New Windsor finance training for Boards starts early 2017.
In 2011, The Federal Court decision by Justice Middleton concerning the ‘rubber stamp’ approval of erroneous financial accounts of the Centro company by its directors and CFO, sent an urgent message to all Boardrooms.
And that was that paid or unpaid directors could be held personally responsible for ill-informed decisions and for signing financial declarations after a quick, cursory ‘read’. It was made alarmingly clear that ‘not knowing’ is no excuse.
As a result, many non-financial, nonprofit directors scurried to get up to speed – at least to the level where they could confidently interpret a Profit and Loss statement. It was a great start.
Windsor stepped in at that point to offer the
Windsor Fiscal Fundamentals short course learning units
designed by expert Lisa Bundeson to (very quickly) take anyone who was
not an Accountant up to the level of financial perception they needed to sit assertively on a contemporary nonprofit Board.
But that was then … and this is now.
Five years on, the game plan for all nonprofits has changed – and continues to change radically with the introduction of NDIS and other legislation.
A report from finance experts Grant Thornton in partnership with publishers and expert commentator reveals results of a 2015 survey investigating the level of ﬁnancial literacy existing among Australian nonprofit boards today.
This research was designed to gauge the sector’s readiness to meet the challenges of an NDIS-driven future. And, as Simon Hancox, National Head of Not-for-Profit Audit and Assurance Partner Grant Thornton Australia said: ‘We see strong financial literacy at a board level as crucial in ensuring that not-for-profits are able to weather the challenges ahead…. (and so) our findings make compelling reading…”
The aggregated figures that have emerged from this study of 1065 respondents from small, medium and large organisations are inarguably riveting.
In its Executive Summary, Grant Thornton stated that two clear themes had emerged from its analysis of the survey responses:
In essence, these were:
When asked whether they believed their board had the right level of financial literacy to meet the current needs of their organisations, 59% of respondents believed they did.
Of real concern is that when survey participants were asked the same question in relation to future needs, only 40 % believed their boards had the right skills.
The accuracy of these estimations depends largely on how informed the respondents were on the precise skills levels of the Board members. Nevertheless there appears to be an area of concern.
Both common sense and survey content suggest that this knowledge gap might be bridged by director education – just as it was in the period following the Centro debacle – if for rather different reasons
The Grant Thornton report suggested that some areas that are known to improve the overall financial literacy of directors should be adopted across the nonprofit sector.
•Evaluation of financial literacy during the director selection stage.
• Including financial training in director induction programs.
• Evaluations that assess board needs.
• Ongoing director education programs.
Windsor is delighted to advise that each of these four points is already covered in our assiduous Search and Select Advisory for nonprofit directors.
But there is more to come.
Training programs under the direction of Lisa Bundeson are in the pipeline and will be offered early in 2016. These will revisit the content of the existing Fiscal Fundamentals short course for non-financial Directors –
• Financial Statements
• KPIs and Ratio Analysis
• Financial Risks
• Financial Viability
• Capital Expenditure
• Investment Strategies
New elements will be incorporated into this course
These will provide professional development guidance that will enable directors to meet the more stringent requirements of financial acuity demanded by the current nonprofit environment.
What those are is encapsulated in the following chart.
|The board reads and understands the financial information provided by the management team
|The board understands the nature of key income and expenditure items and the factors that can affect them
|The board has a clear understanding of the respective roles of the board and management
|The board has a clear understanding of the budget, how it supports the strategic plan and the risks associated with it.
|The board critically evaluates the financial performance of the organisation
|The board promptly reacts to changes in financial performance to mitigate any risks to the organisation
|The board understands the costs of providing services/programs
|Board members understand the legal responsibilities and potential liabilities of acting as a director
Source: Not for Profit- Are you ready for the future? Findings from our Not for Proﬁt Financial Literacy Survey. Pro Bono Australia. Grant Thornton. June 2016.
Delivered by senior professionals with specialist backgrounds in accounting, risk management, finance, governance and fiscal forensics, the Windsor updated Fiscal Fundamentals program offers numerous confidential delivery options ranging from half day familiarization courses through to ongoing courses, seminars and workshops for an indefinite number of participants at your venue or ours. The choice is yours.
Watch this space (and your inbox) for details.