Florida 4-H Program Handbook

SECTION 5: Procedure for Handling Funds

How Are 4-H Club (Unit) Accounts Created?

There are several different ways in which 4-H accounts for individual clubs (units) have been established historically in Florida. They may be classified as sub-accounts in the County 4-H Foundation or each individual 4-H club may have its own account.

Regardless of the county method, there are some universal policies, guidelines and procedures that need to be followed in either maintaining accounts or establishing new accounts as new units are created.

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Establishing A 4-H Club Account

The first initial step is the authorizing or "chartering" of 4-H county or local units. Clubs must be chartered to be eligible for an account with the authorization to use the name and emblem.

All 4-H Clubs which receive/expend funds, and which are organized on either a formal or informal basis, should have some type of written evidence that recognizes them as part of the 4-H program conducted by the CES.

The 4-H Charter (or other documentation) authorizing a volunteer managed organized to carry out a program of youth activities using the name and emblem also authorizes the club to establish one (1) checking/savings account for its activities. Additional accounts require special approval from the County Extension Director.

It is recommended that an annual application of continuation for club charters be used as a method to remind the unit leaders of the fiscal role/responsibilities of club accounts.

All individual 4-H clubs operate under the authority and jurisdiction of their respective County Extension Director.

While accounts can be handled within the extension office, NO 4-H faculty, specialist, or county staff member or 4-H leader’s name should appear on any checking or savings account of a 4-H club or program.

Proper use of the 4-H name and emblem must be abided by in all fund-raising and account management activities. County 4-H units, individual 4-H units, and their leaders and members are accountable for all funds raised by them or in their name. This includes responsibility for how funds are used and protecting balances from misappropriation. To insure this, an annual financial statement must be prepared which includes details on income and expenditures for any 4-H unit authorized to use the 4-H name and emblem. See the 4-H Homepage for details of application and chartering of local 4-H units. A sample form for an Application of Continuation of 4-H Charters is found in Appendix B. 

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Recommended Guidelines for Managing 4-H Club Accounts

Each county 4-H extension agent is responsible for overseeing the handling of treasuries and fund-raising activities by 4-H units, 4-H members, 4-H leaders, and parents. Additional or customized reporting procedures may be established by a County Extension Advisory Committee as approved by the county director.  Any 4-H unit authorized to have a treasury or participate in fund-raising activities should be required to meet the following requirements for good accountability:

• A 4-H unit that plans to maintain more than $25 in funds must establish its own savings and/or checking account. The 4-H extension agent can authorize establishment of an account. Accounts should be set up so that they require two signatures from unrelated people.
• All bank accounts must be established with a federal identification number and reported to the County Extension Office. No account held in the name of 4-H should use the name of a 4-H member or leader nor should a Social Security number of an individual be used in lieu of the appropriate tax identification number. Any accounts currently operating under a social security number must be converted to comply with aforementioned requirements.
  
  If 4-H clubs have sub-accounts under one County 4-H Program/Foundation account then individual 4-H units within the county are not required to apply for individual identification numbers. Under these conditions the County Extension Office must maintain account procedures according to Extension policies.
• Account names must include the club name and "4-H Club".
• Before beginning any type of 4-H fund-raising activities for the program year, the method of fund-raising and intended use of funds must be included in the annual budget proposal, then reviewed and approved by the County Extension Director or appointed designee. Note: Raising funds with no specific 4-H program or purpose in mind is not allowed.
• If a 4-H unit intends to conduct a fund-raising event to raise more than $100, they must file an intent with the CED, or designee, indicating the type of activity and purpose for which the funds are being raised.
• Each time the 4-H unit conducts a regular business meeting, the written record of income and expenses should be updated.
• At the end of the 4-H year, the funds remaining in a club account should not be excessive. Funds should not be accumulated for the sake of accumulating funds.
  
  As a general rule, a beginning balance which is not designated for any specific purpose, should not exceed 110% of a club’s proposed budget for the next year.
  
  A significant aspect of the 4-H Club program is to teach the youth. Officers and members will learn how to prepare a budget, raise funds, and manage their money. Therefore, the retention of excess funds by a 4-H unit is strongly discouraged. A copy of FORM SS-4 Application for Employer Identification Number can be obtained from your local IRS Office or on the web at: http://www.irs.gov/pub/irs-fill/fss4.pdf

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Rights and Responsibilities of 4-H Units for Fiscal Management

Chartered units are authorized to use the 4-H Club name and emblem for 4-H educational or informational uses. Thus, they are encouraged to plan and implement educational programs and community service projects in their community.

Units have the authority to receive private money to support the operating expenses of the 4-H Youth Development Program. All funds for these purposes, regardless of the source, should be managed and accounted for accurately. 4-H Unit members and leaders are responsible for all resources (money, equipment, property, etc.) raised, collected, or otherwise obtained and expended in the name of 4-H. Again, this is delegated responsibility under the authority of the County Extension Director.

The unit may receive funds by virtue of its own fund-raising enterprises or from other sources such as gifts or bequests from individuals, organizations, or businesses. The treasurer has the responsibility for recording, disbursing, depositing, and properly accounting and classifying the unit funds. 4-H funds should not be co-mingled with other funds, such as private, business or other institutional funds.

Budget management is a primary responsibility of 4-H unit officers. If there are deviations from the planned budget, the officers are obligated to inform the members to be sure that there is full agreement and support or approval of any changes.

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Accounting Procedures for 4-H Units

Books and Financial Records

Most banks today use automated deposit techniques that result in a computer generated deposit receipt. Those receipts must be kept to document the deposit and verify bank statements. If the bank is not yet automated, bank deposits should be noted in the appropriate passbook for each account and dated and initialed by the teller. The 4-H Treasurer's Book and List of Duties will assist youth and their leaders in the fiscal responsibilities. 

Checkbook: The most common type of checkbook is one which has a stub for noting the number, date, amount and item or purpose for which the check is drawn, as well as a place for noting deposits. This helps identify the check with the bill paid. The original bill is kept in the treasurer’s files as evidence in support of payment. The canceled check, properly inscribed, can serve as a receipt. An alternative checkbook used today, would be a one-write check system that records the information as a duplicate as you write the check. Cost per check is usually higher, but insures that the important information is captured.

Ledgers: Ledgers will provide for separate entries of receipts and disbursements. Entries are made in the calendar order in which they occur. Pages are divided into columns, each titled with the descriptive heading appropriate to the items listed under income and disbursements. Additional heading for funds should be established as appropriate in order to separately account for funds from different sources and expenses by different category or for different purposes. Units using the 4-H Treasurer’s Book meet these requirements.

Bank Statements: These are a record of deposits, withdrawals, fees paid and interests earned on a monthly basis. The balance shown on each statement should be reconciled with the unit’s balance monthly. Treasurers should note discrepancies and check with the bank within one week of receiving the statement.

Other Necessary and Supporting Records: These include bills, receipts, canceled checks, and written authorization for disbursements not covered in approved budget or minutes of meetings approving budget changes or special non budgeted items.

The use of personal computers and associated computerized accounting and financial report generating programs by 4-H treasurers is encouraged.

Cashiering

Cashiering is the management, use, and accounting of all cash activities. These are some guidelines to follow when dealing with cash.

• Each 4-H club or unit should have its own account, with an individual account number and pre-coded deposit slips.
• Individual accountability for cash must be maintained throughout all cashiering operations.
• A cash receipt (pre-numbered receipts are preferred) must be issued for each individual collection of cash. All cash receipts should be accounted for.
• In some cases, it might not be practical to issue a cash receipt. In those cases, collection of funds should be documented by a Statement of Cash Collections to be filled out daily. The statement should indicate who collected the money, total funds collected (attach cash register tape) and the name of the banking institution where funds will be deposited. After the funds are deposited, the deposit receipt should be attached to the statement of cash collections.
• Statements of Cash Collections must be signed by two individuals, one of whom is an unrelated adult. The receipts should be turned over to the treasurer.
• To ensure the safe handling of currency and to protect the individuals (youth or adult) handling the cash, where practical, funds should be deposited daily or turned over each day to the treasurer to deposit.
• Treasurers are required to make deposits of funds received within one week and are encouraged to make daily deposits. If, under certain circumstances, deposits cannot be made daily or turned over every day to the treasurer, the funds should be receipted daily and kept in a secure place overnight.
• On rare occasions, a petty cash fund may be needed for miscellaneous items. However, the use of petty cash is not encouraged and should not be used as a substitute for sound planning and budgeting. Petty cash should be reconciled, at the minimum, on a monthly basis. In petty cash allotments, the cash plus the cash receipts for expenditures should equal the initial authorized amount. All petty cash allotments should be entered in the general ledger as petty cash along with the person’s name to whom the small amount of cash is issued.
• If 4-H funds are stolen, the theft must be reported to the nearest police office immediately A copy of the police report should be given to the extension office and the county extension director as soon as it is available.

Audits

4-H units are required to prepare an annual audit. This is a provision for an examination and audit of financial statements, fund balances, assets, and the established accounting system, independent of the 4-H treasurer or others involved with finances, to assure the accuracy of information, the existence of assets and the reliability of the financial data. Audit reports assure the organization’s membership as well as Extension faculty responsible for authorizing use of the 4-H name and emblem that private funds are being handled properly.

Who Performs Audits of 4-H Club Accounts?

A person (or two) who has not been involved in handling the accounts should complete the audit. Each 4-H unit is responsible for assuring that its financial statements and related books and records are audited or reviewed on an annual basis. A copy of the unit’s audit or peer review report must be on file at the local Cooperative Extension office. The completed audit report can be documented into the 4-H Blue Ribbon Enrollment and Club Database System (club screen). 

It is recommended that an audit committee, appointed by the County Advisory Committee and approved by the County Extension Director, be established to oversee the conducting of audits for all units under the jurisdiction of the county 4-H extension office. A CPA is not needed unless accounts are large and complex.

There are certain circumstances where it would be acceptable to use a peer review committee over a formal audit by an independent CPA.

• When past audit results have not found any significant accounting errors, internal control weaknesses or accounting system problems.
• When the extension agent and/or county director is satisfied by the results of previous audits or reviews.
• When the structure of the organization, system of internal controls, and separation of duties related to the handling of cash and other assets are adequate.
• When the financial statements present fairly the financial position of the organization.

Audits may be performed if there has been a change in the treasurer during the course of the fiscal year and any time the county extension director deems it desirable to have an audit. An independent audit, however, should be performed if there are suspected irregularities related to financial activities.

What Should the Audit Report Include?

At a minimum the audit report should include:

• beginning balance
• total income
• total disbursements
• ending balance
• the balances should be reconciled with printed bank records
• a statement that the records have been reviewed and found to be handled in keeping with established organization budget goals and policies
• signature of auditor(s)
• signature of Extension faculty member who has received and accepted report.

What Happens to the Audit Reports?

The audit report should be distributed to the 4-H organization’s officers or executive committee members. Then, the results should be distributed to the membership. The Extension Agent who has authorized use of the 4-H name and emblem for that group should also receive, review, and accept the auditor’s report. Normally, this will be the county 4-H coordinator and/or county extension director. On an annual state basis, the county extension director will forward documentation to Extension Administration that all 4-H organization annual audits have been completed and received.

In some cases, donors or potential donors may ask for a copy of the audit in support of a major proposal.

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