external auditor

What Is an External Auditor? (And Do Boards Need One?)

When it comes to reviewing a company’s financial status, every organization needs a good external auditor. Auditors look through in-depth accounting information in order to ensure that the reporting is a true representation of an organization’s financial position.

Auditors also assess things such as risk in order to help guide organizations to a healthier and more prosperous financial future.

Internal audits happen frequently within an organization. Companies utilize their own hired talent to review the work of others or the overall validity of the company’s financial reporting. As the Association of Certified Fraud Examiners explains it, “The internal audit function helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

The scope of internal auditing is broad and may involve the efficiency of operations, IT controls, the reliability of financial reporting, deterring and detecting fraud, and compliance with laws and regulations.”
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Strategies for Dealing With a Boardroom Bully

boardroom bully

While many of you may have hoped that bullying behaviors ended with high school, the sad truth is that sometimes even the boardroom has a bully problem.

The tactics won’t be the same as when you were growing up, but they can still cause a great deal of discomfort. Perhaps your boardroom bully constantly cuts people off when they’re speaking or refuses to put topics on the agenda.

Maybe they work behind the scenes to manipulate or intimidate fellow board members. Not only can these behaviors create awkward situations, they can also have a deeply negative effect on your board’s ability to function.

So how do you handle a tricky situation like this? Here are some of our suggestions:
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Strategies for Managing Board Vacancies

Board vacancies

Inevitably, the time will come when your board has one or more empty seats to fill. For boards that are already small in number, having vacancies can cause some strain.

But, unless your bylaws mandate a quorum that you cannot meet, your board should be able to continue operating normally until the seats are filled.

However, there are some stressors you may encounter along the way. Here are some helpful tips for confronting them.

An even number of directors creates a tie vote.

Perhaps, your board typically has 10 members plus a board chairperson for tie-breaking votes. What happens if you’re down one member, and the vote splits? Obviously, if your bylaws dictate a procedure for a tie vote, be sure to follow it. If you have no process already in place, your best option is to revisit discussion on the issue at hand and vote again.

If the vote comes out the same, consider enlisting the opinion of an outside expert. This individual would not cast a vote, but they could bring more information to the table, which could help shift the overall vote counts.
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Looking for Signs of Board Success

signs of board successSigns of board success can take any number of shapes, and the bottom line for measuring a board’s accomplishments will vary from organization to organization.

But when it comes down to overall effectiveness, there are some tried and true signs you can look for to better understand your board’s overall functionality:

Your board’s structure is clear and encourages efficiency

Boards vary in size and in structure, but experienced board member and Stanford GSB lecturer David Dodson has found one universal factor that he believes is a sign that boards are on the right track.

He writes that all boards—even small ones—need a clear, outlined structure for how meetings will be held, how often board members must be in attendance, and what is expected from them both inside and outside of board meetings. Dodson insists, “My strongest advice to a CEO or a board member is to put that scaffolding in place.”
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Strategies for Nurturing Junior Boards

Over the past decade, the number of junior boards serving nonprofit organizations has risen dramatically. According to Guidestar, the largest nonprofit information site, statistics show that 74% of millennial professionals are eager to get involved with charitable causes and networking within their community.
nurturing junior boards

Furthermore, 84% of millennials made a charitable donation in the past year. These statistics bode well for nonprofit executives who are striving to fundraise during recovery economic times.

Harnessing the creativity and enthusiasm of younger leaders has been a boon to the nonprofit community. The investment in junior boards has helped many charitable causes connect with and access a younger donor base.

Millennials have gained from these partnerships, too; they’ve gotten the chance to prove their capabilities as networkers and fundraisers while also advancing their personal connections in the business community.

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