Do you still need a Treasurer?

This board role was established for the volunteer officer who had custody of the funds and handled all financial transactions, with board approval as needed. And if your Treasurer is still making bank deposits and paying invoices, stop reading – you need that role. Most all-volunteer or very small organizations do. Even if a bookkeeper, administration clerk or association management company handles basic financial functions, you need someone with accountability for financial reports and strategic advice on the board.

Why, however, do I still see organizations that have a Chief Financial Officer appointing Treasurers from among the board members? Usually, that person can’t even answer board questions about the in-year financial statements without whispering to the CFO first. And in any good board now, EVERY board member can read the financial statements and make intelligent inquiries about unexplained variances and trends. Of course, financial statements are distributed at least a week in advance so directors have time to spot items they want to question.

Perhaps you are saying to yourself the Treasurer is there to provide oversight to the financial staff. But if there is a CEO or Executive Director, isn’t that their job? Well, yes it is.

So you need to provide oversight to the CEO’s work? Yes, but, that’s now usually called an Audit Committee, not a Treasurer, a wise practice we’ve learned from the corporate sector. The name makes it clear to everyone that the committee members aren’t handling money. The Committee exists to support the board in its fiduciary duties. The committee oversees the annual audit, carefully reviews management letters and CEO actions with regard to any financial control issues raised by the auditor or by past deficits and losses. In a mid-sized organization, the Audit Committee might have a mandate such as:

“To help the Board enhance and protect the reputation and resources of (organization) by ensuring an independent review of financial controls and statements, and overseeing investment policy.”

What about cheque co-signing, a traditional Treasurer role? Well, how many cheques are actually issued today, with direct deposit for payroll, credit cards, PayPal, Interac transfers and more? With the CEO/Executive Director as second signature to the CFO on most of those that are still issued, how many cheques really need board involvement? Usually only large amounts above what has been delegated, and any payment to the CEO, such as for travel expenses.

Some of you are now thinking about the grants your organization makes. And it’s true that in small organizations the Executive Director may not want to have the final say on grants. It may be more political to have that decision made by elected volunteers, and your grants might not be a major enough part of your work to have a separate Grants Committee or extensive policies. If a review of grant allocations is needed before board approval, a Finance Committee can do that.

And let’s be honest–Executive Directors are not always chosen for their financial management skills. Plus, in small organizations, they may have no specialized financial staff to rely on. They may need direct help from a Treasurer with financial matters while they develop their skills and knowledge. I needed to do that in one of my own past Treasurer roles, working closely with the senior staff person to implement new financial software, set up a chart of accounts, develop a budget, prepare a cash flow forecast, hire a bookkeeper and design report formats. After a while, I could pull back and just be on call as issues arose, and issues became less frequent as she became comfortable with financial duties.

Keep in mind that if the Treasurer is directly involved with in-year financial management, they cannot be independent enough to chair an Audit Committee or oversee the audit. It’s their own work that the Auditor will be reviewing, so they have to be in a resource role, not a leadership one, in relation to the audit.

Overall, if you’ve read this far and believe your organization still needs a board member with the title Treasurer, that’s just fine. You will be in a position to justify that choice when a new board member asks, and that’s a good thing. My main goal was to make you think about one sample aspect of governance structures and operations. And if this article has made you wonder about other governance practices that might need a rethink, I’d be happy to send you my book chapter on Reviewing Governance, for free.