Often Board members simply get handed the role of Treasurer if they have a financial background. Understandably, most Board members have agendas for their service that supports the organizations mission and, let’s face it, only a certain portion of the population embraces finance and board controls.   If you are lucky, you receive some form of past records from your successor and guidance from management or the outside accountant. Utilizing your resources is quite important if you are to be successful, especially if success is enhancing further toward best practices.

Financial reporting requirements necessitate a review with management and/or the independent auditors the effect of any regulatory and accounting initiatives, as well as other unique transactions and financial relationships, if any. Independently, through professional reading and focused continuing education, keep up-to-date on new developments related to the applicable industry, the organization’s specific sector, and the environment in which the organization operates, including any regulatory requirements it may be subject to. We have huge resources at our disposal in this day and age, and we are glad to offer our thoughts to assist you. These discussions best occur as meetings, whether they are in person, video or simply teleconferences. Unless you are following a well-functioning individual, watch how management and the independent auditors react to your request for their participation in these meetings. Don’t be surprised if they react with amazement with what you wish to accomplish. The other reaction may be a lack of interest, which you should read as a need for you stepping into this role. As outside auditor, I can tell you that if the board doesn’t want to hear it, it most likely means they haven’t considered it. However, we all know auditing requirements seek enhanced evaluation by the audit committee.

Expect to be in the role of reviewing any interim financial reports issued since the last meeting. This should be your entire committee’s responsibility so don’t feel overwhelmed. This is you taking time to understand the organization and its mission, and information that is available concerning that niche of the industry area and updating your experience in financial aspects of the organization. You will then be in a position to discuss with management and the Chief Audit Executive the financial statements, with emphasis on changes in reporting, how results are achieving the organizations budget or objectives for the year. Specifically, focus on any new and unusual transactions and the financial trends. The trends may be simply meeting budget aspects on revenue raising and expenses. New and unusual transactions tend to be recorded by journal entry. They are outside the usual recording of transactions. Therefore, your service on the board and knowledge of important aspects occurring are vital to your reviewing the records. We forewarn you, you are looking not just for what is recorded but what is not recorded or missing. It will take time for you to grow into your role and you should take each interaction as an opportunity to grow. Further, watch for those who can serve as your successor, as life changes for all of us and let’s face it, this is a volunteer position for you and you may need to move on at some point.

As part of your role as Treasurer and having a functioning committee, the option of conducting executive sessions with the outside auditors, executive director, and chief financial officer (CFO) are rightly available to you. If the organization has a chief audit executive (CAE), general counsel, or outside counsel, executive sessions should be conducted with each of these individuals as well. Circumstances may dictate that additional executive sessions may be needed with the director of financial reporting, controller, or others as desired by the Committee. Such meetings can range from short, ten minute telephone calls, to longer or more involved meetings, depending on the topic(s). Your role in monitoring each of these important relationships can become somewhat involved. Consider the timing of the establishment of these sessions in conjunction with regularly scheduled meetings on a schedule which works best into your service year, or as might become necessary as you serve. It is important that you review the content and action steps established with your committee, preferably at its regularly scheduled meetings. Thus, there may be a need for more than two meetings a year if you wish to spread the burden of these important functions among you and your committee members.

It falls to your committee to appoint the independent auditors to be engaged by the organization, establish the audit fees of the independent auditors, and pre-approve any non-audit services provided by the independent auditors, including tax services, before the services are rendered. In order to accomplish that function—at least once each year—discuss each of these items with management, the CAE (if applicable), and the board of directors. Assure you understand the total audit fee in relation to any non-audit services being provided by the independent auditors. Review and evaluate the professional relationship with the auditors, including continuity of partner, manager, and staff; and level of service provided by auditors. Review the scope of all services provided by the audit firm throughout the organization. It is best to review soon after the audit has been approved by the board, so that the recommendation for the appointment of the outside auditor in the next fiscal year can be documented in the board minutes in a timely manner.

Assure that you record each and every important aspect of these actions and discussions, especially any action steps taken, as part of your committee’s meeting minutes.

Do you need professional help with your non-profit? Czarnowski & Beer is currently offering a complimentary, no-obligation evaluation of your nonprofit organization. Visit our nonprofit offer page or contact us at info@czarbeer.com or call (212) 397-2970 and we will be happy to help you and answer your questions.