Presented on Monday 2 November at NCVO/BWB Trustee Conference 2015. Rosaline Jenkins, Sustainable Funding Consultant, NCVO and Bill Phillips, Former Trustee of our case study Hidden monsters - financial oversight and the role of trustees If you would like to find out more about our 2016 Trustee Conference email us at ncvoevents@ncvo.org.uk or call us on 020 750 3153.

1. Organised by: Lead Partner:
Media Partner:
Sponsors:PM4: HIDDEN MONSTERS
FINANCIAL OVERSIGHT AND
THE ROLE OF TRUSTEES
Rosaline Jenkins
Sustainable Funding Consultant, NCVO
Bill Phillips, Former trustee of our case study
Drinks sponsor:

2. 2
“All trustees, however, should take an active interest in
the financial affairs of the charity and exercise care
when appointing or supervising anyone to manage its
finances. You cannot escape your financial
responsibilities by delegating control and supervision of
the finances to someone else; you remain responsible
for the financial affairs of the charity and would share
liability for any financial wrongdoing.”
The Good Trustee Guide
Everyone shares responsibility

3. 3
IS THERE A MONSTER UNDER YOUR BED?
Images courtesy of Maurice Sendak
CASE STUDY

4. 4
Council’s Audit:
“Members of the Board do not appear to be clear on their
collective roles and responsibilities for overseeing the work of
the organisation and managing staff. The Board relies on the
CEO to report any issues and does not proactively engage in
the work or running of the organisation.”

5. 5
Council’s Audit:
“There appears to insufficient understanding or challenge of the
financial information presented at Board meetings and there is no
monitoring of progress and spending against plan, budget or cash
flow. The CEO prepares a report for each quarterly meeting of the
trustees detailing the main activities of the organisation but this is
focussed on projects and events rather than financial information.
We have been informed by one trustee that the financial information
presented was of a poor quality and that the finance manager was
unable to answer questions raised by the trustees. The financial
information presented to the Board consists of an Income and
Expenditure report for the month.”

6. 6
Council’s Audit:
“We have not performed a detailed review of the allocation of
funding to projects and we note that the auditor did not raise any
concerns in her correspondence with the Board of Trustees or the
Charity Commission. However, in undertaking our investigation the
finance manager has highlighted examples of malpractice in relation
to the completion of funders’ monitoring reports. We recommend
that an independent review is undertaken to establish the extent of
such malpractice and to provide assurance to funders that monies
are being appropriately spent.”

7. 7
“Thank you very much for the financial information, which is very
helpful. I shall also be pleased, if you will kindly supply the following
information for the finance sub-committee meeting:
a.. Copy of The Charity’s budget
b.. SOFA - expenditure against budget with budget variance
c.. SOFA from SAGE
d.. Balance sheet from SAGE (With Dates)
The above information is a basic requirement for any budget
committee meetings and I hope, you will be able to supply these for
the meeting.”
Board Member to Finance Manager

8. 8
The Finance Manager’s reply…
“Well, I’ve trusted that you know that the charity does not
budget and the reasons behind that….
…You have confused me. Is this meeting is a budgeting
meeting? I had been requested historical information, hence
the impression was that it would consider the past which is
still not properly analysed, rather than future.”

9. 9
Some quotes from the press:
“'Shocked' councillors calls for fraud squad to investigate local
charity mismanagement”
“A leading councillor has called for a police investigation into
the mismanagement of a major local charity.”
“A probe into the charity has found the charity was being
badly managed, with bonuses being doled out to staff without
the knowledge of trustees.”
“The leader of the opposition on the Council, said that they
are “shocked” by the findings of the investigation, and
demanded that further action is taken.”

10. 10
SUGGESTED QUESTIONS TO ASK TO FIND
OUT
IS THERE A MONSTER UNDER YOUR BED?
Images courtesy of Maurice Sendak

11. 11
1. ASSUME NOTHING
“All trustees should either have, or be
prepared to develop, basic skills in financial
management”
1. At every trustee meeting, ask to see an
up-to-date copy of the budget, against
the expenditure.
2. Ask for proof of current balance – from
SAGE or equivalent.
3. Regularly assess – are the people
preparing your finances up to the job?
“PROPER CARE AND DILIGENCE”

12. 12
2. DOUBLE CHECK
“Prudence of ordinary men and women of
business in the management of their own
affairs”
1. Are we running a gain or loss?
2. Are key expenses under control?
3. Do we have sufficient reserves?
4. Do we have an investment policy?
5. Is cash flow adequate?
6. Where are we compared to budget?
7. Is our financial plan consistent with our strategic
plan?
8. Are the staff satisfied and productive?
9. Are we filing reports on a timely basis?
10. Are we fulfilling our legal obligations?
Don’t rely
on just
one
source!

13. “Trustees should ask for financial
information to be presented in a
form that they can understand…”
The Good Trustee Guide
13

14. 14
FOUR QUESTIONS AND A TOOL TO
MANAGE FUTURE RISK
WHAT’S THAT COMING OVER THE HILL?
Images courtesy of Maurice Sendak

15. MANAGING RISK
15
Four questions for the future:
1. How much money do we have received and guaranteed
for the future?
2. How much money do we think we can raise?
3. When will the money arrive, and what for?
4. What decisions need to be made, and when?
And then check the assumptions behind the answers.
BUILD RISK ADJUSTMENT INTO PLANNING

16. MANAGING RISK
16
1. You should plan ahead – who are your prospects
for the next year?
2. Decide criteria for how you will assess the
relative risk of funding being successful, or not.
3. Use this to grade the opportunity as ‘high
probability, medium probability or low
probability’. You might want to have a category
‘cold ask’ for those that are a complete long-shot.
4. Adjust the amount of potential income
accordingly.
BUILD RISK ADJUSTMENT INTO PLANNING

17. MANAGING RISK
17
BUILD RISK ADJUSTMENT INTO PLANNING
Prospect Probability Amount of
ask
Risk
adjusted
Adjusted
amount
Moneybags
Inc.
High £25k 80% £20k
Stingy
Council
Low £20k 20% £4k
PIPELINE TOTAL £24k

18. COMPARE AND CONTRAST
0%
20%
40%
60%
80%
100%
120%
Received and Guaranteed, by cost area
Project Lions Project Tigers Project Bears Core costs

19. COMPARE AND CONTRAST
0%
10%
20%
30%
40%
50%
60%
70%
80%
Pipeline, risk adjusted
Pipeline Lions Pipeline Tigers Pipeline Bears Pipeline Core Pipeline unrestricted

20. COMPARE AND CONTRAST
0%
20%
40%
60%
80%
100%
120%
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
Received and Guaranteed, by cost area
Project Lions Project Tigers
Project Bears Core costs
0%
10%
20%
30%
40%
50%
60%
70%
80%
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
Pipeline, risk adjusted
Pipeline Lions Pipeline Tigers
Pipeline Bears Pipeline Core
Pipeline unrestricted

21. 21
WHAT ARE YOUR TOP QUESTIONS?
LOOKING FOR MONSTERS
Images courtesy of Maurice Sendak

22. GOOD LUCK!
Ros Jenkins
Rosaline.Jenkins@ncvo.org.uk
@Rosjtweets
http://blogs.ncvo.org.uk/author/rosaline-jenkins/
22
Bill Phillips
@Pinns35
http:/www.pinn.co.uk/