be involved with the survey and with
the development of more concise, more
understandable financial reports — with
graphs, for instance, as well as key
financial ratios and dashboard summaries.
Typically, this primer should be
presented by both a staff person — the
CFO, for instance — and a finance
committee member, as there is tremendous value in peer-to-peer communications, especially in the area of financial
No matter who it comes from, how-
ever, the primer should:
• Include an overview of staff’s
responsibility to provide timely and
accurate financial statements.
Explain that staff, either directly
Every organization during its board orientation — or its first board meeting, if
there is no orientation — should present
new and returning board members with
a “financial primer.” •
or through the finance committee,
is responsible for addressing and
answering board members’ questions.
Explain the budget process and the
budget philosophy (i.e., zero-based
Explain the independence and role
of the auditor: While working with
staff, the auditor works for the board
of directors. The auditors are issuing
an opinion on the financial statements as provided by staff.
• Review the basic traditional financial
statements — for example, statement of financial position, statement
of activities and statement of cash
flows — and, if applicable, supplementary revenue and expense schedules.
• Discuss important ratios, trends and
variance reports, which should provide more focus to board members
on important data and increase their
desire and confidence to question
• Discuss dashboard reporting and
provide financial data in graphs and
trend lines. If your organization does
not provide the board with these
optional types of reports, it should
consider doing so. The purpose is to
provide the tools to the board for its
oversight function and to enhance
• Provide or discuss a timeline for
submitting financial data to board
members and allowing questions and
comments from the board.
• Discuss with the board the annual
information return, Form 990, that’s
filed with the IRS. This is a very
important and informative document.
In conclusion, financial oversight by
association boards is extremely important. It is critical that all board members have a basic understanding of the
organization’s budget process and the
organization’s financial reporting guidelines. A financial primer, with consideration to using alternative methods of
financial reporting along with the traditional financials, should greatly enhance
the board’s financial oversight function.
Patrick W. Melvin, CPA, is a principal with
Desmond & Ahern Ltd. He may be reached at
(773) 779-4721 or