The Board of Directors and their role in financial management Presented by Jean Fecteau OEO Fiscal Analyst Objectives Understand basic requirements and responsibilities relative to the Boards fiscal oversight ID: 743597
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Slide1
Review of Financial InformationThe Board of Directors and their role in financial management!
Presented by
Jean Fecteau
OEO Fiscal AnalystSlide2
Objectives:Understand basic requirements and responsibilities relative to the Board’s fiscal oversight;Understand the importance of assessing each Board members fiscal knowledge; Understand the value of a Finance Committee; and
Understanding the Organizational Standards related to Board of Directors.Slide3
Board ResponsibilitiesBoard of Directors have a fiduciary responsibility to ensure that the assets of the nonprofit are used in accordance with donors/funders intent, and supports the agency’s charitable mission.
Board of Directors should maintain and monitor financial
accountability of their
organization, acting as trustees
of the organization’s
assets that
includes timely review of financial reports and advance
planning to ensure the agency’s financial
situation remains sound. Slide4
Committees the Board of Directors should consider establishing:Executive Committee Finance Committee
Membership/Nominating Committee
Audit Committee
Fundraising Committee
By-Laws CommitteeSlide5
Finance Committee Responsibilities:Review and approve the annual budget and submit it for approval by the full Board;Review the organization's revenues and expenditures on a regular basis if Board does not meet monthly;
Assist in the maintenance of agency assets;
Assist in the management of organizational investments;
Provide direction for the entire Board for fiscal responsibility. Slide6
Questions that the Board of Directors should be asking.Is our financial plan consistent with our strategic plan?
Is our cash flow projected to be adequate?
Do we have sufficient reserves?
Are any specific expense areas rising faster than their sources of income?
Are we regularly comparing our financial activity with what we have budgeted?
Are our expenses appropriate?
Do we have the appropriate checks and balances to prevent errors, fraud, and abuse?
Gelman, Rosenberg & Freedman CPAs is a member of CPAmerica
International January 26, 2015
Fiscal Responsibility Primary Goal of Board of Directors
(Questions adapted from
The Financial Responsibilities of Nonprofit Boards
by Andrew Lang.)
Slide7
Questions that should be asked related to each member of the Board of Directors?What are the fiscal strengths each Board member brings to the table?Do Board members complete a fiscal knowledge assessment?What Board training is needed to understand financial reporting?How often should the Board review the expenditures and financial reports of the agency?What reports need to be presented to the Board to meet Organizational Standards requirements?Slide8
What can the Board of Directors do to strengthen fiscal knowledge?1
.
Have
all Board members take a financial management
self-assessment
.
2
.
Provide
training on the agency policies and procedures
for Board
knowledge of purchase levels, approval
requirements
and financial controls.
3
.
Read
your financial information and ask questions!
4
.
Volunteer
to be on the
Finance or Audit committee
!Slide9
How does a financial management self-assessment assist the Board?Helps Board understand the state of agency finances; Identify strengths and weaknesses of member fiscal knowledge Assists in targeting Board fiscal training
Assists
in helping Board understand fiscal
responsibilities
Assists in healthier financial practices and processes
Assists in addressing critical financial issues or events Slide10
What do you look for in your financial reviews?1. Budget to actual reports for large variances;2. Balances on financial statements for solvency;
3. Large
multiple purchases of same vendor;
4. Ask
fiscal staff about any unusual expenditures
that
occurred during period;
5
.
What
issues, if any, does the fiscal office
need assistance?Slide11
Websites with assessment tools.Http
://
nonprofitoregon.org/sites/default/files/uploads/file/Fin%20Mgmt%20Self%20Assessment.pdf
Nonprofit Financial Management Self Assessment Tool
https://
nonprofitsassistancefund.org/resources/item/financial-self-assessment
Financial Management Self-Assessment
https://
www.councilofnonprofits.org/tools-resources/self-assessments-nonprofit-boards
Board of Directors Full Board EvaluationSlide12
Organizational Standards related to Fiscal ManagementCategory 8: Financial Operations and Oversight Standard 8.1
The
Organization’s annual audit (or audited financial statements) is completed by a Certified Public Accountant on time in accordance with Title 2 of the Code of Federal Regulations, Uniform Administration Requirements, Cost Principles, and Audit Requirement (if applicable) and/or State audit threshold requirements.
Standard 8.2
All
findings from the prior year’s annual audit have been assessed by the organization and addressed where the governing board has deemed it appropriate.
Standard 8.3
The
organization’s auditor presents the audit to the governing board. Slide13
Standard 8.4 The governing board formally receives and accepts the audit. Standard 8.5 The organization has solicited bids for its audit within the past 5 years. Standard 8.6 The IRS Form 990 is completed annually and made available to the governing board for review. Standard 8.7 The governing board receives financial reports at each regular meeting that include the following:
1
. Organization-wide report on revenue and expenditures that compares
budget
to actual, categorized by program; and
2
. Balance sheet/statement of financial position. Slide14
Standard 8.8 All required filings and payments related to payroll withholdings are completed on time. Standard 8.9 The governing board annually approves an organization-wide budget. Standard 8.10 The fiscal policies have been reviewed by staff within the past 2 years, updated as necessary, with changes approved by the governing board. Standard 8.11
A
written procurement policy is in place and has been reviewed by the governing board within the past 5 years.
Standard 8.12
The
organization documents how it allocates shared costs through an indirect cost rate or through a written cost allocation plan.
Standard 8.13
The
organization has a written policy in place for record retention and destruction. Slide15
In SummaryAll Boards should have a finance committee and possibly an Audit Committee;
Boards
should perform an annual financial assessment of Board member
financial
knowledge;
Board Members should receive financial
information
prior
to Board
meetings and review information, prepared to ask questions;
Engage in fiscal training
that will
assist
all members
with their fiduciary responsibilities;
Know your agency's policies and procedures
;
Ensure the Board is fully engage with the Organizational Standards related to Financial ManagementSlide16
Books to Reference:Slide17
Presented by Jean FecteauOEO Fiscal AnalystContact Information:Jean.Fecteau@dhhs.nc.gov(919) 527-6254
QUESTIONS ???????