Governance: Financial

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Governance Financial

• National Treasurers Presentation to the
• Navy League of Canada AGM
• March 24, 2007

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Before we start.

• What is the state of financial internal controls
  within the Branches of your Division?
• Or to say it another way
• How well are your Branches managing their money?

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Why bother?

• We have over 250 organizations
• Most are working well but we have problems
• Cowichan husband/wife stole money
• Calgary 2,500 stolen
• Edmonton 100,000 stolen
• Thunder Bay 10,000 stolen
• Ontario Division 15,000 stolen
• Northern Saskatchewan30,000 stolen
• These are the big ones!

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Statutory Duties of a Director

• A National, Divisional or Branch Director shall
• Act honestly and in good faith and in the best
  interest of the Navy League of Canada
• Exercise the care, diligence and skill of a
  reasonably prudent person when performing his/her
  duties as a director.
• This is the standard by which a Director is
  expected to carry out his or her duties

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Presidents Responsibilities

• Ultimate accountability for the performance of
  the Navy League or a Division or a Branch
• Stewardship Oversee the conduct of business
  safeguard of resources
• Leadership. Setting strategic direction
• Measurement Measuring organizational
  performance
• Oversight Recruiting Board and staff (if any)
  and evaluating their performance
• All of the above have a financial component

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Financial Component

• Stewardship Signing checks, authorizing
  expenditures
• Leadership Developing and implementing your
  financial plan (budget)
• Measurement Ensuring financial reports are
  produced and understood by your team
• Oversight Audits and Other things

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So how do I stay out of jail?
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Financial Stewardship

• General Stewardship Oversee the conduct of
  business safeguard of resources
• Financial Stewardship Signing checks,
  authorizing expenditures

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The first thing to do!

• Never sign a blank check. Never. Never!
• Not when holidays are coming.
• Not when you are going to be away on business.
• Not when you absolutely trust the treasurer.
• Under no circumstance sign a blank check.
• Signing blank checks is not exercising due care
  nor diligence.

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While talking about checks.

• Check your check signing authority
• The person preparing checks should not sign
• The person benefiting from a check should not
  sign
• Its not about trust, its about taking due care

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The second thing to do!

• Always see a document that shows why you are
  signing a check.
• Maybe its an invoice
• Maybe its a receipt for reimbursement
• Maybe its a summary of travel vouchers
• Even if the treasurer is your mother,
• ask to see the supporting
• documents.

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Third thing Bank Reconciliations

• Make sure your organization gets a bank statement
  every month.
• Have a reconciliation prepared. Compare the bank
  balance in your books to the bank balance on the
  statement.
• You must understand the difference between the
  two figures.
• Check checks that have been
• outstanding for more than a month

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Financial Stewardship

• Never sign a blank check
• Always see documentation
• Reconcile your bank
• Thats showing due care and diligence!!

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If you suspect trouble.

• Inform the next senior person in chain of command
• Be discrete until you have spoken to someone with
  experience
• Branch informs Division, Division informs
  National
• If it smells fishy to you,
• it probably is fishy

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Financial Leadership

• General Leadership Setting strategic Direction
• Financial Leadership Ensuring financial goals
  are established which reflect your strategic
  direction

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Financial Leadership

• Developing and implementing your financial plan
  (budget)
• Your annual program drives your budget
• Understand what you get for what you spend
• Assign responsibilities for
• authorizing monitoring
• Formal review at least
• half way through year

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Financial Leadership (continued)

• Division Presidents Role
• Help the Division Treasurer implement good
  stewardship
• Work with Branches
• Develop plans and associated budgets
• Implement good stewardship
• Have audits done
• Report results of activities
• (including finances)

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Measurement

• General Measurement Measuring Organizational
  Performance
• Financial Measurement Ensuring good financial
  reports are produced

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Financial Measurement

• Decide what information is required. (At least
  same as annual reports.)
• Keep good records
• Then prepare reports that are meaningful to your
  team

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Transform Data into Information

• What information do you need to manage?
• What information is required by law?
• What information do you need to hold people
  accountable?
• What information do you need to report to
  parents? To partners? To other
• levels within the Navy League?

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Keeping the records

• Software
• Simply Accounting
• Quicken
• Synoptic Journal
• (Excel spreadsheet)
• Paper Ledger
• However you do it,
• make sure your accounts reflect reports

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Your Reports

• Make sure your reports are meaningful.
• Avoid WADITW
• Review monthly, in depth every 3 months
• Track actual receipts and disbursements against
  plan (budget)
• Recommend reporting same accounts as annual
  report

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Annual Branch Reports

• Brings together Stewardship, Leadership and
  Measurement
• Section 3, 4 5 (Finance and Property)
• Section 6 (Activities)
• Section 7 (Goals)
• As a Division president,
• excellent report to help you
• evaluate branch activities

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Division Annual Report

• Also focuses on Stewardship, Leadership and
  Measurement
• Annex A Finance
• Strategic Assessment
• As Division president, this is an excellent
  report to supporters, Branches and National.
• National uses information in dealing
• with DND, politicians, industry,
• and potential donors.

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Oversight

• General Oversight Recruiting Board and staff
  and evaluating their performance
• Financial Oversight Arranging for audits (and
  other things)

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Oversight Audits

• Audit engagements cost a lot. Only audit when
  necessary. For example
• Are you incorporated and is an audit mandatory?
• Do you have a bank loan and does the bank require
  an audit?
• If not, review engagements costs
• less and normally meet the need.
• However, must get approval
• of your board

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Audits (continued)

• Figure out if you need audit. If not, get Board
  approval for a review.
• First choice Do you have a CGA/CMA/CA on your
  board to do a review engagement for free? If
  not, get one.
• Second choice Go to your local
• CGA/CMA/CA province web site.
• CGA Certified General Accountant
• CMA Certified Management Accountant
• CA Chartered Accountant
• Stand Fast Ontario Nova Scotia

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Financial Oversight (continued)

• Another Job Selecting right people for financial
  duties
• As Division President, major role
• Be kind to your treasurer, get someone with
  financial background
• Do your part to ensure
• financial controls work

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Other Oversight Stuff

• Charity Registration
• New DND funding model
• Education Foundation

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So what is Financial Governance ?

• Four responsibilities as Division President
• Stewardship
• Leadership
• Measurement
• Oversight
• While all are important,
• Stewardship is the key!

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As a Division President, you have the
responsibility to establish a strong stewardship
culture in your division and its branches
Stewardship
Stewardship
Stewardship
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Discussion

• How are your Branches doing?
• How can they do better?
• How can Division Presidents help them do better?
• How can National help you help them?