous.
I'm a little concerned about liability in this situation.
