1. Do the directors devote adequate time to governing the organization?
Directors are legally responsible for governing the organization. Attend regular board meetings. Engage in the business of the organization. Study important matters. Make informed decisions.
2. Is enough time spent discussing matters of financial oversight at board meetings?
It is the board’s responsibility to safeguard the organization’s assets. Directors should routinely discuss financial oversight. Internal financial controls should be in place to protect assets.
3. Does each director have a copy of the current governing documents?
Directors should be given copies of the articles of incorporation, bylaws, minutes of board meetings, current financial information and the most recent IRS return.
4. Does the board of directors ensure the organization is in compliance with the following state and federal requirements?
- Corporate registration and annual renewal to the Secretary of State
- Registration and annual report to the Oregon Department of Justice
- Annual Federal and state tax reports
- IRS Form 990 (PDF) »
- IRS Form 990-EZ (PDF) »
- IRS Form 990N »
- IRS Form 990‐T (PDF) » for unrelated business income tax
- IRS and State of Oregon payroll withholding taxes
5. Do the directors receive a treasurer’s report with periodic financial statements?
Such reports should be available at every board meeting and should include:
- an income statement explaining revenue and expenses for the statement period.
- a balance sheet explaining assets and liabilities.
The treasurer or another officer should be available to explain the report. Don’t be afraid to ask questions.
6. Are all financial statements prepared in a consistent matter?
Accounting changes should be rare. Be sure you understand whether your organization uses a cash or accrued basis for its accounting.
7. Does the organization receive “restricted” donor funds? If so, how are they accounted?
Donors may “restrict” how their donations are used. Restricted funds should be tracked separately from general funds to ensure they are used only for the donor’s designated purpose.
8. Are liabilities paid on time?
Review the treasurer’s report and look for signs of larger‐than‐normal liabilities. At year’s end, conduct an internal audit. Review billing statements for delinquent balances and investigate them. Late payments may indicate cash flow or other serious administrative problems.
9. What are the policies regarding expenditures, and are expenditures adequately documented and reviewed?
More than one person should be involved in the disbursement cycle. All expenditures should be backed by receipts.
10. Are financial transactions done in secret?
Transparency is important. Each director has a right to all financial information.
11. Does the organization have credit or debit cards?
Credit and debit cards can be easily abused. Debit cards are especially susceptible to misuse. Avoid them if you can. If you have cards, who are the cardholders? Is there an independent review of all credit card and bank statements to protect against unauthorized use? Require receipts.
12. Does the organization have adequate financial controls in place such as segregation of duties?
Basic internal financial controls are essential to protect the organization’s assets. Someone other than the check signer should review bank statements, all cancelled checks and approve all vendor invoices for payment.
13. Does the organization receive cash and, if so, what are the cash handling procedures?
The organization should adopt written procedures for handling cash that includes oversight to protect assets.
14. Who is your bookkeeper? Does he/she have access to assistance when necessary? Are you using an accounting system?
The bookkeeper should be competent and use a proven accounting system.
15. Are the directors in compliance with IRS and state standards for setting key employee compensation?
The board of directors sets and reviews key employee compensation, expenses, travel and reimbursement arrangements. Compensation must be based on comparable worth. Travel expenses and reimbursements should be backed by receipts.
16. Are staff complaints regarding alleged management misconduct taken seriously and addressed objectively?
Employees bring more actions against organizations than any other class. Take their complaints seriously.
17. Does the organization have a written conflict of interest policy that is enforced?
A conflict may exist any time a director, a director’s spouse, or a director’s business receives any payment from the organization. Such payments are not automatically prohibited, but there are legal standards. Be sure directors understand the legal requirements for approval of a conflicted transaction. The organization should have a written policy for board review and approval of all conflicts of interest and self-dealing.
18. Is the staff prohibited from communicating with the board or attending board meetings?
Staff should be allowed to bring their unresolved grievances to directors. They should not be prohibited from communicating with directors when necessary.
19. Do directors have access to staff members who can answer their technical questions?
Directors should not interfere with day-to-day operations, but they have the right to access staff for information.
20. Have the directors consulted the staff regarding policy decisions?
Consult your staff experts whenever possible.