Review of Financial Information - PowerPoint Presentation

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 ???????