Do you find yourself wondering where you should focus when looking at your organization’s financial statements? Your role as a board member includes a fiduciary duty of care to oversee operational results and to communicate those results to stakeholders. Here are a few tips to help you succeed.
- The statement of financial position provides a snapshot on a specific date. It has three main components: assets, liabilities, and net assets. This snapshot allows you to assess the financial health of your organization.
- Assets will include your bank and investment accounts, fixed assets such as a building or furniture, accounts receivable and prepaid expenses.
- Liabilities will include accounts payable, debt and deferred revenue.
- Net assets include the organization’s unrestricted, designated and restricted net assets.
- The statement of activities reports revenue, expenses and gains or losses on investments or other assets, which result in the change to net assets for the fiscal reporting period. Most statements will include columns for reporting the current month, fiscal year-to-date, current fiscal year budget, year-to-date variance between budget and actual, and prior fiscal year results.
You can rely on Association Acumen for transparent and timely financial reporting and analysis, but your fiduciary duty includes understanding the financial health of your organization and will allow you to contribute to data-driven decisions regarding the strategic direction of the organization. You don’t need to be a financial guru, but armed with these few tips, you can easily fulfill your fiduciary duty of care and be confident in your ability to read and interpret financial statements, and review and approve budgets to protect the organization’s assets.