Approving financial statements
Board or committee members have responsibility for overseeing the way managers and staff conduct the operational side of your organisation – this means monitoring financial affairs and reviewing and approving financial statements.
As a board member, you should —
- Listen carefully when management reports to the board — ask questions if anything is unclear or seems unusual.
- Inform yourself about your organisation's business.
- Read financial statements carefully —
- do they make sense?
- do they present a realistic view of cash flow?
- do they comply with legal regulations and accounting standards?
- are extraordinary items or significant expenses explained adequately?
- does anything extra need to be disclosed in Notes?
- question anything that appears irregular and seek outside advice if necessary.
- Has the external auditor raised any issues?
- Remember that even if your board has an audit committee, the whole board is responsible and accountable for signing off on financial statements.
For a checklist on what to consider before approving financial statements, see the AICD's Qld Director magazine June 2008 (www.companydirectors.com.au)