Keeping your Charity on the Right Track: Reporting to the Board
Along with our Charity & Not for Profit colleagues across our national association MHA, we have created a month by month plan that can help you improve your organisation’s governance. Each article covers an area of charity governance that you could review within our organisation and leads you through good practice, areas to consider and improve and where you can find extra guidance. In January, we covered the effectiveness of your board.
Month 2: Do we have an effective Finance Function? Reporting to the Board
Charity management and responsibility is often split. Ultimate responsibility remains firmly with the board of trustees but the organisation is run on a day-to-day basis by a management team made up of employees. As a result, it is vital that the board receive timely and accurate financial reports. The key remit of the finance function, regardless of size, is to produce accurate and timely reports for wider management and the board themselves.
Often as board members rotate, the new trustees simply accept what has gone before and receive the same financial reports without question.
Our recommended checklist for the month:
- Is financial information readily available and up to date, or is it received several weeks following a month end?
a. What information is being received (performance and/or position)?
b. What is the basis of preparation (receipts & payments or accruals)?
- Do the management team and board understand financial information or is any form of training required (annual or one-off)?
- Is your current accounting software giving you what you desire in terms of the reports output?
a. Or does someone manipulate the data prior to sending the financial information to the board?
b. How much resource is required to keep the finances up to date – does this seem excessive?
- Do the board have a clear channel of communication with the auditor/independent examiner and are any auditor recommendations (from the annual audit feedback report) being actioned to improve financial accuracy?
You can also download the full 12-month guide with the monthly and end-of-year checklist.
If you have any questions on this month’s topic or would like to find out how we can help, get in touch with our Charity & Not for Profit team on 01903 234094.