Leslie Milton, CPA, CA, LPA, Associate Partner
The following are questions you should be get answered before accepting a director position on a non-profit organization (NPO) or registered charity’s Board of Directors.
- Who does the bookkeeping, and are the books and records kept up to date?
- Is there an active audit and finance committee?
- How are trust funds handled – e.g. payroll deductions, HST etc.?
- What controls are there over cash?
- What tax return filings are required and what steps are being taken to ensure the organization files them on time?
- Who prepares the tax filings?
- Is there a meaningful budget process?
- Is an accountant engaged to undertake an audit or review engagement?
- How often does the Board meet, and is financial information presented at Board meetings?
- What is the expected time commitment?
We would like to highlight a couple of points in particular.
All directors are responsible for the finances of an organization. While there will be a higher standard of care for a chartered professional accountant than for a layperson, the finances of an organization are the responsibility of all directors. You need to have basic ability to read and question financial information and to ask the appropriate questions at a Board meeting.
There is more to fulfilling your duties as a director than just by participating in the appointment of an auditor. As a whole, the Board has a shared responsibility for overseeing management and ensuring that internal controls and procedures are in place to safeguard the assets of the organization and produce reliable financial information.
The auditor’s role is to form an opinion on your financial statements based on their audit procedures. The auditor will gain an understanding of the organization and its environment, including the internal controls under which it operates. At the end of the audit they will inform the director of any material weaknesses in the design or implementation of internal controls.
When you accept an appointment, encourage your organization to set up an audit and finance committee if one does not already exist. It provides an opportunity for dialogue with the auditor on financial processes and controls that will help benefit the organization and help you discharge your fiduciary duties.
Accepting a director position on the Board of Directors of a NPO or registered charity is a big decision that comes with great responsibility, but also comes with great rewards.
