Connections for Success



Simple Tips on How to Get Your Board the Financial Information They Need

Your board brings to your organization a wide variety of talents and expertise; however, they do not always have experience with financial and accounting matters.  It is up to you to get them the essential information they need to do their jobs.

Board members cannot properly perform their functions if they do not understand the organization’s financial position.  If they are not provided with timely financial information, they will not be able to make informed decisions about goals or plan and monitor the organization’s progress toward those goals.  Without this understanding, they also cannot fulfill their fiduciary duty to the organization.

Board members of organizations with finance or audit committees may falsely believe that only those committee members need to concern themselves with the organization’s financial details.  That could not be further from the truth.  Every board member should have a basic understanding of the organization’s financial statements in order to make decisions that satisfy their duty of care.

At minimum, the board should receive the following financial information on a monthly or quarterly basis in a timely and accurate manner:

  • Statement of financial position (balance sheet);
  • Statement of activities (income statement);
  • Cash flow forecast;
  • Actual results compared to budget; and
  • Operational figures (such as cost per unit of service).

In addition, the organization’s IRS Form 990 should be presented to the board annually.  The board should also remain up to date with the organization’s current goals and programs and be present with benchmarks to make the data meaningful.

Training Your Board

To help management present financial information to their boards more effectively, every board member should receive some training on how to read and use financial statements.  The board orientation process should also allocate time for new members to meet with the chief financial officer to review the financial report format and to understand the organization’s critical financial factors.

Offering periodic refreshers to board members is also advisable.  You can include your CPA firm in these meetings to bring an independent perspective to the discussions and to shed light on the audit process.

Delivering the Numbers

Before you train your board, you will need to develop a user-friendly format for your financial reports.  Remember, graphs are often easier to understand than line after line of numbers, so they can provide a useful method of sharing information.

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