Boards Shouldn’t Rely on the Treasurer
Posted on Wednesday, January 23, 2019 Share
One of the Ten Basic Responsibilities of Nonprofit Boards is to protect the organization’s assets and provide proper financial oversight. The board must assist in developing the annual budget and ensure proper financial controls are in place.
Many times boards will rely on the treasurer to fulfill this requirement. After all, it is common for a board to look for a CPA to fulfill the treasurer role since they have a financial background. There are two dangers with this thinking.
First, having a CPA or someone with financial knowledge on your board, does not remove the requirement that all board members are responsible for the organization’s financials and therefore need to understand them. The board is a group of people that must act together to have any authority. Individual board members cannot act alone and have no individual authority.
Second, not all CPAs or individuals working in a financial related field understand nonprofit accounting. Nonprofits have unique accounting and tax requirements that are different from for profit entities. In addition, the Financial Accounting Standards Board (FASB) who establishes accounting requirements, has recently changed reporting requirements for nonprofit organizations. Your board needs to make sure it has someone that understands the unique needs of nonprofit accounting and taxes and keeps up to date on changes.
Yes, your board should include someone that has more than a passing understanding of nonprofit accounting but they need to be able to communicate the necessary understanding to other board members. Ideally, you want someone that cannot only provide financial oversight but also bring financial literacy.
Not every board member has a financial background, which is as it should be, but for these individuals, you want to be able to provide them with proper training so that they can understand your organization’s financial statements. All board members should possess enough knowledge to understand basic terminology, evaluate the financial statements and ask the right questions. Whether this training is provided through other board members, through your auditor or another outside resource, it is important to make sure all of your board members have the proper skills to do their job.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.