1. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Financial Oversight- the role of
the Board
By:

2. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Objective
 To enable the Board members understand
their role in ensuring proper management of
the finances of the programme.

3. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Understanding financial oversight (FO)
‘principal areas’
 Management Performance -to set and meet
the highest achievable standards
 Expenditure Management -ensure resources
are aligned to achieve programme
objectives/priorities

4. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Understanding (FO) ‘principal areas’
cont’d
 Financial Management and Control
- to provide more effective control, oversight
and monitoring systems for expenditures so
that value for money is a core consideration
in spending, expenditure review and
management decisions

5. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
FO- the Board of Directors or
management?
 Even if board members wanted to handle the
endless, ongoing financial tasks of running
the programme, they may not ably squeeze
these duties into their schedules.
 The board (a policy-making group) sets
policy and the staff (implementation group)
carries it out.

6. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
FO- the Board of Directors or
management? Cont’d
 The ‘tone’ for proper financial management
practices should be set and supported at the
top (the board level) if they/the board
members are to perform their FO role.

7. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Task-FO Responsibilities of Board
members
1. Understand stakeholders’ needs and interests
2. Approve annual budget –sometimes these may be
quarterly or ad-hoc
– Written financial plans – Procurement plans/Activities
– Organization’s strategic plan and mission
– Realistic under circumstances?
– Plan for various scenarios/Contingency
– Identify “Risks and Opportunities”
– Build in accountability
– Monitor variances from actual (Revenue and
Expenditure)

8. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
FO Responsibilities of Board
members cont’d
3. Approve audit
– Financial statements audit
– Audit “Opinion”
 Unqualified
 Qualified/others
– Internal Controls
– Management Letter
– Audit committee

9. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
FO Responsibilities of Board
members cont’d
4. Control investment of capital funds and
disposal of assets
– Cash reserve/surplus
– Understand investment risks
– Investment policy: What types of investments
are acceptable?
– Have policy on disposal of assets and ensure
adherence

10. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
FO Responsibilities of Board
members cont’d
5. Approve contracts
– Long-term commitments
– Can designate executive to sign agreements
– Examples:
 Long-term lease
 Employment contracts
 Significant agreements to purchase/procure

11. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
FO Responsibilities of Board
members cont’d
6. Understand financial statements
– Basic statements
 Report letter (Auditor)
 Statement of Position (Balance Sheet)
 Statement of Activities (Revenue & Expense)
 Statement of Cash flows
 Footnotes

12. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
FO Responsibilities of Board
members cont’d
7. Understand internal control structure and
environment
8. Avoid / disclose conflict of interest

13. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Approach/level of involvement in FO
 It is recommended that the financial
oversight role of the Board be delegated to a
committee. By so doing, the ‘full Board’ will
have ‘kept their hands off but eyes on’

14. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Approach/level of involvement in FO
cont,d
1 . Purpose
 The Finance Committee should provide
assistance to the Board members in relation
to executing their responsibility to the wide
range of stakeholders in respect of the
policies and practices that relate to the
management of the financial affairs. The
Finance Committee should report to the ‘full
board’ regularly.

15. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Approach/level of involvement in FO
cont,d
 The Finance Committee's primary purpose is to:
– Review management's plans to manage the exposure to
financial risk.
– Review the Business Plan, cash plan, balance sheet, and
capital structure.
– Review the funds allocation strategy, including the cost of
capital.
– Review the funds appropriation matters
– Review periodic financial reports

16. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Approach/level of involvement in FO
cont,d
2 . Internal controls
 The management committee/board should
maintain and regularly review the
programme’s system of internal controls,
performance reports, policies and
procedures.

17. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Internal controls cont’d
 Management committees/boards sometimes express
confusion over who should be responsible for
financial management. Although staff may be
employed, it is the duty of the board to ensure that
the organisation complies with accepted good
practice.
 The Management Committee's/board’s role is that of
the ‘guardian' of the resources. They will be held
accountable for any mismanagement

18. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Approach/level of involvement in FO
cont,d
3 . Composition and Qualifications
 All members of the Finance Committee
should have a working familiarity with basic
finance practices, and at least one member
of the Finance Committee should have
financial management expertise

19. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Approach/level of involvement in FO
cont,d
4 . Meetings
 The Finance Committee should ordinarily
meet more frequently as circumstances may
warrant/dictate.
 Any board member who is not a member of
the Finance Committee may attend meetings
of the Finance Committee but should not
vote on any matter coming before the
Finance Committee for a vote.

20. MTAC TRAINIG FOR KD -29TH
MARCH, 2010
Conclusion
 It is the responsibility of the Board to ensure
there are adequate control systems to
safeguard the organization's assets.
Thank you for your active participation