Financial Responsibilities of Boards of Non-Profits. Presented by Darren Adamson, CPA, CA, Partner

Transcription

1 Financial Responsibilities of Boards of Non-Profits Presented by Darren Adamson, CPA, CA, Partner

2 Welcome and Introductions Thank you for coming! Comments and discussion are highly encouraged please share your thoughts and experience Share who you are, the organization you are with, and what you hope to get out of today

3 Overview who does what? Management Board Treasurer Audit/Finance Committee Auditor

4 Board Responsibilities Oversight Mission, Vision, Strategic Objectives Overseeing management Ensure compliance with governing documents Evaluation of CEO Duty of Care Policy Board vs Operational?

5 Board s Financial Responsibilities Stewardship of organization s resources Oversee financial affairs F/S primary means of communication Must understand financial statements Do not need to be expert, but must have basic financial literacy

6 Board s Financial Responsibilities Ensure funds are spent in accordance with donors or funders wishes Ensure statutory obligations are fulfilled Ensure internal controls are in place safeguard assets accurate accounting data minimize risk of fraud

7 Common questions/barriers We have an experienced accountant on the Board, why do I have to deal with this? Shouldn t the Board be focusing on our mission/objectives? Accounting is too complex for me! Isn t this the job of the auditor, or management?

8 A Treasurer s Role Closely linked to Board responsibilities Oversee and monitor financial performance ensure budget prepared/approved ensure Board receives financial info ensure F/S audited and approved

9 A Treasurer s Role Other Treasurer responsibilities may include: chair of audit committee financial policies internal controls analyze financial results approve expenses/sign cheques educate other Board members

10 Audit Committee Ensure annual audit is efficient, cost effective, and objective Oversee financial and control systems Accounting policies Review annual F/S recommend for approval Recommend appointment of external auditor

11 Auditor s Responsibility Conduct audit in accordance with CAS Maintain independence Assess risks Use judgement Provide opinion Reasonable assurance Communicate with TCWG

12 Discussion Table discussion what type of Board and governance structure does your NPO have? Group discussion share key insights

13 Potential Liability for Directors Failure to withhold/remit payroll deductions Failure to remit GST Non-payment of employee salaries Conflict of interest Negligence Breach of contract

14 Internal Controls The Plan of the Organization and all the Co-ordinated Methods and Measures Adopted by Management to Safeguard Assets, Ensure the Accuracy and Reliability of Accounting Data, Promote Operational Efficiency and Maintain Adherence to Prescribed Policies.

15 Fraud 3 types Fraudulent financial reporting Corruption Misappropriation of assets

16 Fraud Prevention tone at the top internal controls values and code of conduct hire/promote appropriate employees visible supervision and review

17 Fraud Prevention cont d controls should include: dual signatures on cheques never pre-sign cheques review invoice/supporting documentation no rubber stamp approvals segregation of incompatible duties physical security locks/cameras

18 Detection Fraud monthly bank reconciliations prepared bank rec s reviewed and approved accurate and timely bookkeeping journal entries reviewed and approved monthly review of financial info by Board and ask questions!

19 Not-for-profit Finance Internal financial reporting managers/staff use various financial reports in performance of duties some of these would go to the Board budget internal, periodic (monthly) f/s actual vs budget audited financial statements

20 Not-for-profit Finance External financial reporting to stakeholders all stakeholders have common interest in: protection of assets efficient and effective use of resources

21 Not-for-profit Finance some stakeholders have specific interests Funders/Donors funds spent as agreed Members organizational performance CRA annual filing of: T2, NPO return, Charity return, GST, payroll deductions Society s Act - annual return

22 Financial Statements 3 Key Statements Statement of Operations Statement of Financial Position Statement of Cash Flows

23 NPO Accounting Topics Deferred revenue Unamortized capital contributions Net assets (equity) Unrestricted Reserves Invested in Capital Assets

24 Financial Forecasting Budget operating capital cash flow Where are we compared to budget? Where do we expect to be at year end? Why do we have variances from expectations?

25 Key Performance Indicators Financial financial amounts (i.e. gross margin) ratios Non-financial employee turnover number of new donors number of clients served/turned away

26 Key Performance Indicators Do not track everything waste of time information overload What is important to your organization? critical success factors dashboard increase chance for success

27 Key Performance Indicators Recommend only track a few KPIs (5 or 6) Each KPI should have: Title/definition the purpose of the KPI Measurement how is it calculated? Target where do we want it to be? Evaluation compare to target, trend

28 Key Performance Indicators Monitor KPIs look for trends compare to benchmarks establish who is responsible how will results be presented? how often? what actions will be taken?

29 Avail - NPO Value-Added Services NPO Health Check-Up Organizational Structure Vision, Mission, and Values High Performing Board Development Program Emerging Leaders Training Program Strategic Planning Governance Policies and Processes Succession Planning

30 Questions? Darren Adamson, CPA, CA, Partner Thank You!