Financial Best Practices

1. Financial Checkbooks should be balanced each month (minimum).
2. All general ledger transactions should be documented with items like invoices, bills, or other legal evidence.
3. Keep track of each check (written, voided and blank). Carbon checks are recommended. Keep all returned and voided checks. It is also recommended to have two signers required on each check and to utilize the check’s memo line to help your group know why a check was written
4. Create and use a reimbursement form each time a reimbursement check is issued. Expenditures must have approval from the proper source (executive board, general membership, advisor, etc.) prior to the actual purchase. No receipts=no reimbursement.
5. NEVER issue a blank check.
6. Blank checks should be stored under lock and key.
7. The treasurer should keep a record of all monies. Make sure to back up any electronic files in case of emergency.
8. Update authorized signers immediately with any changes in officers. When there is a completely new group of officers, an outgoing officer should be present at the bank to verify the new signers.
9. Pay invoices on time to avoid late fees as well as possible future problems with doing business with a particular vendor.
10. Deposit all checks and cash received within 48 hours of receipt. Incoming checks should be immediately stamped “For Deposit Only.”
11. Create a conflict of interest policy that incoming officers will sign each year. This policy will ensure that group funds will not be used for personal gain, as well as helping your group think through different factors in the decision making process.
12. Conduct regular independent audits. This will help ensure that your group is regularly and accurately recording transactions and properly maintaining files.

Student Activities Advisors are happy to meet with group leadership to go over sample general ledgers. Contact Student Activities to schedule an appointment.

Student groups should ensure the separation of financial duties to serve as a checks and balances system to prevent theft, fraud or inaccurate reporting. This separation of financial duties should separate the function of paying bills from reconciling the group’s financial records. Student groups should set an approval process for all purchases to eliminate inappropriate spending/purchases. These financial controls should include individual purchase thresholds. All expenditures not usual to the pursuit of the group’s normal operations should have prior approval from the group. These expenditures include, but are not limited to; loans, transfers or funds to other organizations, grants, special banquets, and social programs. Any check payable to the signer of the check should bear the signature of another registered officer.

Groups should clearly define the roles and responsibilities of each position and should include financial duties in those descriptions. Officers’ roles and responsibilities should be incorporated into governing documents (i.e. the student group’s constitution). In addition, groups should establish a Conflict of Interest Policy that is signed by officers on an annual basis.

A conflict of interest typically occurs when a person in a position of authority over an organization may benefit personally from a decision he or she could make. A conflict of interest policy consists of a set of procedures and guidelines to follow to avoid the possibility that those in positions of authority over an organization may receive an inappropriate benefit. A conflict of interest policy also protects a group from potential activities that would benefit the private interest of an officer or member and would compete against the best interest of the group. These policies typically require officers or employees to disclose any interests that could be considered a conflict. Please view the sample conflict of interest policy when developing your group’s internal procedures.

Student groups should produce a financial disclosure plan, or a summary of expenses, income and general activities. Registered Student Organizations whose gross receipts (income) are more than $5,000 annually have a filing requirement with the IRS. Please see the Taxes page for additional information. A best practice for student groups is to also include a financial disclosure plan as part of your group’s yearly review.

The financial disclosure plan should include:

1. A brief description of the organization’s mission/most significant activities
2. Number of voting members and non-voting members
3. Number of employees
4. Number of volunteers
5. Revenue from grants
6. Revenue from programs/services that the group has offered
7. Other revenue
8. Grant money awarded to outside entities
9. Salaries or other compensations
10. Total fundraising expenses
11. Operational costs
12. Other expenses
13. Tax Documents- Exemption Application (Form 1023 or 1024), IRS Determination Letter, and Annual Information Return (Form 990 or 990-EZ)

Independent auditing is an important element of the ongoing financial solvency and accountability of student groups’ accounts. Student Unions & Activities also reserves the right to audit a student group. In the event that a student group is audited, the following items may be requested: general ledger, fees request, and bank statement for reserve account, payroll tax returns, receipts, invoices, cancelled checks, grants applications/documents, and sales/fundraising documents.

In order to be transparent with its members and the public, student groups should establish and evaluate clear performance measurements annually. Student group officers should clearly define their decision making processes with the group’s general members. Meeting minutes should be taken for all group meetings and made available to the general membership.

We encourage groups to create an annual report that can be shared with the group membership and general public. This report should include an explanation of the group’s mission, activities and results, and annual financial report.

Student Activities Advisors are happy to meet with group leadership to go over sample annual report documentation. Please contact Student Activities to schedule an appointment.