The Finance Committee provides financial analysis, advice, and oversight of the organizations budget. The Finance Committee does an overview of the past years operating expenses and creates a proforma budget for management to review and the Board to make decisions. In practice, the Management Company creates a proforma budget which is then reviewed by the committee, then forwarded to the Treasure and Board at large.
The Finance Committee is a vital part of the Lake Village Community Association.
It has the responsibility for securing the financial health of the Association. Members have a fiduciary duty to ensure the financial matters of the organization are in line with the mission of that organization. Below are six of the main responsibilities of Finance Committee members:
MAINTAINING ACCURATE AND COMPLETE FINANCIAL RECORDS
The Finance Committee’s most important role is to ensure the records of the organization are accurate and complete. It’s important to review all available information and compare to prior year information, budgeted balances or other useful benchmarks. Ask questions if the data is not in line with what is expected.
PREPARING AND PRESENTING ACCURATE, TIMELY AND MEANINGFUL FINANCIAL STATEMENTS TO THE BOARD
The board is tasked with making decisions that effect the operations of the organization, so they need the latest and best information. Relevant and accurate financials allow them to make decisions properly with more time to react. Outdated information is hard to react to, as new circumstances have already arisen, and there is a possibility it is too late to correct something that could be harmful.
HELPING THE BOARD UNDERSTAND THE ORGANIZATION’S FINANCES
In addition to presenting information to the board, the board needs to be able to understand the finances of the organization. Some financial reports provide a great deal of data, and it can be helpful for the Finance Committee to highlight important information. Helping the Board interpret the numbers will allow them to ask more meaningful questions. A deeper understanding of the finances helps the board plan for the future more accurately.
BUDGETING AND ANTICIPATING FINANCIAL PROBLEMS
The budget is a blueprint for the upcoming fiscal period, and sets a guide for spending in the upcoming year. The Finance Committee should receive input from all decisions makers to allow the budget to carry out the mission of the upcoming year. It’s also important that the Finance Committee anticipate costs that may not be mission related, but be necessary for operations, and plan accordingly.
SAFEGUARDING THE ORGANIZATION’S ASSETS
The Finance Committee needs to ensure the assets of the Association are properly maintained. This can be done by implementing proper accounting policies and procedures, and incorporating internal controls. The internal controls procedures need to be regularly reviewed so they are working properly to safeguard assets.
COMPLYING WITH FEDERAL, STATE AND OTHER REPORTING REQUIREMENTS
There is the potential the Association has multiple reporting requirements, and the Finance Committee is responsible for making sure all requirements are met. These requirements can affect the Association’s tax status, eligibility for grants and contributions or have other legal and financial implications.