Just how much should a nonprofit board that suspects no wrongdoing probe into what appear to be ordinary expenses? That's question number one. Question number two: once a board learns from its annual audit that "things are not right" and not just for one manager but many managers, what action should it take.
I believe the answer to question number two is simple -- it's time to at least replace the number one exec.
But to answer question number one, more thought is required. Let's say a board receives and conscientiously reviews the income & expense statement and balance sheet monthly or bi-monthly or quarterly (all reasonable options). Let's say there's even a finance committee that does the same ahead of board meetings. The statements all balance and line items look to be within their budgets. Seems prudent enough (the standard for expected behavior).
Should there be deeper and wider probing and wouldn't such probing begin to look more like micro-managing? That's kind-of my opinion and to be honest, I'd probably be willing to wait until the annual audit to find-out that all is not copesetic, assuming my organization has liability insurance.
The story that launched this topic can be found in the Boston Herald.
Thanks Claire.