The Buck Finishes Here

Hello, I’m Peter Towers, Managing Director of ESS Small Business and ESS BIZTOOLS.  Welcome to Empowering SMEs.

Revelations from the Banking Royal Commission have highlighted that directors have a responsibility to:

• develop policies and strategies for their company; and
• make sufficient enquiries to satisfy themselves that management and the team have appropriately implemented systems to ensure that the policies and strategies signed off by the directors are working efficiently.

This means that directors and committee members must ask sufficient questions and make appropriate enquiries to ensure that the systems, that have been implemented, are identifying any deviations from the policies authorised by the board of directors or committee of an organisation.

Committee members of not-for-profits and charitable organisations need to make sufficient enquiries, obtain certification from reputable third parties and undertake physical inspections to ensure that assets exist – so that the committee members are not embarrassed and suffer financial penalties as occurred to the committee of the National Safety Council of Australia Victorian division in 1991 when assets, that the organisation claimed existed e.g. debtors and “rescue equipment in sealed containers”, were found not to exist.

The organisation had significant borrowings which were secured on those “assets” which were found not to exist, even though the committee had signed off on financial accounts for a number of years indicating that those assets did exist.

There was also an allegation that the audited financial accounts had been interfered with prior to the accounts being submitted to the committee.