But, generally speaking, a business has two choices of accounting methods: Cash or Accrual. Let's use an example where you make $5,000 on a fundraiser and $1500 has already been collected.
In the cash basis, you count income when it's received and expenses when they are paid. So if you prepare your reports for this month, you have $1500 income to report.
In the accrual basis, you count income when the sale occurs, and expenses goods/services are received. So, under accrual, you have $5000 in income at this point.
It's just a matter of timing, in the long run the figures are the same. Frankly, I don't see how a PTO, with relatively small dollars and short timelines would benefit by switching (and you do need to state which method you are using on your IRS filing.) So maybe that's not what they are talking about.
Our treasurer is trying to address the extra funds by changing the accuonting practice every month to say we have less money then we really have.
I understood your first two sentences, but I'm not getting this one. Are you saying that your treasurer is intentionally misrepresenting the financial position of your organization??!!
Our pto has a grant commitee where once a year teachers can apply for extra funds. Previous fundraising took in more than expected so they are discussing have a second grant in the Spring. Our treasurer is trying to address the extra funds by changing the accuonting practice every month to say we have less money then we really have.
Songbird- Tim's right. It is perfectly okay to carryover seed money or money designated for other projects. (I am speaking officially as a PTA State Board member)
I also have to agree with the comments that parents like to see the money their kids raised, spent to help their kids or at least a good majority of it.
Another option you could present if your excess is really large and your school is already blessed, is to help another school that may not be as fortunate. Here we have one school that makes more than enough and are struggling to find places to spend it and another that hasn't had new computers since the age of Tron and no funds to buy copy paper. Ask your membership what they would like to use the money for!
Without reading too much of previous responses, in the interest of time here (and please forgive me if I repeat anything already suggested)
But this year, our PTA at my school raised $17,000 in surplus above the original budget. Our unit Prez put together a meeting with advance notice to all teachers, committee chairs, etc. to bring their "wish-lists" the proposed costs of those items, what they are for etc. A regular proposal to the meeting. The items were then placed on a ballot (All, even the silly ones) and at the next meeting, sample ballots in hand, the items will be voted upon in order of importance. The results will decide what will be funded. After that the budget will be amended to include these items and voted on again.
Okay, just read the part about not having a budget. It is really good idea to have one.
Also, one of the items up for vote is investment in a CD to cover the cost of a new playground. It is a good way to hold onto cash for carryover, without holding cash and making it work for you!
Good Luck!
rvrkids - We create our new budget in August with the new officers, and after all the activity of the prior school year has ended and our audit has been completed. Our situation is different from yours, however, in that we have always had a budget and I think our officers and members expect and respect the process. Since the idea of a budget is new to your PTO, I suggest you put together a preliminary proposal in May or early June based on the actual activity your PTO had this year and what you think are the plans for next year. If you make it easy to update (in Excel, for ex.) and train your successor very well, hopefully s/he will make the necessary refinements and start the school year with a sound budget.
Encourage (dare I say, "demand"?) the new officers to present the annual budget for approval by your members so they all buy in. We do that at the first PTO meeting of the year and before we write any checks for the new year.
After 4 years of being a treasurer, it would kill me to see our PTO not budget. Keep up the good work.
