In-depth

Hidden treasures

Finance | Tesse Akpeki | 1 Oct 2006

Tesse Akpeki gives a perspective on the role of the treasurer.

Financial stewardship is a strategic governance issue, so the best place to begin improving practice is in the boardroom. A financially savvy board asks the right questions, monitors the appropriate controls and understands the relationship between finance and strategic aims. It provides leadership and oversight in proper amounts, supports its executive financial staff and keeps the organisation on track and safe from risk. Finances, while being about controlling funds, can become more about contributing to the overall organisation. But how can organisations strengthen the relationship between governance and finance and improve board engagement in financial matters?

One key lies in the figure of the honorary treasurer. Trustee boards look to the treasurer to guide them through some of the most important and demanding financial oversight tasks. Treasurers are financially skilled trustees charged with additional responsibility of guiding and advising the board as it carries out its duty of oversight. Although frequently undervalued, this is a pivotal role in any organisation, providing a vital interface between the work of the executive and the work of the governing body. Acting on behalf of the board, the treasurer has the power to strengthen oversight, ensure accountability and improve the quality of financial stewardship at the governance level.

Good organisational systems go a long way toward creating a climate where a treasurer can succeed. Key factors for success are establishing treasurer selection criteria, identifying the best candidates for the position and providing the support they need once they take up the post.

Once in position, the treasurer must be able to work with a whole range of individuals and groups including the director of finance, key committees, the chair and the board. Also vital is developing good working practices with these partners.

For the layperson, finance can often seem to exist in a world of its own, unrelated to mission aims or vision. The treasurer can help the board by bridging the gap between the numbers and the real effects they have on the organisation’s ability to fulfil its mission. By showing how financial realities affect such things as programmes and the future of the organisation, the treasurer can help the board build its understanding of the link between finance, strategy and delivering services. Engagement with the financial and non-financial trustees can bring a diversity of perspective that can enhance board discussions.

The debate does not have to be pegged at the cost of paint, photocopying, curtains or first class postage. It can become more strategic, taking the dialogue to a different level. Such engagement can lead to macro governing rather than micro managing. An induction programme that increases the understanding of the non-financial trustee in matters of financial governance would shape a more robust platform of support for the board.

The treasurer, working with the chair, can help improve the financial ability of individual trustees and of the board as a group. The treasurer can help trustees by providing jargon-free explanations of financial terms and procedures, giving them the vocabulary to discuss financial questions intelligently. He or she may prepare a short glossary of financial terms for other trustees to help them get to grips with the language. The treasurer can also act as an interpreter for the finance director and the chief executive, helping to translate their specialist language into plain terms for the benefit of the other trustees.

By building trustee confidence, the treasurer can help to create a climate where trustees feel they can ask financial questions. A respectful, helpful attitude toward the questions posed by non-experts can go a long way in encouraging useful exchange in the boardroom. In his or her work with the finance director, the Treasurer can encourage this executive to adopt a similar attitude of openness, approachability and respect.

A key task for the treasurer is keeping the board abreast of the latest changes in regulations. Financial regulations are naturally on the top of the agenda, but treasurers need to be aware that other kinds of regulation carry financial and risk implications for the organisation, too. The treasurer should monitor changes to all areas that may have an impact on the financial or risk management activity of the organisation and prepare updates in plain terms for the benefit of fellow trustees.

It can be potentially threatening if ‘previously clueless financial trustees’ become clued up, and start asking meaningful questions. Balance this against meaningful debate and improvement, and it will be worth it.

Treasurer recruitment

Many organisations appoint their treasurers on the recommendation of one or more of the existing trustees. This is fine provided the candidate meets the requirements of the job description. Some organisations advertise the treasurer’s role. Again, all serious candidates must meet the requirements of the job description and person specification authored by the trustee board.

Help in finding a treasurer can be obtained by contacting the CFDG or the Honorary Treasurers Forum. The Institute of Chartered Secretaries and Administrators (ICSA) can put potential treasurers in touch with charities, as can networks of ethnic and minority financial professionals such as African and Caribbean Diversity (ACD).

The selection of a treasurer is a key decision for any trustee board. An important part of selection is knowing what you are looking for. An up-to-date job description and person specification, like the one below, provide a starting point for the search. General characteristics to look for include commitment to the organisation, an understanding of trusteeship, a willingness to devote the necessary time and energy, leadership ability, independence and strategic vision.

The Honorary Treasurers Handbook: Enhancing financial accountability by Les Jones and Tesse Akpeki is available from NCVO.

Tesse Alpeki is a freelance consultant and acts as a governance consultant to OnBoard and NCVO 

Treasurer's job description

Purpose

• To monitor the financial matters of the organisation and report to the board of trustees at regular intervals on its financial health in line with good practice and in accordance with the governing document and legal requirements. To oversee arrangements for risk management and ensure that these are adequate to organisational needs, governance requirements and legal obligations.

Trustee responsibilities

• The honorary treasurer will fulfil all the duties, obligations and responsibilities of a trustee. In addition, he or she is authorised by the trustee board to carry out additional duties as described below.

Main responsibilities

• Oversee and present budgets, accounts and financial statements to the trustees;
• Ensure that proper accounts and records are kept, ensuring financial resources are spent and invested in line with good governance, legal and regulatory requirements; 
• Be instrumental in the development and implementation of financial reserves and investment policies; and
• Oversee major contracts including public service delivery commitments.

Main duties

• Liaising, where applicable, with the appropriate member of staff responsible for the financial activities of the organisation;
• Chairing any finance committee in line with standing orders and terms of reference, and reporting back to the board of trustees;
• Monitoring and advising on the financial viability of the organisation;
• Implementing and monitoring specific financial controls with effective systems in place;
• Advising on the financial implications of the organisation’s strategic plan;
• Overseeing the organisation’s management of risk process; and
• Acting as a counter signatory on cheques and important applications to funders.

Tweet

Directory: Charity Finance Directors' Group (CFDG) | ICSA | National Council of Voluntary Organisations (NCVO) | OnBoard
Who's Who: Tesse Akpeki