Fifteen Examples of Sound Financial Policies

Fiscal integrity in an association or chamber of commerce may start with a foundation of solid financial policies. Policies are a subset of the organization’s governing documents.

The policies guide volunteer leaders, especially the elected treasurer and a finance or budget committee. While every organization will have unique policies based on their situation and concerns, there a few common policies and rationale for their adoption.

 Travel Reimbursement

Guidelines for volunteer leadership and staff will be established for travel, food and beverage, registrations, advances, reservations and reimbursements.

Financial Accounts

The board of directors will authorize all accounts and financial instruments (i.e. checking, savings, investment, etc) to safeguard funds.  Changes to any account must be approved by the board.

 Finance Committee

The function of the Finance Committee is to supplement the work of the board of directors with responsibility for: 1) developing an annual budget, 2) monitoring and making budget adjustments during the year, 3) monitoring the performance of investments, and 4) selection and collaboration with a CPA/auditor.  The chair of the Finance Committee shall be the elected Treasurer.

Document Retention and Destruction

The board will adopt a recommended record retention and document destruction schedule, including checks, receipts, tax returns, etc.

Whistle Blower

A policy that encourages persons (staff or volunteers) to report perceived or real irregularities in operations is adopted, allowing a “whistle blower” to approach the board without endangering their position or job.

Conflicts of Interest

Directors and senior staff are expected to disclose potential or existing conflicts of interest at least annually and throughout the year on a regular and consistent basis.

Audits

The board of directors will adhere to a policy for the periodic audit, review or compilation of the chamber’s finances.   An audit committee will be appointed to work with the selected independent auditor and to present the final audit for approval by the board of directors.

IRS Form 990

Prior to submission of Form 990, the Information Return to the IRS, the governing body[1] will have the opportunity to review.

Check Signing Authority

The board will set limits to the authority any officer or employee may expend, as well as define the required number of signatures and processes for reimbursements, including the required submission of receipts in a timely manner. Similar authority will apply to the issuance and use of credit or debit cards.

Investments

The organization will adopt an investment schedule to address savings and reserves to best safeguard the funds in a conservative manner.   An investment advisor will periodically review investments and report to the board of directors.

Savings Reserves

The chamber will maintain a savings reserve equal to a ____ percentage[2] of the annual budget.  Savings over the minimum amount may be used for research and development projects that advance portions of the strategic plan and benefit members.

Chart of Accounts

A chart of accounts will be established for consistent structure so that each budget line item is described in detail for complete understanding and comparative analysis.

Budgeting

The board will approve a balanced budget annually, ____ months in advance of the fiscal year.  Financial reports based on the budget will be provided and officially accepted at all duly called meetings of the board.

Independent Contractor Status

Any person working as an independent contractor shall meet the criteria[3] established by the IRS confirming independent versus employee status.

Insurance

The board will maintain vigilance in avoiding risks and protecting assets.  Insurance coverages will be considered and acquired, including general liability, director and officers’ liability, host liquor liability, publishing, meeting cancellation, and a surety bond.

Be sure to rely on legal, accounting, investment and insurance counsel when adopting or amending policies.  This listing is not intended to be inclusive but to serve as an example.

[1] IRS Definition:   The governing body is the group of one or more persons authorized under state law to make governance decisions on behalf of the organization and its shareholders or members, if applicable.

[2] Benchmark is frequently 50 to 100 percent of the annual budget.

[3] http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee