ACCOUNTABILITY

The extent to which an organization is answerable for its processes and outcomes to a variety of relevant stakeholders including: consumers, community representatives, governing bodies, and governmental regulators.		  
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  MANAGEMENT

See ADMINISTRATION		  
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  PRACTICE

Established actions or ways of proceeding in the regular performance of organizational duties. Policies and procedures often guide practice.		  
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  GOVERNING BODY

A person or persons with the legal authority and responsibility to set policy and oversee the operations of an organization. Generally, the governing body is a group, such as a board of directors or board of trustees. While the exact responsibilities of the governing body depend on the nature and character of the organization, the governing body has minimum fiduciary responsibilities to the organization set by statute, regulation, and case law, and typically assume responsibilities for long term planning, risk management, and evaluation and effectiveness of management.		  
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  EXPENDITURE

A payment or obligation to pay for some products or services received, which is typically planned for through the annual budget process of an organization as a specific anticipated operating expense.		  
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  POLICY

A written statement of principles, values, or intent that provides a basis for consistent decision making and guides the actions of staff, management, and board of trustees. A policy is intentionally broad in its language and application. The following is an example of an anti-discrimination policy:

"[Organization Name] shall not discriminate on the basis of race, color, religion (creed), gender, age, national origin (ancestry), disability, marital status, sexual orientation, or military status, in any of its activities or operations. These activities include, but are not limited to, hiring and firing of staff, selection of volunteers, selection of vendors, and provision of services."

In contrast, a procedure is a detailed, step-by-step description of a process. It tells the reader how to do something. Generally, policies are implemented through procedures. For example, the above anti-discrimination policy would require a detailed grievance procedure in order to operationalize it within an organization.

The governing body has the fiduciary responsibility for setting organizational policy. Therefore, policies must be approved and periodically reviewed by the organization's governing body. However, the governing body typically delegates (via policy) the responsibility for policy development to management. In owner-operated for-profit companies, the owner can act as the company's governing body, depending on the company's corporate structure.

In a public agency the responsibility for setting and reviewing policies may belong to the agency's management team, elected officials, another governmental agency, or as is often the case, a combination of the above.

  
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  EXECUTIVE DIRECTOR

See CHIEF EXECUTIVE OFFICER		  
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  CASE

A general term used to designate clients (including individuals, families, and groups) served by an organization for purposes of monitoring the provision of services. A foster care case is generally based on the placement of an individual child, although casework for the child may include services to the child's family. A child protective services case is based on an entire family household if a family assessment model is used; otherwise a case is defined as a child.		  
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  FOR-PROFIT ORGANIZATION

An organization that is owned or staffed by professionals and intended to make a financial profit by offering a specific service or set of services. These organizations may provide services similar to those offered by not-for-profit organizations, except that the charges to the consumers may be higher and/or established on bases different than the rate-setting criteria employed by not-for-profit organizations.		  
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  AUDIT

See FINANCIAL AUDIT		  
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  MANAGEMENT LETTER

A letter addressed to an organization containing an auditor's conclusions regarding the organization's accounting policies and procedures, internal controls, and operating policies. The letter evaluates the organization's present system, identifies problems and recommends improvements. It is also referred to as a Letter of Recommendation.		  
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Financial Management
  
Private Org Public Agency  

FIN 1: Governing Body Financial Responsibilities

 

The organization's governing body or designated committee of the governing body, as appropriate:

  1. approves the annual budget and any revisions to the budget;
  2. reviews fiscal summaries at least quarterly to evaluate expenditures against revenues;
  3. ensures that budget-to-actual variance analyses are performed after year end numbers are finalized;
  4. reviews fiscal policy and the recommendations of the organization’s auditors; and
  5. annually evaluates the executive director’s management of the organization’s fiscal affairs.

Interpretation: In the case of privately-held for-profit organizations “governing body” refers to the organization’s owners, investors, silent partners, etc.

Regarding element (d), if the organization is not required to have an audit, (see FIN 6.03), the review will examine the ”review of financial statements” and any accompanying recommendations. Generally, it is recommended that the organization ask the auditors to issue a management letter that provides an opinion on its internal control system (see FIN 2).

Element (e) is NA for private, for profit organizations.

Interpretation: An organization's governing body is ultimately responsible for the financial health of the organization. In order to effectively and efficiently fulfill this fiduciary responsibility governing bodies must regularly review the organization’s finances, and oversee the annual audit. Ideally, among its standing committees, an organization should have both a both a finance committee and an audit committee.

The finance committee monitors the organization’s financial status. This includes reading monthly financial reports, managing investments, and working with management to prepare the budget. Minutes of governing body and committee meetings should reflect active oversight of the organization's finances. In many organizations the full governing body serves as the finance committee. (See GOV 6.06, 6.08(b), GOV 7, FIN 4, and FIN 5.)

The audit committee is an independent oversight committee. The audit committee oversees the integrity of the organization’s financial management system and financial reporting, ensures the independence of the annual audit, and deters or detects financial mismanagement or fraud. Staff members, including the CEO and CFO, cannot sit on the audit committee. (See FIN 2, FIN 2.01, FIN 2.02, FIN 6.04, and FIN 7.)

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PURPOSE: The organization’s financial accountability and viability are achieved through the application of sound financial management practices that accord with legal and regulatory requirements.
 
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