Even small errors can cause large headaches over time if not fixed. The fixes may mean much more work for the treasurer to correct the errors and could include filing amended club tax returns. Amended club returns can trigger the need for individual members to file amended personal tax returns.
One big item to check is that the number of shares owned in each stock of your portfolio reconciles with your broker statements. Don’t be alarmed if the value reported is off a small amount. Your broker may be using a quote service that reports prices to tenths of a cent rather than just cents. Downloaded prices into the accounting valuations, meanwhile, will be only to the penny, so small differences in value may be due to this.
If the share numbers don’t match, common transactions to check are:
- Buy and sell transactions for the company. Does each match with the broker’s?
- Was the company involved in a spinoff, merger or stock split?
- Did the club transfer shares as part of a withdrawal payout? Did the broker actually transfer the same number of shares as you have recorded in your records?
The next big item to check is cash balances in cash accounts. Here are common causes for cash accounts not reconciling:
- Missed dividend payments.
- Missed interest payments.
- Missed member payments.
- Missed deposits.
I suggest you do a quick check of cash balances and portfolio holdings at each meeting. You can conduct a more extensive audit annually to catch items not found at the meeting spot checks. The important thing is to catch problems early and get them resolved before they cause bigger problems.