Finance subcommittee terms of reference

Finance Subcommittee

Terms of Reference

Purpose of Finance Subcommittee:
Evaluate the financial performance of the organisation and ensure finance resources are use appropriately and in accordance with the objectives of the organisation. Ensure that appropriate advice and recommendations are made to the Board to ensure the ongoing viability of the organisation occurs.
Functions:
  • Monitor the financial performance of the organisation by reviewing and approving the financial reports that are presented at each Finance Subcommittee meeting
  • Ensure financial reports are prepared that accurately reflect the financial performance of the organisation, are compared against the budget and key performance indicators
  • Ensure all accounts are reconciled each month with any errors or significant variations reported to the Finance Subcommittee for review
  • Prepare minutes of each Finance Subcommittee meeting that are endorsed and presented at the board meeting
  • Review financial policies and make recommendations for any changes if needed
  • Oversee the preparation of the annual budget and ensure it is aligned to the strategic objectives of the organisation
  • Approve the appointment of the auditor and review their performance
  • Ensure that the annual audit occurs and the financial reports are prepared in accordance with any accounting, audit and statutory requirements
  • Ensure that any surplus funds are investment in a prudent way
  • Ensure any grants that are received are used in compliance with the funding agreement and acquittals are prepared in line with the terms of the agreement
Membership:
  • The Finance Subcommittee shall have a minimum of three appointed members that come from the board of the organisation
  • The CEO or Finance Manager are required to attend the Finance Sub Committee to present and discuss the relevant financial reports and issues
  • If the board identifies a need for additional expertise then an external expert can be appointed to Finance Subcommittee
  • Any other board member may also attend
Meetings:
  • The Treasurer will be the chair of the meeting and present a report to the board meeting
  • The quorum for the meeting will be based on half the appointed members plus one other appointed member
  • In the event the Treasurer is absent then one of the other appointed members will chair the meeting
  • To be held each month with a minimum of ten meetings to occur during the year
  • The chair of the meeting will ensure the proceedings of the meeting are accurately minuted, recorded and endorsed prior to the next meeting
General:
  • Each year as part of the board performance review process, there will be a performance review of the Finance Subcommittee
The board will review these terms of reference at least annually but sooner if needed.

The above is just an example and you could have included many other functions depending on the size of the organisation, the activities it undertakes and what other sub committees may be doing. You could also have included issues such as ensuring the organisation has adequate insurance cover, reviewing the need to upgrade equipment, and the review and approval of any contracts above a certain amount or review fundraising activities. This is where the function of the sub committee may be expanded or, if there are critical areas which need closer attention, then you can develop another subcommittee.