Board Role in Asset Protection (Part 2 of 2)

Board Oversight

There are many tools and processes available for a board to protect resources:

• Form 990 - This is the annual information report to the IRS required of nearly all exempt organizations. Averaging 25 pages, board members can glean a lot about income, expenses, assets and programs. Give it a good read. It is expected that the governing body reviews it before submission.

• Audit - An audit is generally defined as a review of the organization's financial situation by an independent outside professional. Look for the organization's policy on the frequency and type of audit required. If it does not exist, inquire why not. When an audit is completed and presented to the board, review it carefully and ask questions of the auditor.

• Budget Approval - The budget is a projection of income and expenses for the year, approved by the board. The elected treasurer has a duty to keep the board informed of discrepancies in the budget. Directors should be articulate about aspects such as the size of the budget and the major income and expense items. The budget is a year round tool of the board.

• Financial Reports - Directors should receive a financial report at every board meeting. Review it carefully, ready to ask questions about trends and performance. If the report is missing, ask why and get assurance it will be provided shortly after the meeting. Let the minutes reflect that the board received,reviewed, and accepted the report.

• Oversight - Directors must accept that they have responsibility for financial management and asset oversight. Don't assume that a committee, treasurer or staff are taking care of matters.

• Policies - There should be numerous policies regarding finances. For example, check signatories, credit card use, and requirement of receipts for reimbursement. Be sure the policies are in place and followed.

• Access to a CPA - If directors need more information to better understand financial matters, ask a CPA to address the board. Topics might include IRS requirements, policy safeguards, audit options, and generally accepted accounting principles.

• Big Picture - Directors sometimes micromanage by inquiring about the smallest line item. The attention should be on the Big Picture.

• Dashboards - Graphics reduce the time spent on listening or reading reports. Improve financial understanding with dashboards designed as pie charts and graphs comparing dues to non-dues income, savings to budget, dues renewals and membership growth.

• Internal Controls - Practices should be in place that protect assets. From secured checkbooks, separation of duties, to limiting petty cash, be sure safeguards exist.

• Finance Committee - Spread the responsibility from the sole treasurer to a broader group of directors serving on a committee. Having several eyes on the books and financial matters is advantageous.

Avoid stories of diversions and embezzlement with a board that understands the responsibility and tools for financial oversight.

Bob Harris, CAE, provides free tips and templates at and is scheduled to address the FIAE Convention on several topics including: "Stellar Strategic Planning," where State Executives are invited to bring their own strategic plans and mission statements for private consults with Bob, and " Building a Better Board." He will also moderate one of the roundtable sessions on "Administration." Bob is nationally recognized for his "real life" approach to improving associations.


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