When organizations have a board member serving as Treasurer, significant dysfunction can emerge in the relationship between the board and the CEO. On one hand, the board has delegated the accomplishment of results within certain boundaries to the CEO, and on the other hand, the Treasurer is expected to oversee, manage, and/or question any/all operational decisions made regarding financial matters.
In other words, both the CEO and the Treasurer are each given the illusion that they are accountable for sound financial management, with the board as a whole often acting like an arbiter between the two.
Policy Governance principles clarify governance and management roles with respect to all decisions, including financial ones. In short, the board sets out the criteria for prudent and ethical financial planning, activities, asset protection, board expenses, the overall worth of the results achieved, and possibly more. The CEO follows these criteria, and regularly provides the board with evidence of compliance with a reasonable interpretation of these criteria.
For answers to common questions about this topic, download and share this Financial Management FAQ with your board and staff members, or take our Board EXCELerator online course to learn how to make Policy Governance principles clarify roles and benefit your organization.