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What should a club do
to protect itself?
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One
thing I have learned as a longtime AMA officer is that there
are column subjects that occasionally need to be repeated;
unfortunately, it's usually a repeat of a bad situation that
drives that column.
When you think about your club, it's easy to realize the
need to protect your flying field. Most of us see the need
to have rules such as established flying hours or no-fly
zones that regulate our conduct at the field. It's commonly
known that the flying field is the number-one asset of the
club, and without it there is no club.
Another asset the club has that needs protection is its
treasury, and that is the focus of this column.
Sadly, we have had another instance of a club losing its
entire treasury to a trusted officer who apparently wasn't
as trustworthy as the club members thought. Club treasurers
are among the most underappreciated officers in most clubs,
and often the treasurer tends to stay in office for years if
not decades.
In many clubs the treasurer has virtually complete authority
over all things financial for the club. This can lead to
problems if that person were to decide to use the club
treasury for personal problems such as medical expenses,
gambling, or drugs. The reason isn't important; the club
treasury disappears and typically, so does the treasurer.
What should a club do to protect itself? That depends on the
size of the club and the amount in the treasury, but all
clubs need to take some basic steps to protect the funds.
Requiring two signatures on all checks larger than a
determined amount can go far to protect the rifling of your
club treasury. It's a good idea to have three people on the
signature list in case one becomes incapacitated. I remember
one club that had an awful time getting access to its money
when its treasurer passed away, and all of the club's
accounts were in his name exclusively. If the family isn't
aware of which accounts are the club's and which are
personal, you can imagine the difficulty.
Another consideration is having an assistant treasurer who
simply keeps an eye on the funds and is there to take the
place of the treasurer if it becomes necessary. It's a good
idea to ask your bank if it can issue duplicate statements
to the treasurer and another officer such as the president,
assistant treasurer, or secretary.
I know of a few clubs that have an audit committee. This
generally comprises two or three members who are willing to
audit the books on occasion. I realize that the term "audit"
may seem technical, but for most clubs with treasuries of a
couple thousand dollars or less, it doesn't need to be
formal.
To protect their resources, clubs with large treasuries
and/or with significant assets such as a member-owned field,
should take steps that are more aggressive. An audit
committee should be in place and it is advisable to purchase
bonding on the treasurer. I understand that bonding will
typically cost several hundred dollars, but that is easier
to deal with than figuring out how to replace the treasury.
It's worth the effort to seek professional help in
performing an occasional audit. If your club has a CPA who
is not the treasurer, he/she would be a good candidate for
the audit committee. I know of a club that had the good
fortune of having a business owner who was willing to
volunteer his accountant for an annual review of the club's
accounts.
A legal audit is an expensive process. You should not expect
it to be cheap, but in most cases a full-blown legal audit
isn't necessary. What you need is a knowledgeable person
keeping an eye on the treasury if it is of any significant
size.
Don't approach this as any indication that you shouldn't
trust the treasurer. Probably 99.9% of our club treasurers
are honest, hardworking club members. I imagine that most
club treasurers would welcome the help and oversight. It'll
make everyone sleep better to know the club has some checks
and balances in place to ensure the safety of the treasury.
When you read this, AMA will have a new executive director.
The Executive Council unanimously voted to hire Jim Cherry—an
AMA member with considerable experience in association
management. I look forward to working with Jim to make AMA
the best organization it can be. I have much confidence in
this selection. MA
Til next time ...
Dave Brown, AMA president
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