360 organisational vision in the Boardroom

360 organisational vision in the Boardroom

The alleged fraud of $600,000 from the IHC fundraising activities, as reported in the Sunday Star Times on 10 January 2010, emits a strong signal to board directors and trustees. As directors and trustees turn their attention more and more on the strategic direction of the organisation, they must also ensure that internal processes are operating efficiently. It’s good to hear that the alleged fraud was picked up by the IHC’s financial systems and action initiated, but when?

The changing and more demanding role of a director or trustees requires them to be alert and to question many facts and assumptions placed before them. The skill-set of today’s director or trustee is rapidly changing. No longer can board members rely only on information provided in board papers. Directors and trustees, as the overseers of the organisation, have a responsibility to ensure all operations are fully functional and that means ensuring the systems are not only in place but are monitored and any concerns addressed as soon as practical.

Six hundred thousand dollars is a considerable sum to just siphon off undetected. As reported by the Sunday Star last year, IHC posted a net surplus of $1.2 million, down on the previous year when $3.1 million was raised from it fundraising activity, and a net surplus of $4.9 million was achieved.

The question that we hope to see answered is when did the alleged fraud take place, and when did the system detect it? If it was after the financial year when the lower net surplus was reported, then we should turn to the board members and ask how and when they review the internal structure, monitoring and reporting systems. Signing a sponsorship agreement and the collection of the funding are two separate activities. Hopefully the accounting department generated the appropriate documentation relating to the collection of the monies, separate from the fundraising personnel who would have negotiated the contractual arrangements. If not, the board may find itself in a position where it has failed in its fiduciary duty to its shareholders and stakeholders.

Alert boards review internal structures as part of their work programme and good directors and trustees ensure that checks and balances are part of key systems and are continuously being monitored by management with material variances being reported to the board.

Strong boards conduct stakeholder research to ensure they are fully aware of what is transpiring between parties such as the organisation’s sponsors.