Nigel Siederer and Roger Chester agree that trustees need to be trained in finance
RC: Much depends on the size of the charity. Small charities (and I am the trustee of a small charity) probably think that they need some accounts, but don't understand them. Medium-sized organisations know they have to have them, but rely on the auditor or finance person. Large ones should understand them - but there is a 'but' running through all of this. Have they been trained? Are they updated regularly? Do they appreciate the difference between the Companies Act and the Charities Act?
NS; It is crucial to have at least one trustee who does understand accounts, who will be working closely with the lead finance staff member (who, in a small organisation, might be the chief executive rather than a finance director), who can guide the other trustees to the key features of the accounts and, crucially, can spot both the immediate problems and those on the horizon.
RC: I am old-fashioned enough to think that the governance position of treasurer is very useful. It gives the post holder gravitas, more so than chair of the finance committee, I think. What is important is that someone at board level can say the things that need to be said, even when no one wants to hear them.
NS: I agree that the title 'treasurer' is better and that other trustees shouldn't rely too much on one person. Having a finance committee is good, but not all charities are large enough to sustain one. You rightly mentioned training. As a grant assessor, I see too many accounts in which the required description of how trustees are trained is a standard sentence saying that "training is provided by our professional advisers". You just know that no real training is going on, and it makes you worry about the quality of the financial oversight.
RC: I believe that all trustees, not only the treasurer or the ones on the finance committee, should be properly trained. This should be by attendance at an 'introduction to charity finance' event provided by the Charity Finance Group or Sayer Vincent, with regular updates. Maybe the same rigour should be applied to charity trustee training as to trustees of a pension scheme who have to follow a prescribed training scheme.
NS: Ideally, yes. Too many trustees have no general training, despite the Statement of Recommended Practice requirement to report on this, and too many auditors insert the sort of standard sentence I have described, which trustee boards just nod through. Getting every board to have one general training session a year would be a real advance. An inexperienced treasurer should certainly go on introductory external training. There is then some hope of them guiding and encouraging the others.
RC: Another difficulty is how information is presented. Trustees should receive management accounts at regular intervals throughout the financial year, and there is no statutory format for these. Trustees are then required after the year has ended to approve the financial statements that are in a statutory format. How do they know how the information tells the same story? Many accounts are adjusted at year-end for pension liabilities and investment valuations, which might not be recorded in the management accounts. What information is included in the management accounts? Do they even include a balance sheet?
NS: I was going to make much the same point. Trustees are not doing their jobs properly if they merely sign off the report and accounts once a year. Through the year they have got to be looking at management accounts, which provide a means of monitoring income and expenditure against budget. They need to ensure their cash is flowing in and out as forecast. If they're large enough to have investments, they need to be reading the manager's reports. They have to approve the standing financial controls and periodically review appointments of investment managers and auditors. They have to set desired reserve levels and monitor them. They have to respond to difficulties and to development proposals. The treasurer should steer the way finances are presented and guide the others on the board.
RC: I suppose that the essence is, do people volunteer to help a charity? Or do they want to be a trustee, which is a much more onerous position with definite legal responsibilities?
Nigel Siederer is a consultant at Good Foundations Consultancy and Roger Chester is head of finance and administration at LionHeart