A National Resource to Support Excellence in Community Action

Financial Oversight by Governing Boards

Last Revised: Sep 21, 2007 - Initial Posting: Sep 28, 2006
Purpose

The Office of Community Services/Virginia Department of Social Services has developed a training presentation to help Community Action Agency board members learn about and effectively fulfill their financial oversight roles and responsibilities.

Description

Financial Oversight by Governing Boards - PowerPointThe Office of Community Services/Virginia Department of Social Services has created a Financial Oversight by Governing Boards (PowerPoint) as a training presentation to help strengthen the effectiveness of financial oversight of Community Action Agencies (CAA’s) - notes format.  It is intended only as a basic overview of this topic and not meant to be exhaustive or replace on-going training provided to boards by their agency’s chief financial officer, auditor, or other financial specialist.

The presentation has information that can be used by CAA’s nationwide.  An overview of financial management systems is included, along with some basic tools to help Boards perform their oversight responsibilities.  The areas listed below are covered and expanded upon in a full outline of the training presentation.

  • Elements of Effective Financial Oversight by Governing Boards
  • Board Governance Responsibilities in Financial Management
  • Financial Management Policies and Procedures
  • Budget Approval
  • Board Financial Reports
  • Audit Services
  • Audit Report Review
  • Audit Report – Red Flags
  • Conclusions – You Are Responsible
  • Get Help

One of the most critical, if not the most critical challenge every community action agency or non-profit organization faces is maintaining an effective financial management system.  And there is no doubt that it is, indeed, a challenge.  It is a challenge for the small to medium sized agencies with scarce financial resources.  And it is a challenge for large agencies managing numerous funding streams often with differing restrictions and requirements as to how the funds can be used.

Although instances of fraud, theft, and mismanagement of funds are fairly uncommon across the national network of community action agencies, nevertheless, when they do occur the publicity generated over-shadows the good work being done by all the others and weakens the perception that legislators and the general public have about community action.  In some cases, it leads to the dismissal of chief financial officers, executive directors, and even to the bankruptcy of the agency itself.  And in almost every case, the community action agency’s board of directors failed to exercise the kind of oversight that might have prevented the problem.

While an inactive or “rubber-stamp” board sometimes causes that failure, it often occurs because non-accountants often find financial management to be intimidating.  Accountants use terminology that few people understand.  We do not understand the financial reports provided to us by our finance staff.  And for some of people, audit reports might as well be written in a foreign language.  CAA board members can use topics covered in the Financial Oversight training as a guide to ensure ongoing fulfillment of their role in this extremely important area.

Outcomes

Effective governance is an element of ROMA National Goal 5: Agencies Increase Their Capacity to Achieve Results.  Additionally, CSBG Information Memorandum 82 (issued March 23, 2005) emphasizes that CAA boards are ultimately responsible for assuring that an agencies remain administratively and fiscally sound.

Contact

Dan Deane, Program Specialist
804.726.7925