Each year every Student Chapter should have a budget that is reviewed and approved. It is good practice to ensure that the budget is balanced and even better practice to plan for revenues to exceed expenses. For a list of resources and templates, please visit the Officers Resources page by clicking here.
Please become familiar with the information listed below.
Documented financial procedures should delineate the processes for approving expenditures of Student Chapter funds and for reimbursing members or the Faculty Advisor for outlays of personal funds for organization purposes.
Some expenses are approved in general by way of the budget. However, even for those projects for which funds have been specifically allotted, it is advisable to have the responsible officer submit a detailed list of requested expenditures for approval. This process does not have to be complicated; it can be as simple as having the Student Chapter president and/or Faculty Advisor review and approve the request. Even the simplest policy will help guard against fraud or spending that leads to problems.
The same is true for procedures related to expense reimbursement. Documented policies should detail what types of personal expenditures will be reimbursed and the process for requesting reimbursement. It is always preferable to spend Student Chapter funds directly, but having these procedures documented will help keep track of expenses.
With a host department- or college/university-based account, there may be very specific procedures related to expense approval and/or reimbursement, so it will be important for the Faculty Advisor and Student Chapter officers to know these.
For incoming checks, it is important for the receiver to stamp the checks “For Deposit Only” as soon as they are received. Until the checks are deposited, they should be kept in a locked box or drawer. Prior to depositing a check, the person making the deposit should make sure it the check is written correctly, is signed, is made out to the right payee, and is written for the correct amount. Deposits (checks and cash) should be made at least weekly, and during times where more funds are coming in (membership dues deadline, fundraiser), they should be done daily. It can be very helpful to keep copies of all checks deposited along with the deposit slip. Having all this information can help resolve any questions that may arise after the deposit has been made.
When handling incoming cash, it is important to keep all cash in a locked drawer or cash box. A cash box should be kept in an enclosed place when not in use, where it is not visible to passersby. A receipt book with carbon copy forms, or some other means, should be used to document cash receipts. This receipt becomes a record not just for the person making the payment but for the Student Chapter. When taking the cash to the bank for deposit, the person making the deposit should keep the money in a non-transparent envelope.
Division of duties
If the treasurer is responsible for tallying incoming payments and making deposits, then a different officer should be responsible for tracking member payments or other payments in the chapter’s financial record books. Incoming cash and checks should be processed and recorded as quickly as possible after they are received. Once they are processed, they should be placed in the possession of the treasurer or the person responsible for making deposits.
If you are working with a new Student Chapter, one of the things you’ll be involved with is helping the Student Chapter officers to set up the financial accounts for the chapter. If there are multiple options available, you’ll want to discuss them with the student leaders to determine the best set up.
Setting Up Accounts – Host Department or Campus-Based Accounts
In some cases, the Student Chapter account will be a part of the host department account, especially when the Student Chapter is just beginning. In other cases, the account may be housed under the college/university. This type of set up may or may not be required. If this applies to the Student Chapter with which you work, the most important thing is to work with the appropriate staff person to learn about any policies and procedures and work with him/her to get the account set up.
Things you’ll want to be sure you understand include:
- how money can be deposited or withdrawn/spent from the account
- whether a minimum balance is required
- whether the Student Chapter is considered a sales tax exempt entity (be sure to get the appropriate identification numbers if this is the case)
- how long it takes to get a check issued from the account and if a purchase order is necessary
- procedures related to budget requests for the next fiscal year
Setting Up Accounts – Off-Campus Bank Accounts
Some Student Chapters establish checking or savings accounts at a local bank. With this type of account, things you may want to discuss with your banker are balance requirements, account signature authority, and electronic banking options.
The steps involved in establishing a Student Chapter checking or savings account are as follows.
1. Obtain an Employment Identification Number (EIN) from the Internal Revenue Service.
This is like a Social Security number for your chapter. Keep in mind, your organization is responsible for understanding all requirements and obligations for filing reports to the IRS. Applications for an EIN can be retrieved at http://www.irs.gov/pub/irs-pdf/fss4.pdf. For detailed instructions for completing the application, visit http://www.irs.gov/pub/irs-pdf/iss4.pdf. There is no fee associated with the application process, and there is an option in the Reason for Applying section of the form to indicate that you are applying for banking purposes only.
2. Obtaining an EIN does not mean a registered organization is a non-profit organization or has tax-exempt status. There is a difference between an EIN and a tax exempt
identification number. For more information tax exempt status for not-for-profit organizations and how to apply, visit http://www.irs.gov/pub/irs-pdf/p557.pdf. This
process is much more complicated than the process for applying for an EIN, and Student Chapters who are considering doing this are advised to seek legal counsel.
3. Research banks to find one that will give you the best benefits. Some banks may give small clubs and groups many of the same benefits as incorporated organizations. It may be helpful to mention that you are affiliated with your college/university and bring documentation that verifies this relationship (a printed letter on letterhead from a
professional staff member in the student activities or host department is ideal).
4. Open the account. Be sure to keep detailed records of any account information or regulations in a safe place. Take the time to orient any chapter officers as to the account set-up and procedures. Regarding the account signature authority, it is important to ensure that procedures for changing the authorized signatures are completed immediately following officer elections. You may want to consider having the Faculty Advisor named as an authorized signature, due to the high level of turnover among Student Chapter officers. Having the Faculty Advisor’s name on the authorized signature list does not necessarily mean he/she will have to sign every check issued by the Student Chapter. Policies can be established for when the Faculty Advisor must sign the check along with the Student Chapter treasurer (e.g., for checks over $500), but if necessary, he/she can access the account at any time (e.g., if the outgoing treasurer leaves for a semester overseas before the signature change is executed). AIS recommends that Student Chapters establish a policy requiring two signatures for the withdrawal of funds no matter what the amount.
There are pros and cons to the different types of accounts, and you may want to consult with
other AIS Student Chapters or your college/universities business office.
If the Student Chapter decides to assess member dues, the general information related to dues should be included in the Student Chapter bylaws. More specific procedures should be conveyed in writing to Student Chapter members on an annual or semester basis, depending upon how frequently the Student Chapter collects dues. Each time dues are collected, members should be informed as to the due date, any early payment discounts or late payment penalties, and any ramifications for failure to pay dues.
If members are expected to pay dues, there should be established and documented consequences for a member’s failure to do so. More importantly, those consequences must be enacted consistently. If a member has extenuating circumstances, the president or treasurer may certainly consider those and make a decision as to how to proceed. The most important thing is to ensure members understand the expectations and procedures and that the officers implement those procedures consistently.
If the Student Chapter’s financial account is housed under the host department or the college/university, there may be additional policies with which the Faculty Advisor and student officers should be aware. Some examples of these are:
- Required use of purchase orders
- Prohibitions on use of funds for certain kinds of expenses (e.g., alcohol, presentations by political candidates, events that are inconsistent with college/university mission)
- Annual budget submitted by specific deadline
- Required attendance by officers and/or advisors at training program