Role of the finance committee
What, if any, is the role of a Finance Committee in Policy Governance?
Finances, being means that provide for fulfilling Ends, will be the accountability of the executive (solo or team), who may find a knowledgeable finance committee of great value in budget prep, fiscal wisdom, and policy watch-dogging. Normally, a Finance committee will not be an arm of the board, unless a board redesigns it to fulfill its fiscal monitoring. The same committee, however, won't serve both realms. -- Margaret Keip, responding to the above question on the Policy Governance e-list, April 20, 2005
The question suggests another one - what was the role of the finance committee in the previous governance structure? It seem to me that the fundamental concept that needs understanding is the difference between being responsible for something and doing something.
The executive, whether a person, a team, or even a committee, is responsible to the board for the management of the church, charged with achieving the ends specified by the board within the constraints established by the limitations imposed by the board.
To meet its responsibilities I would assume the Executive would achieve those ends by delegating authority to the finance committee to establish the same controls, (read procedures) and reporting duties (read accounting) for budgeting income and expenditures that they had under a board governance system, in much the same way that the Worship Committee relates to Sunday services, or the Religious Education committee relates to its assigned area of church life.
Chuck Moore, Treasurer, Emerson Unitarian Universalist Church, Canoga Park, CA
I agree with Chuck Moore that if the Executive uses a Finance Committee (instead of a paid accountant/treasurer) that committee's role is establishing controls, managing investments, budgeting, and accounting for actual expenditures. However, there is also a role for a Board governance committee here, under the Board's monitoring responsibilities.
As more and more attention is paid to the fiduciary responsibilities of Boards (both non-profit and for-profit), all Boards should take responsibility for ensuring that the organization's finances are audited periodically by an outside auditor, who is hired by the Board and reports directly to the Board. Rather than require the entire Board to do all the associated work, many Boards create a Board Audit Committee, which then reports to the whole Board as part of the monitoring process for finance-related Means policies.
Marilyn Sherry, Birmingham Unitarian Church, Birmingham, Michigan