Unlike the extensive accounting teams at large corporations, chapters and small non-profits have a smaller, more tight-knit money management team. Successful financial accounting at non-profit consists of various members assuming pseudo accounting roles to maintain accountability and transparency.
Determining who sits on the finance committee of a chapter or non-profit and their responsibility can prove somewhat tricky. What should always be kept in mind is that the finance team has a complete fiduciary duty of ensuring the financial handlings of the organization are in line with that organization's mission.
Here is a quick breakdown of the roles and responsibilities of a non-profit financial team.
Necessary Roles
A chapter or nonprofit's financial team must always include the treasurer. The treasurer is tasked with paying the bills and maintaining the books in accordance with the organization’s policy. Another board member, usually the president cosigns all checks. In the event of credit/debit card and e-checks, there is no co-signer, the treasurer assumes the duty of keeping track of the online accounts and all e-banking transactions.
Another possible position role is that of a financial secretary. The financial secretary's duties would be to categorize all deposits according to how donations are designated and then deposit the funds. He/she often receives dues and other monies coming into the organization.
Additionally, there must be an auditor or audit committee. If one does not exist then the finance committee assumes that role. The auditor is most effective when they are familiar with the internal financial structure of the organization. While the compiled information is vital to the accounting, the auditor conducts the official and final audit based on Generally Accepted Accounting Principles.
The finance committee in some organizations may also be known as the supervisory, governance, or accountability committee; and their duties should be included in the organization’s constitution & bylaws. They conduct periodic inspections to ensure compliance with the organization’s fiscal policies, and to select an independent auditor (unless an audit committee is used). It should be noted that the report of the treasurer and financial secretary are not voted on, they are filed after they are presented. Only the final audit report should be voted on and accepted.
All these crucial roles come together to ensure that the organization's donations are utilized for the intended purposes. This small yet essential team also focuses its efforts on keeping the organization compliant with state, federal, and other reporting requirements. The financial team's responsibility is to maintain accurate reports that they will then present promptly to the board.
The financial committee in chapters and non-profits may be small in size, but they are significant in the goals they achieve.