What is the role of the board in finance?
Internal financial controls are essential checks and procedures that help board members:
- Meet their legal duties to safeguard the organisation’s assets and ensure its solvency.
- Administer the organisation’s finances and assets in a way that identifies and manages risk.
- Ensure the quality of financial reporting, by keeping adequate accounting records and preparing timely and relevant financial information.
Most arts and museum boards oversee and scrutinise the financial management of their organisations rather than being directly involved in the financial management. It is a board’s obligation to ensure that financial affairs are managed effectively and to receive the right information to be able to have assurance that this is being done.
Although boards may delegate financial duties to management and committees, they cannot delegate their ultimate responsibility for the finances of the organisation. All board members should be aware that there is no such thing as a stupid question. If financial information is presented in a way that they do not understand they should ask for it to be simplified.
Boards should take extra care in relation to the newer technologies including mobile payment systems and cryptoassets.
The role of the board in finance is summarised in the Charity Commission publication: Internal financial controls for charities.
Another good resource is a government report: 15 questions trustees should ask.
