Question

What role does the Board of Directors play in overseeing the accounting for a nonprofit organization? What sorts of skills should an organization consider for people they seek to have join their Board of Directors from an accounting standpoint? What roles do the Treasurer and finance committee play within a nonprofit for overseeing accounting?

Answer 1

Board of directors role in overseeing the accounting for a nonprofit organisation:-

Board of directors is the main governing body of a nonprofir organization who governs and oversee the whole business. Board of directors have a fiduciary responsibility to oversee the accounting and reporting function in any business. They play a very key role in overseeing the accounting of a nonprofit organisation. Annually BOD's meet to discuss the business of the company which also includes the accounting and reporting. Sometimes, if needed they meet more than once. All the directors have a right to vote on each business. BOD also may create some committee for the same for overseeing the work of the auditors and financials of the business known as the audit committee. If any such committee is created, non-executive directors oversee the financial reporting of the organization.

To be a director, first of all he should have knowledge of the business and the industry in which he is working. Apart from this, he should have analytical skills, problem solving skills, technical qualifications, leadership skills and understanding skills.

Treasurer and finance committee role within a nonprofit for overseeing accounting:-

Treasurer and finance committee work hand in hand. Manytimes, treasurer is also a part of finance committee. A treasurer and finance committee is generally one who oversees the inflow and outflow of the cash within the business. They are responsible to oversee the complete finance function within the business. The are responsible at the start of the year to prepare various budgets which mainly includes the cash budget. And for the other parts of the year, should compare the business of the company with the budgets and if there are variations to it, should analyze the same try to reduce the same. They are responsible to obtain finance through various sources such as debt, equity, loans etc. They also have thorough knowledge of the financial reports of the business and various financial ratios. They are also responsible for book keeping and financial reporting function.