Boards and Financial Reports

There are 1.4 million nonprofits in this country. The responsibility for managing them is given to their governing boards and their staff. Governing boards, in particular, have the financial responsibility to make sure that the finances are well managed. However, governing board members often are at a loss how to read them. Yet, they are asked to approve the financial reports. Have you ever approved a report that you didn't understand, assuming that someone on the board understands them; and therefore, the reports must be right? Who is reviewing your financial records at the end of the organization's fiscal year? Is it a timely review? How many months have gone by since the auditor reviewed the records? If it is eight or more months, the auditor ought to report to the board why it is taking a long time. The auditor ought to review the final report with the governing board. Who is handling the finances of your organization? How do you know that they are competent? Ever walk into the office and observe large amounts of cash laying around? Do one month's financial reports differ in format from the previous month's? Who is checking the bank statements to make sure the checking account is balanced? Who is approving the invoices that come in and who is paying them? If some of the invoices are not paid, are they listed in an aged accounts payable file? Accounting problems can occur, because individuals do not know what they are doing or individuals are just plain careless. On the other hand, accounting problems can occur because of theft. The Florence Crittenton League recently was betrayed by an employee who stole $637,000. Periodically, we read about other organizations that have had this happento them. The American Red Cross had it happen in the past at regional offices. Good controls is one way of avoiding thes situations. Need help with understanding the finances. Purchase a copy of Robert Anthony and Lelie Perlman's Essentials of Accounting. It is a programed textbook that leads you through accounting step by step.