Finance Committees-Perspective     0029-01  ZZall

                  - - - Rejoice in the Lord always ... again I say Rejoice !!! - - -


                    TO:  Interested Ministries                                                                            FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                               FILE:  0029-01/all

                     RE:  Finance Committees - Perspective                                                 Originated:  January 1987                               


PREFACE

       Some time ago it was our privilege to work with a Ministry then over 40 years old.  They were just setting up and beginning to use a Board appointed FinCom (Finance Committee  (Click Here)  and be led effectively by the Corporate (chief) Financial Officer (CFO), or the Volunteer Treasurer of the Board.  
       
Since this was quite new to some of them, there were a number of questions raised by both the paid staff (S/M) and the Board Members which needed to be rehearsed. It seemed that portions of material shared with them could be of broader interest. Please Go Here  and  Here  for more perspective.

VOLUNTEER BOARD COMMITTEES

    Initially we needed to reflect on the fact that Committee's in general are the butt of many jokes due to their ineffectiveness; e.g., "A committee is a body that keep minutes and wastes hours". 
    We reviewed in depth the real value of effective Volunteer Board Committee work and how important good 'Task Forces', or Committees, should be for the overall good of a Ministry. The FinCom (Finance Committee), for instance, needs to focus in on Finance matters and then report relevant issues back to the Board in a written condensed manner.
    The person providing the quote below is undoubtedly from the financial community, but this person probably has been involved enough with "Volunteer Groups" such as Churches, Mission Groups and Christian Schools, to know the value of a healthy emphasis to the stewardship of 'financial' resources.

    QUOTE --- "Of any of the Committees of a volunteer Ministry Board, an effective Finance Committee can make the most significant, and practical, contribution to the Ministry's overall health."

MINISTRY FINANCE EVALUATION

        Then, the overall Board of this Ministry took the time to prayerfully evaluate, or grade, themselves via the following questions which, in our opinion, are the major fiscal responsibilities of the full Board:

I S S U E

GRADE

1.      We see that all organizational assets

     are well protected.

_______

2.      We have current and relevant written

    financial policies.

_______

3.      The Board, as a whole, senses financial

    responsibility - it is not born primarily

    by Staff and the CEO.

_______

4.      We review and approve annual budgets

    or fiscal projections.

_______

5.      Our financial statements are regularly

 

    received and are well understood by all

  

    Board members.

_____

6.      We have a well functioning Finance/Audit

 

    Committee (FinCom).

_____

7.      Our Corporate Financial Officer (CFO),

 

    or Treasurer, is NOT largely 'honorary';

 

    this person leads in fiscal matters

 

    rather than staff or the CEO.

_____

8.      The desired CPA professional help is

 

    retained.

_____

9.      We have a 'feel' for our legal and fiscal

    responsibilities as Board Members.

_______

10.     We make all necessary government reports.

_______

CORPORATE, OR CHIEF, FINANCIAL OFFICER (CFO)

            The critical corporate fiscal person, or leader, is the CFO. Usually this is a very busy 'volunteer' person and many of these matters must be delegated to the Staff - who might include either paid or unpaid Business Administrators, Accountants, Bookkeepers or Clerks, and, in some cases, the Ministry Executive or CEO. 

    A> The FinCom meetings themselves should be chaired by the CFO, often referred to as the corporate, or Board, 'Treasurer'.  We prefer the CFO title in volunteer groups because sometimes 'Treasurer' means the person doing the actual depositing, check writing and report preparation (Bookkeeper or Accountant). The CFO's tasks should be more 'big-picture-ish' with the CFO's emphasis being an interpreter of the group's finances; rather than the historian. The CFO should be the one Board member fully conversant with the Ministry's finances --- yea, know as much as the Ministry CEO or S/Ms. The CFO, of course, is privy to the Board's 'thinking' on Ministry 'doings' (which usually involve money) and therefore must be oriented to financial effect of proposed actions. We are fully aware that some CFOs are also the Bookkeeper, but the real value to the volunteer Board comes from efforts toward CFO activities and not the necessary S/M tasks.  S/Ms should be expected to assist the CFO but not take the place of the CFO.
    B>. The CFO should be the 'owner' of the monthly financial statements -- the CFO should feel at ease in presenting the financials in person directly to the full Board. The S/M, in our opinion, should not be the lead person in presenting the monthly financials to the full Board -- the S/M should only function as the necessary resource person when more detailed information is absolutely vital for financial clarity.
    C. The Board financial statements should be very 'overviewish' and emphasize the key financial status and trends of the Ministry -- do NOT 'major' in trivia.  Please Go Here and see our Ministry Finance Publication on the subject of 'KEY ITEM TREND STATEMENTS- KITS'. Also  Go Here  for some samples.
   
D. A primary function of the CFO and the FinCom is to insure that the full Board does NOT receive Financial surprises of any sort ---- sometimes good 'stuff' is as disrupting as bad 'stuff".
   
E. The FinCom should carefully develop and recommend (Financial Policies) to the full Board for action; plus insure that all such policies are current and relevant. See our Ministry Finance Publication series on Ministry Finance Policies and Related Philosophy.
   
F. The CFO, or FinCom, should  NOT DO THE WORK OF  the staff; their thrust should be their leaders and counselors -- augment and appreciate their efforts - do NOT be at cross purposes. We recommend a clear job description  (Go Here) for the entire Ministry Finance Team; Be sure and see that all 'bases are covered', but, WE REPEAT, DO NOT DO THE WORK OF THE STAFF.
   
G. Do your best to anticipate the financial future as unto the Lord; see that:

  •   Cash is regularly projected some 90 days into the future.

  •   Money is managed to obtain maximum yield on deposits.

  •   The  Operating Budget  is Board  'owned'  and approved and that it reflects the "here is what we are going to do"  plans as expressed in dollars. The Ministry needs a dynamic Income/Expense operating budget for at least a 12 month period of time (maybe even less frequent)  which is up-to-date and carefully monitored as actions are reflected in the historical financial statements

  •   Capital or Fixed Assets requirements are authorized and recorded via a budget plan.

    H. The CFO could call FinCom meetings between full Board meetings to cover such items as:

  •   Study and research financial impact of various courses of action.
  •   Define the scope and detail of Board  financial statements. 
  •   Define and receive the monthly financial reports coming to the FinCom from the Staff.
  •   Interact with fellow FinCom members and Staff to insure understanding and communication of fiscal matters.
  •   Before each full Board meeting -- receive previously defined current financial information from Staff; articulate, or word, proposed Board resolution/motions coming from the FinCom --- often resulting from assignments from the Board.

    J. The CFO should carefully utilize the interests, skills, and experiences of all of the FinCom members. Once a year all the FinCom tasks should be placed on paper and FinCom members choose, in a non-pressured manner, tasks of interest to them.
    K. Accept from the Board the safekeeping of all the assets.  Carefully think through the degree of personal involvement FinCom members can give to specific internal auditing tasks - such as counting cash, verifying by count other negotiable assets, etc. etc. This FinCom, of course, should select the  external auditing  or CPA firm and then recommend retention to the full Board. You should interact with the CPA firm as to scope of the audits and the reports coming from them. Insure that CPA recommendation are understood and either accepted or rejected.
    M. Be responsible for 'how much of our financial information should be available' to your other staff, constituents and the public
    N. Go through Board or FinCom minutes for some years and extract existing written financial policies - arrange in logical order and making sure they are current or relevant.  Click here  for more Financial Policy matters
    O. Tips for full Board Member understanding of Financials include: keep material relevant and not too voluminous; material easily referenced - full use of colored paper (1):  pages numbered, ask members to read back portion of handout as the CFO makes the presentation and insure 'that all are reading the same thing, etc.'; do not embarrass - be tactful - but all must understand the financials. The CFO's interpretation of the financials could involve status of   "special funds" . Graphs help to show financial trends.

CFO and STAFF MEMBER RELATIONSHIPS

        The CFO, representing the Board, and the S/Ms, and the CEO,  MUST be in agreement in at least the following matters:

  •   The scope of the S/M's decision-making authority.

  •   Click here for more info on this topic as you carefully go through S/M's Job Description to insure understanding.

  •   Clearly understand what the FinCom expects from the S/M as to periodic financial statements.

  •   Agree as to what and when FinCom and the Board are to receive financial statements; be sure and allow sufficient time so that members can 'digest' before their meeting time. The CFO and the Board Chairman choose meeting dates into the following month, for example, to allow for timely preparation and dissemination of financial data to 'those who should know'. Too often we find meetings unnecessarily scheduled for too early in the subsequent month.

  •   Sometimes a S/M is confused by Board member requests; we recommend that requests for financial information flow via the CFO.

  •   What can the Staff buy or sell without CFO, FinCom or even Board approval - whether Budget approved or not.

  •   How much Staff is needed when financial statements are presented to the full Board or when FinCom and/or Board meets regarding Staff compensation.

  •   Scope of S/M's involvement in calling, agendizing and participating in FinCom meetings themselves.

  •   Recognition of extra S/M tasks caused by the FinCom's existence which might include: more meetings; possible extra reporting requirements, additional people interaction.

        To sum it up ------ the Ministry Board should have a functioning FinCom and CFO, or Volunteer Treasurer, in order to care for these important fiscal areas of concern. 
        We trust this paper contributes to your goal of being the best possible steward of your finances as unto the Lord!


   --MINISTRY FINANCE "LINGO"  ABOVE INCLUDES--:

Big Pix = Big Financial Picture of things.
CEO = Chief Executive Officer, or Ministry Executive 
CFO = Chief (Corporate) Financial Officer, volunteer Board Treasurer
FinCom = Board arranged Finance Committee
KITS = Key Item Trend Statement
S/M = Ministry paid Staff Member


     The bulk of this Publication originated in January 1987 and was   . UPTD:   May 23, 2010

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