2. A NFPClient
Perspective
WHY HAVE DEDICATED FINANCE,AUDIT OR RISK
COMMITTEES?
More committees = more work, volunteer & staff
Individual committee mandates can be blurry or perceived to
overlap
Specialized subject matter, particularly with respect to Risk
Committees
Lack of Board member knowledge or expertise
Additional cost & complexity
Audited statements should cover all these bases anyway,
shouldn’t they?
3. A NFPClient
Perspective
WHY HAVE DEDICATED FINANCE,AUDIT OR RISK
COMMITTEES?
Full Board agendas are crowded
Limited attention to complex risk issues
Varying committee time horizons
Annual versus multiple year
Audited statements and auditor relationship tend to be viewed as
a commodity
Competently done at lowest cost and least staff effort
Life threatening risks or organizational issues are more than
financial
4. A NFPClient
Perspective
Example of Risk Issues Examples of Risk Mitigation
Loss of major funding source Diversification of revenues
CRA compliance on tax receipts & filings Outsourcing
Employee theft or misuse of assets Internal controls & audits
Unfavourable media attention Media response plans & training
Catastrophic events Insurance
Significant risks of physical harm to
employees or beneficiaries
Suspension of program activity
5. A NFPClient
Perspective
HIGH IMPACT
LOW LIKELIHOOD
manage & monitor
HIGH IMPACT
HIGH LIKELIHOOD
immediate action
LOW IMPACT
LOW LIKELIHOOD
accept & monitor
LOW IMPACT
HIGH LIKELIHOOD
management effort worthwhile
RiskImpact
Risk Likelihood
CICA, 20 Questions Directors of Not-For-Profits Organizations Should Ask About Risk, 2009
Risk Matrix
6. A NFPClient
Perspective
THOUGHTS and CONSIDERATIONS
Assess your NFP’s operating environment and enterprise risks to
determine if dedicated committees are warranted
Ensure dedicated Board attention allocated to risks issues
Draft clear committee mandates & develop work plans
Provide training to Board members
Approach your auditor relationship as a trusted partner on these
issues
Recommended reading: 20 Questions Directors of Not-For-Profit
Organizations ShouldAsk About Risk