Working with your board treasurer

This guide is for treasurers, directors and board chairs who want the money side of a small charity to run smoothly between them. Our guide to board officers explains what a treasurer usually does, and our guide to financial controls covers the checks that keep money safe. This one is about the working relationship: who does what, what the treasurer needs and when, and how to hand the role over without losing anything.

Three roles, not one

In a small charity, money work usually sits with three people, sometimes fewer:

The California Attorney General's Guide for Charities says the treasurer or chief financial officer "is responsible for the financial affairs of the corporation." In practice that means making sure the work is done well, not doing all of it. If your charity is so small that the treasurer also keeps the books, ask another board member to review the bank statements and reconciliation every month.

What the treasurer needs, and when

Agree a simple timetable with the director or bookkeeper, and write it down:

• By the 10th of each month: bank statements, the bank reconciliation and the month's income and expense report, compared with the budget.
• A week before each board meeting: the treasurer's report, sent with the board papers.
• Straight away: anything unusual, such as a large unexpected bill, a missed payroll deposit, a bounced payment or a donor asking about a gift.
• Read-only access to the bank accounts and the accounting system, so the treasurer can check without asking.

The New York Attorney General's guidance on internal controls says boards should get reports "at least quarterly, preferably monthly" comparing actual income and spending to the budget, with timely explanations of differences.

The treasurer's year

Our guides to the annual budget, restricted funds and filing your first Form 990 cover each of these in more detail.

Sharing the Form 990 with the board

Part VI, line 11a of the Form 990 asks whether a complete copy of the final return was given to every voting board member before it was filed. The IRS instructions say you can answer "Yes" only if each member got the full return, including schedules, on paper, by email, or by a link to a password-protected site where the whole return can be seen. Saying that a copy is "available upon request" doesn't count, and neither does a copy with parts removed. The treasurer is usually the right person to send it and to give the board time to ask questions.

Audits, reviews and state rules

Whether your charity needs an independent audit depends on your state, your funders and any government grants. The rules vary a lot. Two examples from the California Attorney General's guide:

• Audits. California charities that must register with the Attorney General and have gross revenue of $2,000,000 or more, not counting grants from and contracts for services with government entities, must have audited financial statements, and an audit committee if they are a corporation.
• No double roles at the top. In a California public benefit corporation, the secretary or the treasurer (or chief financial officer) may not also serve as the president or chair of the board.

Other states set different thresholds, and some require a CPA review rather than an audit once revenue passes a lower level. Check with your state's charity regulator, and see our guide to audits and reviews. The New York Attorney General's guidance calls for regular oversight of the finances by an audit committee or, if there is none, by the board itself.

When the director and the treasurer disagree

Disagreement about money is normal: how much to keep in reserve, whether to take a risky grant, when to hire. Keep it healthy:

• Bring the question to the board with the facts, rather than settling it between two people.
• The director runs the operations within the budget the board approved; the treasurer doesn't manage staff or approve day-to-day spending outside the agreed limits.
• If the treasurer sees something that looks wrong, such as missing money, unpaid payroll taxes or a payment to an insider, they should tell the chair at once. See our guide on when money goes missing.

Handing over to a new treasurer

When a treasurer's term ends, plan a handover of a month or two:

• Update the bank signers and online banking access, and remove the outgoing treasurer
• Hand over passwords through a password manager or another secure method, then change them
• Share the last 12 months of treasurer's reports, the budget and the last Form 990
• List every bank account, card, loan and investment, with who can use each
• List the recurring deadlines: payroll filings, the Form 990, state reports and insurance renewals
• Introduce the new treasurer to the bookkeeper, the accountant and the bank
• Record the change of treasurer in the board minutes

In California, according to the Attorney General's guide, charities with total revenue under $50,000 (other than private foundations) file an Annual Treasurer's Report (Form CT-TR-1) with their yearly registration renewal (Form RRF-1). Check what your own state asks for, and who signs it.

Our succession planning guide covers handing over accounts and passwords in more depth.