Board Finance Committee Responsibilities

board committee job descriptions

A board finance committee plays a crucial role in ensuring the financial health and stability of an organization. It acts as a critical link between the board of directors and the financial management team, providing oversight and guidance on all financial matters. The committee’s primary responsibility is to safeguard the organization’s assets and ensure its long-term financial sustainability.

One of the core functions of the finance committee is financial planning and budgeting. This involves working with management to develop realistic and achievable annual budgets, as well as longer-term strategic financial plans. The committee reviews and approves these plans, ensuring they align with the organization’s overall strategic goals and objectives. It also monitors budget performance throughout the year, identifying and addressing any significant variances.

Financial reporting and compliance are also key responsibilities. The committee oversees the preparation of accurate and timely financial statements, ensuring they comply with all applicable accounting standards and regulations. It also reviews the organization’s internal controls and risk management processes to ensure they are effective in preventing fraud and protecting assets. The committee typically works closely with external auditors, reviewing audit plans, findings, and recommendations.

Investment management is another significant area of responsibility, particularly for organizations with endowments or significant reserves. The committee develops and oversees the organization’s investment policy, setting guidelines for asset allocation, risk tolerance, and investment performance. It monitors investment performance regularly, ensuring it aligns with the policy objectives and benchmarks. The committee may also work with external investment managers to implement the investment strategy.

Debt management and financing fall under the committee’s purview. If the organization has debt or is considering taking on debt, the committee reviews and approves the financing terms, ensuring they are favorable and sustainable. It also monitors debt levels and compliance with loan covenants.

Furthermore, the finance committee provides oversight of financial policies and procedures. This includes reviewing and approving policies related to cash management, procurement, travel, and other financial matters. The committee ensures these policies are up-to-date, clearly communicated, and consistently enforced.

Effective finance committees are composed of board members with relevant financial expertise, such as accounting, finance, or investment management. They should meet regularly, maintain open communication with management, and actively engage in discussions about financial matters. By fulfilling its responsibilities effectively, the finance committee contributes significantly to the organization’s financial health, stability, and long-term success.