Finance And The Board Of Directors

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​The Board of Directors of a nonprofit organization has a fiduciary responsibility to oversee the financial health of the organization. Although they are not responsible for managing the daily operations of a nonprofit organization’s finance department, they should be confident that the finance department is managed efficiently and effectively with proper processes and systems in place to support the organization as it successfully carries out its mission.

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To fulfill their responsibility, Board members should ask senior management questions in five key areas:

• Personnel
• Policies and Procedures
• Internal Controls
• Allocation of Resources
• Financial Audit

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Questions Nonprofit Board Members Should Ask

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KEY AREA #1: PERSONNEL

• Is there an adequate number of staff in key positions, with well-defined roles and responsibilities, to operate the finance department efficiently?
• Are the procedures that each staff member follows in performing their duties documented?

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KEY AREA #2: POLICIES AND PROCEDURES

• Does the organization have a formal Accounting Policies and Procedures Manual?
• Is the manual updated at least annually, reviewed by senior management and approved by the Board of Directors?

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KEY AREA #3: INTERNAL CONTROLS

• Does the organization have sufficient internal controls to mitigate the risk of unauthorized and fraudulent activity and prevent noncompliance with regulatory requirements?
  
• How does senior management monitor and ensure that the internal controls are working properly?

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KEY AREA #4: RESOURCE ALLOCATION

• Are adequate resources allocated in the budget for implementing automated systems to replace inefficient manual procedures?
  
• Are resources allocated to programs that are not directly related to the organization’s mission?

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KEY AREA #5: FINANCIAL AUDIT

• How has the organization addressed the findings presented by the auditors in their Management Letter?
  
• Why was there a delay in the start day of the audit and what steps are being taken to correct this issue?

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Roberta Katz Consulting is working with many nonprofits in improving the operations of their finance function. Schedule a complimentary consultation today to discuss how I can provide your organization with an impartial assessment of its finance department.

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