Well we had the meeting and it was volatile. When the subject came up about the discrepencies in the amounts, the defense was that it had always been done that way and that is how they were taught. Basically they pleaded ignorance, believing they had done nothing wrong. I find it hard to believe they did not know that this was fraud all these years since it was so obvious to me when they suggested that there was another way to, "figure the numbers".

One of the members felt that the treasurer should resign since ignorance was not an excuse.
The same member told the principal that this tax needed to be paid and if it was not paid (principal is the second signer) then a letter would be going to the authorities. The principal told me that the tax should be paid.

Now, about the petty cash. Yes it was not so petty. The best the audit committee can figure out is that the profits from any sale that did not involve a Vendor (Secret Shop, book fair, candy sale) were were put directly in to petty cash. We have no idea how much money was earned this year from such sales because there is no record. It is assumed that $1,000, if not more, filtered through petty cash with no documentation. The treasurer and new president see no problem with that.

Critter, on another post I read that you are from Michigan. I'm from Michigan as well and was wondering what you can tell me about about how appropriate it is to send home a child in a taxi (paid for by the PTO). Is this legal? I have reservations about sending home a child in a taxi unsupervised. Any comments?

True, so true. That is another topic altogether since she never reports in the financial statements how much petty cash she has on hand.

tomorrow is the big meeting where the discrepencies will be discussed. I'll state what happens.

If she doesn't report on petty cash, how can anyone be sure it's petty?

The amount of $13 was the difference of what I gave to the treasurer to deposit in the bank and what she paid to the book fair company. There was no rounding error committed by the company. The treasurer should have at least paid the entire amount listed as gross sales.

The amount of sales tax that was not paid was over $105. In addition to not paying the actual gross sales amount and taxes, the Treasurer put down on the last financial statement that she paid the full amount including tax. At present we have shorted the book fair company $118.00. Now, like I said according to her accounting she paid that but that is not what the company says was received. It is possible that she amended the books and that it will be reflected in the next financial statement, or that the difference was put into petty cash. Unfortunately she does not include any documentation on our petty cash fund in her financial reports to either the executive committee or the general membership.

Sure the book fair company works on an honor system and that is what I was attempting to provide, an honorable PTO.

Thanks for the additional info; I think I've got it now.

Yes, it sounds a little fishy, and it's the book fair company that's getting ripped off. IANAL, but I do not believe that you (or anyone else in the PTO, for that matter) is responsible for any underpayment of sales taxes, for the following reason.

Sounds like the way you are set up, you're just providing a venue for this bookfair company to sell books to the kids. Although you sign a report telling them what you sold, they apparently don't check it against what inventory you return, so they have no way of knowing what books you sold for what price, or, for that matter, how many items were stolen during the fair. Someone on their end, however, is responsible for reporting gross sales to the state and remitting the appropriate sales tax. Even though they may be relying on your reports to figure out their gross sales, they have ultimate responsibility to make sure they are accurate. Maybe they are not checking very carefully because it's not material to them--underreporting $13 in sales could be a rounding error in their case--depends how big the company is. No doubt that the labor involved in checking the inventory against the sales records would far exceed $13.

Anyway, if the book fair company sets the gross sales prices, and you do not have the flexibility to modify it, then the amended report that was completed was wrong--no two ways about it. (In my earlier answer, you only would have been ok if you had the flexibility to set the sales price.)

I'm having a hard time backing into the math on this, but it sounds like it was a pretty small sale. If it were me, and the total difference was really only $25 or less, here's what I would do. I would go to the Treasurer and say something like this: "We don't have the flexibility to set the sales prices, and there must be some misunderstanding that we do, because the gross sales are less than what we actually ended up selling. I'm concerned that the report I completed was changed without consulting me, because I believe it was correct as is. I feel very strongly that we should do the right thing here, and therefore here is $25 out of my own pocket to make this right. Let's make sure this doesn't happen again. We need to either stop saying we're going to pay the sales tax, or change the way we do the final reports."

If someone came up to me and did that, I would sure take a hard look at what was going on. Should YOU really have to be out of pocket on this? Of course not. But for that relatively small amount of money, the peace of mind would be worth it. Your initial post said you were angry and hurt, and thinking about going to the school board. At the risk of offending you, I just don't think it's worth all that for a pretty small sum of money.

If my math was wrong, and the total amount owed is substantially more than $25, I would still go to the Treasurer and the new President, and go over the whole deal with them. If your Treasurer doesn't get this, you have bigger problems!

One last point--if you're not getting any profit from this deal, then your PTO budget should be showing a line for book fair expenses that is the sales tax that you are agreeing to pay for. If you can get that line item in there, then that should help eliminate any misunderstanding going forward.

Thank you for your responses. You asked for more information so I will try to explain more. Please bear with me.

Our book sale was one in which the prices were set by the book fair company, which is located in the same state. As had been done for previous sales, the PTO decided to pay the sales tax for the children. Much like furniture stores having sales and saying "no interest and we will pay your sales tax." We wanted to have a $1 book sell to the children for $1, not $1.06. This way more books would go home in the hands of the kids. The book sale was being done as a service to our children and not to make a profit.

According to our book fair rep., since the children were purchasing the books (as the end user) sales tax must be paid regardless of whether we were tax exempt. The PTO does not have its own Tax ID #, but the school has one, which the PTO members have used when purchasing items for the school. Filing for a seperate Tax ID# for the PTO is another subject all together. I am working on it though.

When I submitted the book sale report to be sent with payment, it included the gross sales, sales tax and total amount to be remitted. I had signed it. At our last general meeting the Treasurer's own financial statement stated that she paid that amount. At the executive board meeting I attended a couple of weeks later, I learned that the amount sent was actually $13 less than our gross sales amount and of course taxes were not included.

I have called the book fair company to find out if my name was on the sales report they received and it wasn't (a new one was written). The rep. did confirm the amount remitted and it does not match the amount I put down. It was the amount I heard discussed at the executive board meeting.

It seems to me, from discussions with previous book sale chairs, our PTO has made a habit of working the sales figures so that we do not end up paying the book fair company the actual amount they are due. It should be noted that the book fair company operates on an honor system (not checking us out for the number and dollar amount of books and other items we receive).

To me it does look a little fishy. More than just a misunderstanding, it seems that the PTO is defrauding the book fair company. We sould not be defrauding the book fair company just because we can get away with it. It is blatant disregard for the law and the by-laws of the PTO.