Saturday, May 7, 2011

Specifics About Cards, Signatures and Online Banking

At the Convention, Article 6 Council, Section 7 Duties of Officers, (a) General was amended by adding the following subsection: (3)WSPTA requires two (2) signatures on every check. Use of a PTA debit card, credit card, ATM card and online banking to disburse PTA funds is not permitted. Does this preclude using an electronic payment process where action by two separate individuals is necessary to authorize a payment?

The two signature requirement has been in the Bylaws for a very long time and is intended to minimize the risk of one person unilaterally spending PTA funds.  This is similar to the recommended practice for businesses that divides responsibilities among employees so that no one of them can divert funds without another person’s complicity.  I believe the Bylaw amendment was intended to clarify that the two signature requirement applies in the era of electronic banking.  Some banks offer electronic payment systems that require authorization from two different individuals before a payment is made, and there are also commercial firms that offer a similar system that can be used with any bank account.  Because each payment requires action by two different people—in effect two electronic signatures—I believe use of such a system is consistent with the intent, if not the letter, of the Bylaw and the recent amendment.  Of course, other precautions such as requiring the two signatures be from different households, etc. would still apply.  One word of caution:  such systems are primarily intended with for-profit businesses in mind, and often have a cost involved.  Accordingly, any PTA contemplating use of such a system will have to make a business judgment as to whether the convenience of not having to obtain two written signatures justifies the additional costs involved.