Yvonne Norton Leung, MBA, JD, Consultant to Nonprofits, ynortonleung@aol.com - 1 -
QUESTIONS FOR THE BOARD TO ASK ON FINANCES
By asking the following questions, the Board can provide itself with a clear financial picture.
Is the corporate plan adequately supported?
 Have revenues and expenses matched?
 How have deficits and surpluses been handled?
 How diverse are our sources of support and revenue?
 How dependent are we on one source for our income?
 Do our priorities match our program priorities?
 How much of our total funding is allocated to each segment of our operation?
 How much is spent on operating and maintaining buildings and grounds?
 Are we making adequate provision for deferred and future maintenance needs?
What is our overall financial condition?
 Have deficiencies noted in annual audits been acted upon?
 Have assets and endowment been increasing?
 How much short- and long-term debt do we have?
 How much interest do we have to pay each month?
 What is the level of our operating reserves?
BOARD FISCAL RESPONSIBILITIES
 Understand
 Mission and goals of the organization
 Primary programs and services offered
 Sources, uses, and timing of income and expenses
 In what direction is the income source heading?
 What could impact this income source positively or negatively?
 What needs to happen for this source to produce greater income?
 How is the Board involved with this income source?
 Review and approve annual operating and capital budgets
 Ensure budget based on council goals and objectives
 Monitor budget by review of monthly financial statements
 Diversify income streams
 Develop and implement financial and fundraising policies
 Ensure 6–12 months operating reserve
 Protect the council’s image in the community and manage the Girl Scout “brand”
 Current and long-term liabilities in relation to unrestricted liquid assets
 Growth or decline in income sources
 Growth or decline in expenses
 Operating reserve
 Percent of fixed assets represented in unrestricted assets
 What else? Trends
Yvonne Norton Leung, MBA, JD, Consultant to Nonprofits, ynortonleung@aol.com - 2 DOES THE BOARD UNDERSTAND THEIR FISCAL AND LEGAL
ROLES AND RESPONSIBILITIES
1. Finance Committee
 What is the role of the finance committee?
 What is the role of the treasurer?
 What is the Board’s role with the finance committee and the treasurer?
2. Internal Controls
 What are internal controls?
 Why are internal controls important?
 What is the Board’s role with internal financial controls?
3. Annual Audit and Management Letter
 When should the Board approve the audit?
 What should the Board do with the management letter?
 How does the Board stay current on changes in accounting standards and accounting
trends?
4. Operating and Capital Budgets
 What is the operating budget based on?
 When should the budgets be approved by the Board?
 How is the capital budget funded?
5. Federal, State and Local Requirements
 What is the Board’s role with IRS Form 990?
 What is the Board’s role with payroll taxes and reports?
 What is the Board’s role with corporate state reporting (annual report, solicitation
reports)
6. Oversight
 How does the Board provide oversight on the budget?
 How does the Board provide oversight on internal controls?
 How often does the Board provide oversight?
Yvonne Norton Leung, MBA, JD, Consultant to Nonprofits, ynortonleung@aol.com - 3 FINANCIAL STATEMENTS CHECKLIST
1. Records in-kind contribution in the financial statements as required by FASB 116?
2. Records pledges as income in the financial statements as required by FASB 116?
3. Board of Directors understands that it can only designate, as only donors can restrict per
FASB 116?
4. Reports net assets as unrestricted, temporarily restricted, and permanently restricted as
required by FASB 117?
5. Reports investments at market value as required by FASB 117?
6. Budgets for depreciation?
7. Depreciation is reflected in the monthly financial statements?
8. A monthly financial statement is prepared by the 15–20th of the following month?
9. Financial statements are the second priority, after payroll, in the accounting department?
10. Financial statements are mailed monthly to the finance committee?
11. Financial statements are mailed monthly to the Board of Directors?
12. Acknowledgement letters are sent to council donors in compliance with the IRS language
for gifts over $250 as required by publication 1771?
13. Makes available, upon request, their IRS forms 1023/1024 and 990 for public inspection
as required by the IRS?
14. Board of Directors knows that nonprofit tax returns (IRS Form 990) are available on the
internet at www.guidestar.org?
15. Board of Directors receives a monthly statement of financial position (balance sheet)
compared to the prior year?
16. Board of Directors receives a statement every month of functional expenses (income
statement) as compared to the prior year and compared to the budget?
17. Board of Directors receives a variance report or commentary explaining variances from
the budget and from the prior year?
18. Proper systems are in place to record the revenue and expenses in the proper period?
19. Staff have the skills and resources to provide timely and accurate financial statements?
20. Financial statements tell the “correct story” of the organization?
21. Finance committee and Board of Directors receive a monthly cash flow statement when
the council experiences cash flow problems?
22. Board members understand the business and its financial cycles?
23. Board received training on reading financial statements?
24. Board members ask questions about the financial statements prior to, or during, the
Board meeting?
Yvonne Norton Leung, MBA, JD, Consultant to Nonprofits, ynortonleung@aol.com