2191404675_53b2efeb3e_o

With all the recent emphasis about the responsibility of a non-profit board to practice good governance and oversight it may come as a surprise to learn that refraining from approving the treasurer’s report on the financial status of the organization is the most responsible course.

During a board meeting there are a lot of items on the agenda upon which members will make motions to accept and vote on, but the treasurer’s report should not be one of them. Instead, the report should be acknowledged and filed with the secretary for audit.

The primary reason for this is that non-profit boards are generally comprised of members of the community who lack the expertise to scrutinize the financial documents for errors and inconsistencies. The treasurer may not have the appropriate skill to do this themselves.

Certainly a few minutes at the board meeting isn’t going to allow for an effective review. Even if the financial statements are sent out prior to the meeting and board members are assiduous about reading them, it can be difficult to spot mundane problems much less skilled attempts at fraud.

As Julie Piotch writes:

Unfortunately, only groups who have been through litigation having had to take a member to court over financial misfeasance or embezzlement understand the importance of not approving financial reports whose accuracy the board cannot fully substantiate.

The treasurer’s report should be presented, questions about it are solicited and then it is filed for audit either by an auditor or the audit committee. The report can be acknowledged, but should not be approved, adopted or accepted.

What the board does need to vote to accept is the audit whenever it is presented. This is often at the annual meeting, but bylaws may require it at other times such as when a new treasurer is elected. The board would also vote to approve the budget when it is presented.

Image: striatic under CC BY 2.0

About Joe Patti

In addition to writing for ArtHacker, I have been writing the blog, Butts in the Seats (buttsseats.com) since 2004.
I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)
I am currently the Director of the Vern Riffe Center for the Arts at Shawnee State University. Across my career I have worked at University of Hawaii-Leeward Community College, University of Central Florida, Asolo Theater, Utah Shakespearean Festival, Appel Farm Arts and Music Center and numerous other places both defunct and funky.

Don't Stop Hacking The Arts Yet...

  • Stages of Board Life Cycle

    Non-Profit Quarterly recently published a piece charting out the cyclic nature of boards of directors. If ever you have been frustrated with your board and wondered why it is…

  • micro manage

    Many people have horror stories about working for a supervisor that micro-manages their work. While that may be a hellish experience, it is even worse if you are the…

Leave a Comment

Send this to a friend