1. Governance Matters
Finance,Audit & Risk
Committees
Not-for-Profit Sector LAB Update
November 2015

2. A NFPClient
Perspective
WHY HAVE DEDICATED FINANCE,AUDIT OR RISK
COMMITTEES?
 More committees = more work, volunteer & staff
 Individual committee mandates can be blurry or perceived to
overlap
 Specialized subject matter, particularly with respect to Risk
Committees
 Lack of Board member knowledge or expertise
 Additional cost & complexity
 Audited statements should cover all these bases anyway,
shouldn’t they?

3. A NFPClient
Perspective
WHY HAVE DEDICATED FINANCE,AUDIT OR RISK
COMMITTEES?
 Full Board agendas are crowded
 Limited attention to complex risk issues
 Varying committee time horizons
 Annual versus multiple year
 Audited statements and auditor relationship tend to be viewed as
a commodity
 Competently done at lowest cost and least staff effort
 Life threatening risks or organizational issues are more than
financial

4. A NFPClient
Perspective
Example of Risk Issues Examples of Risk Mitigation
Loss of major funding source Diversification of revenues
CRA compliance on tax receipts & filings Outsourcing
Employee theft or misuse of assets Internal controls & audits
Unfavourable media attention Media response plans & training
Catastrophic events Insurance
Significant risks of physical harm to
employees or beneficiaries
Suspension of program activity

5. A NFPClient
Perspective
HIGH IMPACT
LOW LIKELIHOOD
manage & monitor
HIGH IMPACT
HIGH LIKELIHOOD
immediate action
LOW IMPACT
LOW LIKELIHOOD
accept & monitor
LOW IMPACT
HIGH LIKELIHOOD
management effort worthwhile
RiskImpact
Risk Likelihood
CICA, 20 Questions Directors of Not-For-Profits Organizations Should Ask About Risk, 2009
Risk Matrix

6. A NFPClient
Perspective
THOUGHTS and CONSIDERATIONS
 Assess your NFP’s operating environment and enterprise risks to
determine if dedicated committees are warranted
 Ensure dedicated Board attention allocated to risks issues
 Draft clear committee mandates & develop work plans
 Provide training to Board members
 Approach your auditor relationship as a trusted partner on these
issues
 Recommended reading: 20 Questions Directors of Not-For-Profit
Organizations ShouldAsk About Risk

7. A NFPClient
Perspective
THANKYOU!
Stewart Hardacre, CPA, CMA
stewart.hardacre@gmail.com
(613) 796-8000