The Financial Governance booklet addresses the major aspects involved in governing financials for directors and officers with low financial literacy. The booklet includes a detailed overview, case studies, financial performance indicators and key success strategies especially the need to maintain a full overview of organisational performance.
Governing finances is amongst the most important of the Director’s duties for the simple reason that resources are required to fulfil the organisation’s purpose. The Financial Governance asserts that Financial Governance is different to Financial Management. When governing finances Directors must:
- Ensure there are adequate financial planning, controls, compliances and risk governance
- Meet their formal duties such as avoiding insolvent trading
- Ensure the organisation remains a going concern e.g. able to make provisions
- Ensure a well formulated financial strategy is in place and being skilfully executed.
By contrast, financial management involves the daily application of finances to the work of the organisation by the CEO’s team.
Directors cannot perform their financial governance functions if they are unable to interpret financial reports independent of management. The ability to interpret financial reports enables Directors to meet their duties and responsibilities to the company and its stakeholders. In addition to being able to read financial reports directors need:
1) An understanding of the legal expectations that apply to their duties, responsibilities and their powers with regards to financial matters
2) A whole of business focus so finances are approach with a view to the overall organisation context, and
3) The strategic factors that apply to financial governance.
When done well financial governance significantly increases the ability of Directors to use their powers responsibilities to realise the best interests of the organisation. Many Directors are under skilled in financials governance and the Financial Governance booklet will provide highly useful information and tools.
The author, John Mero, takes a practical approach to financial governance. He has completed over 150 financial assessments of for-profit and not for profit companies for Boards, Management and external authorities and draws on this experience to present a quick read booklet for financially illiterate directors seeking a sound introduction to what is often a mysterious world of numbers.