the role of the trustee are you ready
Download
Skip this Video
Download Presentation
The Role of the Trustee, Are you Ready?

Loading in 2 Seconds...

play fullscreen
1 / 19

The Role of the Trustee, Are you Ready - PowerPoint PPT Presentation


  • 90 Views
  • Uploaded on

The Role of the Trustee, Are you Ready?. CHHSM Annual Meeting March 5, 2006. Amy A. Hayman Edwin Eng Senior Vice President Vice President [email protected] [email protected] Table of Contents. The obligations of a not for profit Board member Fiduciary obligations

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The Role of the Trustee, Are you Ready' - reid


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
the role of the trustee are you ready

The Role of the Trustee, Are you Ready?

CHHSM Annual Meeting

March 5, 2006

Amy A. Hayman Edwin Eng

Senior Vice President Vice President

[email protected]@cainbrothers.com

table of contents
Table of Contents
  • The obligations of a not for profit Board member
    • Fiduciary obligations
    • How to act as a Trustee
  • Role of a Good Board Member
  • How should a Board member learn
  • How to Assure Good Stewardship of Financial Resources
the leadership obligations of a not for profit board member
The Leadership Obligations of a Not For Profit Board Member
  • Understand fiduciary obligations
  • Know the role of a good Board member
  • Know the goals of the Organization
  • Know how the Organization operates
  • Know how to become educated on key issues
  • Independence
slide4

Some nonprofit boards have moved to strengthen the board:

  • Staff oversight
  • Assurance of quality standards
  • Oversight of management (especially CEO)
  • Development of long range plans
  • Financial focus
    • Operating budgets
    • Capital plans
slide6

Unfortunately . . . They Are Not Enough

  • Nonprofit health care now more like a business
  • Multi-site Systems complicate fiduciary duty
  • Creditors may litigate if they suffer losses
  • AGs more likely to second-guess trustees
    • If non-profit, trustee protected unless display ‘willful misconduct’
understand fiduciary obligations
Understand Fiduciary Obligations
  • Duty of Care - A trustee must perform duties:
    • In good faith
    • In the best interests of the Organization
    • With such care as an ordinary person would use
  • Duty of Loyalty – Exercise their power in the interest of the Organization relating to:
    • Conflicts of Interest – do not use position to personal advantage
    • Corporate opportunity
    • Confidentiality
  • Duty of Mission – Must work to achieve mission of Organization
    • Challenges in difficult times to balance mission against need to act quickly
    • Must have process that considers reasonable alternatives consistent with the mission
    • If trouble arises, non-profits face scrutiny from AGs and creditors
slide8

Best Practices for Trustees: Adopt Business Model Governance Structures & Reporting

  • Workable board size & committees (including Finance, Investment & Audit)
  • Get board members with needed business expertise
  • Educate about obligations, liability, and reporting requirements
  • Independent board members assert responsibility to challenge management: periodic direct access to outside advisors.
  • Regular monthly financial reporting
  • Conflict of interest policies
slide9

Best Practices for Trustees: Manage Assets & Liabilities, Not Just Operations

  • Assess financial risk already in balance sheet
  • Develop financing, risk & investment guidelines and objectives
  • Treasury expertise in large systems or outsourced advice
  • Monitor & oversee
slide10

Best Practices for Trustees: Oversee Financial Stability & Take Action in Time of Trouble

Regular Review

  • Compare Costs & Cash to Competing Facilities
  • Detailed Financial & Audit Reviews by Trustees with Business Experience
  • Request Management Analysis & Recommendations
  • Periodic Outside Review
slide11

Warning Signs

  • Increase in AR or AP
  • Decrease in Operating Margin
  • Decrease in Cash
  • Decrease in Occupancy
  • Problems Measuring & Reporting Financial & Operating Performance
slide12

Warning Signs (cont.)

  • Negative Variance to Budget
  • Inability to Respond to Regulatory Actions
  • Turnover of Staff, Legal or Accounting Advisors
  • Rating Agency Downgrade or Negative Outlook
  • Violation of Covenants
  • Lack of Financial Independence (e.g. preferred loans to management)
  • Management Recommends New Ventures when Internal Operations Not Controlled
the role of a good board member
The Role of a Good Board Member
  • Be active: attend and participate in meetings
    • Accept increased accountability
  • Analyze key decisions of management team
    • Focus on major decisions
    • Avoid diminishing CEO’s role
  • Know when to trust management and when to consult with outside experts for information without management in attendance
    • Attorneys, Auditors, Consultants, Bankers
  • Stay up-to-date with continuing education activities
  • Know the goals of your organization
    • Make sure the goals are defined and that you understand
    • Make sure your actions enhance your organization’s goals
  • Be aware of how your facility operates
slide14

Can the Board Rely Upon Management?

  • Most of the time: absolutely yes
    • Most management teams operate with high integrity and intelligence
    • Most can be trusted
      • To provide appropriate information and
      • To act responsibly on behalf of the organization
slide15

When to Seek Outside Advice

  • In good times
    • There are times when management’s judgment, regardless of its motivation or prior history, needs to be analyzed
      • Most members of a Board and managers dislike this process and try to avoid it
      • These are the times when Board needs to assert its role as the ultimate fiduciary of the organization
slide16

When to Seek Outside Advice

  • In bad times
    • Poor decisions and reckless behavior will threaten the overall organization and the individual liability of the members of the Board
    • When an organization gets out of balance:
      • No questioning of management
      • No use of independent experts
      • Culture of passivity
      • Lack of input from staff
    • In time this may result in:
      • Poor strategy
      • Bad decisions
      • Poor operational results
      • Potential for greater problems
slide17

When to Seek Outside Advice

  • Board members need independent advice on:
    • Management performance and compensation
    • Measurement of performance
    • Revenue cycle problems
      • Resident turnover, inability to collect cash
    • Operational efficiency
      • Program, number of employees, supply costs
    • Regulatory compliance
    • Initiation of new technologies
    • Audit and management letter
    • Change in business model
      • Acquisitions
      • Acceptance of Increased risk
        • Start ups, expansions, repositioning
      • Entering new lines of business
        • indirectly or not at all related to core mission
slide18

Financial Stewardship

  • Financial Stewardship – “The responsibility of managing resources wisely and executing these responsibilities with integrity and ethical conduct”
  • Resources include:
    • Time
    • Money
    • People
    • Property
  • Responsibilities include:
    • Spending wisely as if money were your own
    • Purchasing wisely
    • Being accountable for your actions, property and time
    • Encouraging others to be good stewards
financial stewardship
Financial Stewardship
  • Role of Financial Stewardship is paramount within overall governance as it underpins both performance and compliance objectives
  • What Board member must do
    • Provide stewardship to ensure organization’s ongoing health and viability and compliance with legislative requirements
    • Board and management need to take a long range view of stewardship
  • How Board member provides financial stewardship
    • Establish appropriate governance structures
    • Provide leadership and vision to achieve objectives
    • Select, support and monitor CEO
    • Validate compensation plans
    • Ensure fair, effective and compliant employee relations
    • Ensure effective strategy, planning and budgeting; ensure adequate resources; monitor progress
    • Establish control mechanisms
    • Manage risk
    • Comply with financial reporting requirements
    • Enhance organization’s image
ad