UC 4-H Youth Development Program - Policy Manual Chapter 9: Financial Management




		"The University of California 4-H Youth Development Program Engages Youth in Reaching Their Fullest Potential while Advancing the Field of Youth Development."



University of California Cooperative Extension 4-H California Youth Development Program Policy Handbook

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UNIVERSITY OF CALIFORNIA COOPERATIVE EXTENSION
4-H CALIFORNIA YOUTH DEVELOPMENT PROGRAM
POLICY HANDBOOK

CHAPTER 9
FINANCIAL MANAGEMENT IN THE
4-H YOUTH DEVELOPMENT PROGRAM

I. INTRODUCTION

The California 4-H Youth Development Program (4-HYDP) is a major educational effort that is central to the mission of the University of California Cooperative Extension (UCCE) system. This means that the University of California, Division of Agriculture and Natural Resources, has overall responsibility for development, efficiency and effectiveness of the 4-H YDP in California. Funds for support of 4-H YDP work come from the United States Department of Agriculture (USDA), UC, the California 4-H Foundation, private donors, and various other sources.

II. AUTHORIZATION

Definition
1. 4-H units and councils, when authorized by the issuance of a 4-H charter, are granted certain privileges and responsibilities related to financial activities.
2. UCCE expects 4-H units and councils to raise and manage all 4-H YDP funds in accordance with generally accepted accounting principles and within the policies and procedures specified in this Handbook.
3. 4-H units and councils are authorized by the 4-H charter to carry out a program of youth development activities using the 4-H name and emblem. This authorization also gives them the authority to organize, account and manage the operational and fiscal concerns of the county 4-H YDP programs, projects, and units under their jurisdiction.
4. This policy extends to funds generated in the name of 4-H by the adult volunteers, parents/guardians, and members of all 4-H units and councils.
Responsibility
Authorization to use the 4-H name and emblem is the responsibility of the statewide 4-H YDP director, working in cooperation with each regional director, county director, or designee. The county director is responsible for authorizing the use of the 4-H name and emblem within her or his jurisdiction. See Granting Authorization to use the 4-H Name and Emblem and Staff Resources for more information.

III. THE CONCEPT OF INTERNAL CONTROLS

Control System
A successful organization must have an "internal control system" to coincide with privileges and responsibilities. This concept is recognized by all enterprises, both public and private, as the framework for good management. An internal control system consists of the policies and procedures designed to provide management with reasonable assurance that the goals and objectives it believes important to the entity will be met. Internal accounting controls are established to ensure that only authorized transactions are processed and recorded, to allow for the preparation of appropriate financial statements, and to ensure that access to, and use of, assets is appropriate. Administrative controls provide the environment in which accounting procedures occur. This environment is characterized by three major factors.
1. Awareness: Communication of what is expected.
2. Attitude: Incentive to exercise control.
3. Discipline: Assurance that activities are controlled.
Control Environment
The internal control system set forth in this section are designed to help 4-H YDP staff and adult volunteers create an appropriate control environment and a system of sound accounting procedures for the financial operations of all California 4-H YDP activities. The objective is to provide a framework of internal controls for 4-H activities that gives reasonable assurance regarding the following:
1. Accomplishment of established 4-H YDP goals and objectives.
2. Efficient and effective use of 4-H YDP resources.
3. Safeguarding of all 4-H YDP assets.
4. Reliability and integrity of 4-H YDP financial reports and other information.
5. Compliance with all policies, plans, procedures, laws, and regulations applicable to 4-H YDP activities and programs.

IV. BANK ACCOUNTS

Authorization
1. All 4-H units and councils must be chartered to use the 4-H name and emblem to raise, allocate, and disperse funds in support of 4-H programs, projects and groups. See also Using the 4-H Name and Emblem .
2. Authorization to establish one checking and one savings account is obtained from the county director upon approval of the unit’s charter by the statewide 4-H YDP director.
3. Additional accounts require further approval from the county director.
Establishment of Accounts
Each 4-H YDP unit and council that manages cash is required to:
1. Have an Internal Revenue Service (IRS) Employer Identification Number (EIN). See Obtaining and Maintaining Federal Income Tax Exemption flowchart.
2. The UCCE county office must be the address of record for all county 4-H units and councils.
3. The statewide 4-H YDP office should be the address of record for all sectional and state councils.
4. Establish at a financial institution its own checking and/or savings account with at least two (2) signatures.
Signatories
1. The signatures must be from two (2) unrelated individuals, of whom one can be a 4-H member and the other an adult volunteer. If the bank does not allow youth members to sign, then there should be two adult volunteers.
2. Although many banks do not allow an account to require two (2) signatures, all 4-H YDP accounts should be set up so that two signatures are required by the 4-H unit or council to expend or withdraw funds.
3. No UCCE or 4-H YDP staff should be signatories on 4-H unit or council bank accounts.
Use of ATM and Deposit Cards
1. 4-H units and councils are not allowed to apply for or use automatic withdrawal or credit cards. On-line banking transmissions are not permissible.
2. Deposit cards that allow for deposit only may be used with the approval of the county director. See Deposit Cards and Electronic Banking FAQ.
Review of Monthly Statements
1. The county director, or designee, must review all the monthly 4-H YDP unit and county council bank statements for any discrepancies. See Establishment of UCCE 4-H County Office Banking Procedures flow chart and Reviewing 4-H Council and Club Monthly Banking Statements checklist.
  1. Monthly statements should be immediately copied and forwarded to the 4-H unit or county council treasurer.
  2. Upon completion of the monthly review all statements should be initialed and filed in UCCE office. See Monthly 4-H Bank Statement Verification Form
  3. Any discrepancies identified in the monthly bank statement review must be reported immediately to the county director.
  4. The county director will investigate any discrepancies, with assistance from the statewide 4-H YDP office and the ANR Controller’s office. If discrepancies are identified, and depending on their nature, they may result in the removal of adult volunteer signatories from the account or closure of the account and transfer of the funds to the 4-H county council to be held in escrow.
2. The statewide 4-H YDP director or designee must review all the monthly 4-H sectional and state council bank statements for any discrepancies. See Establishment of UCCE 4-H County Office Banking Procedures flow chart and Monthly 4-H Bank Statement Verification Form .
  1. Monthly statements should be immediately copied and forwarded to the 4-H sectional or state council treasurer.
  2. Upon completion of the monthly review, all statements should be initialed and filed in the statewide 4-H YDP office. See Monthly 4-H Bank Statement Verification Form .
  3. Any discrepancies identified in the monthly bank statement review must be reported immediately to the statewide 4-H YDP director or designee.
  4. The statewide 4-H YDP director will investigate any discrepancies, with assistance from the ANR Controllers office. If discrepancies are identified, and depending on their nature, they may result in the removal of adult volunteer signatories from the account or closure of the account and transfer of the funds to the 4-H state council to be held in escrow.
3. Failure to follow the above policies can result in the revoking of the 4-H YDP unit, sectional or state councils’ 4-H charter. See the 4-H Banking Policy FAQ , Establishment of UCCE 4-H County Office Banking Procedures flow chart and Staff Resources for more information.
Federal Employer Identification Numbers (EIN)
1. A 4-H YDP staff member must apply for all unit or council EIN numbers after the group has received charter approval from the statewide 4-H YDP director. The county office must maintain a record of all EIN numbers in the county.
2. No account held in the name of any 4-H unit or council should use the name of a member or adult volunteer, nor should a social security number of an individual be used in lieu of the appropriate Federal Employee Identification Number (EIN).
3. Each of the 4-H units and councils must have their own EIN. See Sample SS4 Form and SS4 Form .
4. The county office address must be the office of record for all 4-H units and councils. Steps to Obtaining and Maintaining Federal Income Tax Exemption for more information.

V. RESPONSIBILITIES OF 4-H YDP STAFF

The purpose of this section is to describe the roles and responsibilities of the 4-H YDP staff in overseeing the management of funds for 4-H units and councils. 4-H YDP staff is responsible for creating an environment that encourages proper internal controls.

Training Adult Volunteer and Youth Treasurers
1. The 4-H YDP staff is responsible for training the member and adult volunteer unit treasurers and council officers in the policies, procedures, principles and tax filing requirements as appropriate to 4-H YDP operations.
2. At a minimum, trainings must be conducted annually and attendance is required in order to hold the position of treasurer and manage council or unit banking accounts.
Maintenance of Records
The 4-H YDP staff is responsible for collecting and maintaining copies of the following:
1. Annual budgets, including proposed fundraising activities for the 4-H units and councils.
2. EIN records.
3. Bank accounts and their signatories.
4. Annual financial statements from each 4-H unit or council.
5. Annual audit and/or peer review reports.

See Chapter 8, Unit and Council Management onannual entry of financial reports into the State 4-H YDP Financial Reporting System for more information.

VI. 4-H UNIT AND COUNCIL TREASURER RESPONSIBILITIES

Authorization
1. 4-H units and councils are responsible to UC and are obligated to follow UC policies and procedures established to document financial activity in accordance with laws and regulations.
2. 4-H units and councils must demonstrate an ability to handle funds properly. The administration of all 4-H units and councils is to be in accordance with the group's constitution, bylaws, or other enabling documents and is to be controlled by a duly constituted governing body.
3. The 4-H unit or council treasurer has the primary responsibility of handling the organization's funds. Failure to comply with these policies may result in withdrawal of the 4-H charter and disbanding of the 4-H unit or council. The county office will be the legal mailing address for all county 4-H units and councils.
4. The accounting procedures outlined here are generally applicable to all 4-H units and councils. All individual 4-H units operate under the authority and jurisdiction of their respective 4-H county council. Additional or customized reporting procedures may be established by a 4-H county council for the 4-H units under its jurisdiction, as approved by the county director or designee.
Responsibilities
The 4-H unit or council treasurer is responsible for:
1. Keeping accurate financial records (copies of invoices, bills, etc.) relating to the funds and property of the 4-H unit or council, and accounting fully for all receipts and expenditures.
2. Receiving, recording, and depositing all funds in a regulated account established for the particular 4-H unit or council.
3. Paying bills or making other authorized expenditures appropriated in the budget or otherwise approved by the 4-H unit or council leadership.
4. Furnishing annual financial reports at year-end, or September 15, and at such times as required by the 4-H council and/or the county director.
5. All 4-H units and councils authorized to use the 4-H name and emblem are required to prepare an annual financial statement which includes details on income and expenditures. Financial reports should include a balance sheet and a statement of revenues and expenses (income statement).
6. Acting as custodian of all funds and personal property of the 4-H unit or council and keeping a current list of all such property. The 4-H unit or council secretary or other designated member or adult volunteer may also carry out this function.
7. Preparing all financial records for an annual audit or peer review, and participating periodically as a peer review team member during the financial review of 4-H units or councils.
8. Preparing and filing all reports required by federal, state, and local governmental agencies, including the Internal Revenue Service, California State Franchise Tax Board, State Attorney General, and the State Board of Equalization, where and when applicable.
9. Participating in annual training of 4-H unit and council treasurers that teaches 4-H youth treasurers and other youth member officers how to assume responsibility for preparation of budgets, for raising funds, and for maintaining their individual 4-H unit or council accounting records.

VII. PLANNING AND FUNDRAISING

The purpose of this section is to describe the responsibilities and procedures related to planning and fundraising.

Budget
1. All 4-H units and councils will prepare an annual program budget to establish allocation of financial resources to fulfill program needs.
2. Budget management is a primary responsibility of 4-H unit and council officers. Thus officers are responsible for ensuring that members are kept abreast of the budget targets as compared to the actual expenditures. If there are deviations from the planned budget, officers are obligated to inform the members to ensure that there is full agreement, support, and approval on any changes.
3. The method of fundraising and intended use of funds must be included in the annual budget proposal, and reviewed and approved by the county director or designee.
4. Raising funds with no specific associated 4-H YDP purpose is not allowed.
Income/Fundraising
The classification of income should follow the general categories of income typically used by non-profit organizations. For example, IRS Form 990 contains such classifications. If needed, subcategories can be created to better identify sources of funds.
Authorization for 4-H YDP Fundraising
1. County directors are responsible for reviewing proposed fundraising activities through the annual budget submission process and assuring their compliance with applicable policies. See Using the 4-H Name and Emblem.
2. Chartered 4-H units and councils are authorized to use the 4-H name and emblem for educational or informational uses that are in the best interest of 4-H. Thus, they are responsible for helping to plan and implement an educational program in their community. Units and councils have the authority to receive private money to support the operating expenses of 4-H. All funds for these purposes, regardless of the source, should be accurately accounted for and managed.
Fundraising Guidelines
1. All methods of fundraising by 4-H units and councils must comply with UC’s general fund development guidelines given below. The regulations apply to those activities involving the solicitation and use of goods and services for 4-H YDP, as well as the solicitation of funds.
  1. Any raising or use of funds by a 4-H unit or council must be for the purpose of furthering the research and education goals of the 4-H YDP.
  2. Any 4-H unit or council intending to raise more than $100 (one hundred dollars and no cents) in a fundraising activity that is not in the approved budget must file a letter of intent with the county director or designee, indicating the type of activity and purpose for which the funds are to be raised.
2. All fundraising activities in support of the 4-H YDP must comply with the following:
  1. Federal law regarding the use of the 4-H name applies in these activities. See Public Law 772.
  2. Pertinent federal rules and regulations governing Using the 4-H Name and Emblem must also be followed. See also Fundraising: Private Support for the 4-H Program.
  3. The 4-H Name and Emblem shall not be used to imply endorsement of commercial firms, products or services. See Fundraising: Sponsorships and Promotions.
  4. In connection with 4-H fundraising purposes, the following disclaimer statement must be used on products or services offered for sale: “A portion of the sales price of this product or service will be used to promote 4-H educational programs. No endorsement of the product or service by 4-H is implied or intended.”
  5. Public, non-profit agencies, such as the 4-H YDP are not to conduct lotteries, drawings, raffles, bingo, and other games of chance. See Raffles, Lotteries, Gaming and 4-H.
3. Endorsement of Commercial Firms, Products, or Services is prohibited.
Fund Sources
The following criteria should be used in determining the acceptance and administration of funds. For more information, refer to the ANR Administrative Handbook Section 206-Gifts.
1. The 4-H unit or council may manage other funds, such as proceeds from sales or donations. The 4-H unit or council must manage the funds in accordance with UC policies and with the 4-H units or councils’ constitution and bylaws.
2. 4-H units or councils should be aware that all funds received from any source must be accounted for as public funds.
Contracts and Grants
Adult volunteers, members, units and councils may not apply for or receive contracts and grants.
Gifts to 4-H Units and Councils
1. The 4-H units or councils may receive funds by virtue of their own fundraising efforts from individuals, organizations, or businesses. Funds donated directly to a 4-H unit or council by private individuals, groups, agencies, or foundations are to be managed in accordance with the procedures outlined in this Handbook and must be reported in the 4-H units or councils’ annual financial report.
2. Any proposals of significant gifts, e.g., those in the amount of $1,000 (one thousand dollars and no cents) or greater, that are given with or without restrictions; gifts of real estate; or gifts proposed as endowments must be reviewed and approved prior to acceptance by the county director in coordination with the ANR Development Services Director.
  1. Donations include gifts of both money and things (a.k.a. “in-kind donations”).
  2. Adult volunteers should refer all potential donors to the county director for further action.
  3. In accordance with UC policy, the ways in which the 4-H YDP staff may acknowledge gifts are limited as follows:
    1. Recognition of gifts may be made by listing the donor’s name in printed material, on banners, or other signage.
    2. Gifts may not be acknowledged by displaying corporate logos, marketing materials, web links, or other forms of promotion and/or endorsement.
    3. The specific amount of the gift may not be stated, however, donors may be by broadly categorized by gift amount (e.g., $100 to $1,000, $1,001 to $10,000, and so on).
Raffles and Games of Chance
1. Public, non-profit agencies such as the 4-H YDP are not to conduct lotteries, drawings, raffles, bingo, and other games of chance. See Games of Chance and the 4-H YDP FAQ.
2. The USDA and the 4-H YDP has a long-standing policy discouraging fundraising activities involving raffles, lotteries, games of chance, etc.
  1. Federal regulations for the Granting Authorization to use the 4-H Name and Emblem require that fund-raising programs using the 4-H Name and Emblem should be carried out for specific educational purposes.
  2. Private support monies should be a) given and used for priority educational purposes, and b) accounted for efficiently. See National 4-H Headquarters Fact Sheet, Raffles, Lotteries, Gaming and 4-H.
3. The 4-H name and emblem may not be used on or associated with products and services sold in connection with 4-H YDP fundraising programs where an endorsement of a commercial firm, product, or service is either intended or effected.

VIII. ANIMALS AS GIFTS IN THE 4-H YDP PROGRAM

The 4-H YDP does not accept animals as gifts or donations. 4-H units or councils, and county 4-H YDP offices cannot accept title or ownership of animals. Any such gifts should be made directly to individuals. (It should be understood, however, that gifts to individuals are not deductible as charitable contributions for federal or state income tax purposes.)

IX. GUNS AND FIREARMS AS GIFTS IN THE 4-H YDP PROGRAM

The 4-H YDP does not accept guns or firearms as gifts or donations. 4-H units or councils, and county 4-H YDP offices cannot accept title or ownership of guns or firearms. See Chapter 10 Firearms .

X. MANAGEMENT OF EXCESS FUNDS

Retention of Excess Funds
The goal of fundraising should be to increase the total amount of funds available for 4-H activities. The retention of excess funds by a 4-H YDP unit or council is strongly discouraged and must be approved by the county director.
Investment of Excess Funds
Any investment of excess funds should be carefully considered and approved by the 4-H unit or council and county director. County directors are responsible for approving the amount of annual carry forward funds for 4-H units and councils as well as determining the investment of those funds.

XI. FINANCIAL PROCESSING PROCEDURES

Accountability
Officers of the 4-H units and councils, as well as the adult volunteers involved are accountable for all funds raised. Accountability includes responsibility for how funds are used and protected from misappropriation. This includes monitoring adult volunteer and youth treasurers’ responsibilities. The 4-H Treasurer's Manual provides more detailed information.
Handling Money
The 4-H unit or council treasurer has the responsibility for recording, disbursing, depositing, and properly accounting for and classifying the 4-H unit or council funds. Individual accountability for cash must be maintained throughout all cashiering operations. 4-H funds must not be combined with other funds, such as private, business, or other institutional funds.
Receiving Money
1. The 4-H unit or council must have a record for all cash and checks received.
2. A receipt should be issued for each individual collection of cash and checks. Pre-numbered receipts are preferred.
3. In some cases, it might not be practical to issue a receipt. In these cases, collection of funds must be documented by a Statement of Cash Collections to be filled out daily. The completed Statement of Cash Collections should indicate the name of the individual who collected the money, the total money collected (attach cash register tape), and the name of the banking institution where funds will be deposited.
4. Two individuals, one being an unrelated adult, must sign the Statement of Cash Collections . The receipts must be turned over to the 4-H unit or council treasurer as soon as possible.
Depositing Money
1. If practical, to ensure the safe handling of currency and to protect the individuals handling cash, funds should be deposited daily or turned over each day to the 4-H unit or council treasurer.
2. Checks must be made out to the 4-H unit or council and not to an individual. Checks, currency, cashier’s checks and money orders must be endorsed by someone authorized to do so within the 4-H unit or council.
3. The 4-H unit or council treasurer must deposit all funds in the 4-H unit’s or council’s account. Treasurers are required to deposit funds received within one (1) week and are encouraged to make daily deposits. If, under certain circumstances, deposits cannot be made daily, a receipt must be written and kept in a secure place overnight.
4. When a Statement of Cash Collections is used, the deposit receipt should be attached.
5. A deposit receipt must be obtained from the bank and filed with the checkbook. A deposit entry should be made in the checkbook or passbook. The date, amount, and source of income for each individual amount received must be entered in the ledger.
Ledgers
The ledgers will allow separate entries for receipts and disbursements. Entries should be made in the calendar year in which they occur. Headings for funds should be established, as appropriate, in order to separately account for funds from different sources and for expenses by different categories or for different purposes. 4-H units and councils with procedures in conformance with the 4-H YDP Treasurer's Manual will meet these requirements.
Other Necessary and Supporting Records
Other documentation to be retained on file include bills, receipts, canceled checks, and written authorization for disbursement not covered in 4-H unit or council approved budgets, or minutes of meetings in which budget changes or special non-budgeted items were approved.
Petty Cash Fund
On rare occasions, a petty cash fund may be needed for miscellaneous items. However, the use of petty cash is not encouraged and it should not be used as a substitute for sound planning and budgeting. Petty cash should be reconciled, at a 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 which the cash is issued.
Change Funds
A change fund may be necessary to support substantial cash sales activities. The purpose of a change fund is to provide a reserve of small denomination currency and coins to make change. The change fund is not a petty cash fund and is not to be used to pay expenses. A change fund is established by writing a check for the balance to be kept in the change fund and obtaining the equivalent small denomination currency and coins.
Cash Advances
In general, cash advances may not be made from the 4-H unit or council checking or savings account. On rare occasions, it may be necessary to provide cash in advance of an expense being incurred. The advance must be approved by the unit or council for a specific purpose and the amount of the advance should be no greater than anticipated costs. The recipient of the advance must provide receipts for expenses incurred and return that portion of the advance not used. The persons approving the advance and signing the check must be different from the person receiving the advance.
Theft or Mismanagement of Funds
If 4-H funds are stolen or mismanaged or if there is suspicion of other financial abuse, the incident must be reported immediately upon discovery to the county director or designee.
Handling Funds for Project Groups
Project groups within a 4-H units or councils may raise funds for special events, such as field days, project trips, or community service activities. All funds raised are to be deposited in the 4-H unit or council treasury. It may be desirable to keep separate subsidiary records of such special events, but final accountability rests with the 4-H unit or council treasurer. The 4-H unit or council treasurer should set up separate project accounts in the general ledger for each special event controlled by a project group so that separate accountability can be maintained over funds and expenditures.

XII. DISBURSEMENTS

Procedures
1. All expenditures must be made from established 4-H unit or council accounts.
2. Decisions concerning the disbursement of funds by a 4-H unit or council are to be made by the membership of the council or unit.
3. Financial commitments and expenditures must be in accordance with the policies established in this Handbook and with the 4-H unit’s or council’s approved budget.
4. If expenses are incurred for non-budgeted items, these expenses should not be paid until after the 4-H unit or council formally approves the unbudgeted expenditure.
5. For budgeted items, the treasurer should make payments only with proper documentation such as a purchase order, receipt, invoice, or other supporting documentation.
6. All checks must bear the signatures of two unrelated persons authorized and designated as signatories by the unit or council.
Records
1. All money paid out must be entered in the check register or stub when the check is written.
2. All disbursements are to be made by check and must be substantiated by receipted bills, canceled checks, and written authorization (e.g., unit or council meeting minutes, the annual approved budget, etc.).
3. Disbursements should be made only from money that has already been deposited, not from anticipated deposits or from cash in hand.
4. Checkbook stubs must be completely filled out at the time each check is drawn or a deposit is made.
5. At a minimum, the classification of disbursements should follow the expense accounts and definitions set up in IRS Form 990. Sub-classifications can be added to provide additional detail or clarity.

XIII. FEDERAL TAXES

Responsibilities
1. 4-H units and councils must meet all federal, state, and local tax laws and requirements for the preparation and filing of any necessary tax returns or informational forms.
2. Each 4-H unit or council must work with the 4-H staff to know and understand the tax rules and apply these to the 4-H unit’s or council’s specific situation.
3. The county director and the 4-H staff are responsible for assuring that all 4-H units and councils are in compliance with 4-H financial and federal tax reporting requirements.
4. Annually, (November 1) all 4-H YDP staff are responsible for confirming the information from all units and councils in the statewide 4-H on-line financial system, including confirmation of filing federal taxes.
Filing Requirements
1. All 4-H units, councils or organizations regardless of their annual revenue are required to file with the IRS. See also IRS 990 Filing For All Units Response Sheet.
2. 4-H units and councils with annual revenues less than $25,000 (twenty-five thousand dollars and no cents) are required to file an annual electronic notice called an e-Postcard. See the IRS’s Annual Electronic Filing Requirement for Small Exempt Organizations -- Form 990-N (e-Postcard)
  for more information. The due date for filing is November 15 if using the California 4-H YDP program year July 1-June 30. See also Instructions for Filing a 990 e-Postcard 4-H Units and Councils
  4-H councils and 4-H units with revenue greater than $25,000 (twenty-five thousand dollars and no cents are required to file IRS Form 990, Return of Organization Exempt from Income Tax, or IRS Form 990-EZ, Short Form Return of Organization Exempt from Income Tax. Refer to IRS Instructions for Form 990 and Form 990-EZ for greater detail.

XIV. CALIFORNIA STATE INCOME TAXES

4-H units and councils are not required to file a California Franchise Tax Board Form 199, California Exempt Organization Annual Information Return, since they are nonprofit tax exempt organizations formed to carry out 4-H YDP activities, and operate under the auspices of UC. There are no California Franchise Tax Board reporting requirements for any 4-H unit or council regardless of income.

XV. CALIFORNIA STATE SALES TAX

Definition
The sales tax responsibilities of 4-H units and councils engaged in fundraising projects are set forth in California State Board of Equalization Publication No. 61, Sales and Use Taxes: Exemptions and Exclusions and Publication No. 18, Tax Tips for Non-Profit Organizations.
Items Made by 4-H
The sale of food products, nonalcoholic beverages, and tangible personal property made or produced by members of the organization are exempt from state sales tax when those sales are made on an irregular or intermittent basis and the organization ’s profits from those sales are used exclusively in furtherance of the purposes of the organization.
Items Not Made By 4-H
Sales of items not made or produced by group participants such as t-shirts, wrapping paper, mugs, stuffed animals, etc. are taxable. 4-H units or councils should follow all local rules for collecting and reporting sales taxes.

XVI. PROPERTY TAX

Real Property
1. Any real property donated to, or purchased by 4-H units or councils will generally be held by UC in the name of The Regents of the University of California and as such, is therefore exempt from payment of property taxes.
2. The Development Services Director, in addition to the county director, must be consulted when 4-H units or councils are considering purchasing or accepting donations of real property.
Other Property
Any other property (e.g., tools, equipment, etc.) owned by 4-H units or councils may be subject to property tax. Any exemptions must be obtained through the local taxing authority (county tax assessor).

XVII. FINANCIAL REPORTING AND COMPLETION

The purpose of this section is to describe the steps involved in preparing financial reports and completing the accounting and auditing processes.

Financial Reports
1. An annual financial statement will be prepared by the treasurer of the 4-H unit or council and will be forwarded to the county director or designee at the close of the 4-H YDP program year (July 1-June 30) or by other applicable county deadline, but no later than September 15th.
2. Annual financial statements of 4-H councils should be made available to adult volunteers and units in the county. A copy must be kept on file in the county 4-H YDP office.
3. The 4-H YDP staff will file an annual summary report on the California 4-H Financial Reporting system. It must include the total revenues raised by the program for that year and the total assets held by the 4-H council and all units, including cash and investments.
4. The report must be certified in the on-line 4-H Financial Information System of the statewide 4-H YDP office by November 1 of the reporting year.
5. Non-compliance with this policy will result in loss of charter and withdrawal of the authorization to use the 4-H name and emblem.
Bank Statements
1. Adult volunteer and youth treasurers are responsible for maintaining and reconciling bank statements for each account. These constitute a record of deposits, withdrawals, fees paid, and interest earned on a monthly basis.
2. Additionally, the county director, or designee, must review all the monthly 4-H units’ and councils’ bank statements for any discrepancies. See Reviewing 4-H Council and Club Monthly Banking Statements.
Inventory Report
1. A Treasurer's Manual Form - 6.2 Annual Inventory Report of 4-H unit or council property and equipment will be made by each 4-H treasurer at the close of the 4-H program year (July 1-June 30) or other county due date, but no later than September 15th. The Treasurer's Manual Form - 6.2 Annual Inventory Report shall be kept on file in the county UCCE 4-H YDP office for five (5) years.
  1. Articles purchased or disposed of during the year will be recorded or deleted on the current inventory listing, as appropriate.
  2. Donated equipment will be posted on the inventory listing, showing the item received and the source of the donation and its value.
  3. The 4-H council is responsible for reviewing its own and each unit’s property and equipment inventory listing when the treasurers’ annual audited financial reports are reviewed.
2. Each 4-H unit or council must have a written procedure for transferring funds, equipment, or other assets to the county UCCE office or 4-H council, as appropriate, should the 4-H unit or council disband.
3. The 4-H YDP staff will issue a combined report to the statewide 4-H YDP office of all material assets with an individual purchase price or fair market value of $1,500 or more. The report is due in the statewide 4-H YDP office by November 1st of the reporting year.
Financial Review Responsibilities
1. One of the key elements of any system of internal controls is the provision for an examination and audit of financial statements, fund balances, assets, and the established accounting system. This examination should be independent of the 4-H unit or council treasurer or others involved with the relevant finances. Independence ensures the accuracy of information, the existence of assets, and the reliability of the financial data.
2. It is desirable to have a peer review committee that is appointed by the county council president to oversee the conducting of audits for all units that are under the jurisdiction of the county council. See the 4-H YDP Treasurer's Manual and 4-H YDP Record Retention Guidelines.
Audit and Review Requirements
1. Each 4-H county council is responsible for having its financial statements and related books and records audited or reviewed on an annual basis after the close of the fiscal year. A copy of the county council audit or Treasurer's Manual Form - 8.5 Year-End Club Peer Review Report must be on file at the local UCCE office by the county due date and no later than September 15th of the program year.
2. Under certain circumstances, a certified public accountant (CPA) must conduct an audit (review) of county council financial statements and related books and records. The following circumstances may indicate the need for this type of annual audit (review):
  1. There are suspected irregularities related to financial activities.
  2. The county director or county council deems it desirable to have an independent audit by a certified public accountant of a treasurer's annual financial statements, fund balances, any other books or records, and/or the accounting system.
  3. The treasurer's duties are transferred from one indivi dual to another within the county council.
Peer Reviews for County Councils
1. An internal peer review of the financial report and related books must be conducted by the county council annually. The peer review team will be composed of at least three (3) adult volunteers from the county.
2. The internal peer review team should not include the county council treasurer, anyone related to the treasurer, or any other adult volunteer involved in the financial matters of the county council, such as fundraising, bookkeeping, or holding signature authority. See Treasurer's Manual Form - 8.6 Peer Review Checklist.
Peer Reviews for 4-H Units
1. Unit Treasurer's Manual Form - 8.5 Year-End Club Peer Review Report (or audits, if appropriate) must be filed with the 4-H YDP staff by the due date established by the county office, but no later than September 15th of each program year.
2. The review team should be comprised of two (2) adult volunteers and two (2) members. Team members should not include the treasurer, relatives of the treasurer, or anyone who has authority to sign checks.

XVIII. GIFTS FROM 4-H UNITS AND COUNCILS

All moneys received from 4-H YDP fundraising programs, except those necessary to pay reasonable expenses, must be expended to further the 4-H YDP educational programs. See Soliciting, Receiving and Giving Gifts FAQ .
Any use of the 4-H name and emblem is forbidden if it exploits the 4-H programs, adult volunteers, members, USDA, Cooperative Extension, land-grant institutions, or their employees.