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The board of directors of [ORGANIZATION’S NAME] is charged with the general direction and control of the organization. The decision to serve as a director is a commitment to [ORGANIZATION’S NAME] and our membersclients, and part of this commitment includes a responsibility to understand the financial statements, risks and controls of the organization so as to properly exercise authority over the organization’s direction. Accordingly, to be an effective director, an individual must have a certain base level of financial skills, consistent with the size and complexity of the organization.
One of the key measures of the organization’s success is found in its financial statements. As such, a director must understand these financial statements to participate in a meaningful manner in the direction and control of the institution. Each director shall have at least a working familiarity with organization basic finance and accounting practices, including the ability to read and understand the organization’s balance sheet and income statement and the ability to ask, as appropriate, substantive questions of management and auditors. To ensure that a director obtains this level of financial literacy as set forth in [ENTER COUNTRY’S REGULATORY BODY], to [ORGANIZATION’S NAME] provides periodic training and makes other resources available to volunteer officials, as outlined in this policy.
Attendance. Directors cannot fulfill their responsibilities if they do not attend board meetings on a regular basis. Each director must devote sufficient time and effort to remain informed and aware of issues affecting the organization.
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Integrity. A director must maintain the highest standards of personal conduct. Directors must demonstrate integrity, dedication, and cooperation. Maintaining the confidentiality of organization business and individual member client information is essential.
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Leadership. Effective directors use good judgment judgement and work for the best interest of the membershipclient. The board’s responsibility is to ensure that adequate policies, procedures, management, and planning are in place; the board should not be led or simply monitor results after the fact. Care should be taken, however, not to assume responsibility for conducting the organization’s daily operations. Conversely, management should not usurp the director’s role. The board should direct and management should manage.
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At a minimum, every to [ORGANIZATION’S NAME] director should be able to examine the organization’s balance sheet, income statement and be able to understand what each line item means and why it is important to the vitality of the organization. Board members clients should understand if the line item changes what does that change mean to the health of the organization.
A director shall understand the specific activities in which to [ORGANIZATION’S NAME] engages, including not only how these activities generate revenue for to [ORGANIZATION’S NAME] but also the various risks associated with these activities that could lead to financial loss. If the activities are higher risk such as Indirect Lending, Loan Participations, Member client Business Loans and/or include more complex investments then additional training will be provided on how these activities can impact the organization’s financial statements, as well as, steps the organization takes to “limit and control” these risks.
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