Financial governance – a fundamental responsibility of good governance

In today’s competitive business environment, the need for good financial management and governance is at the top of the list for organisational sustainability and viability. Every board should have at least one person who is appropriately qualified and experienced in the area of strategic financial management to provide leadership in this most important area of good governance.

Leading and managing a successful business today requires a diverse range of skills across the organisation and this refers equally to the board and its membership as well. The board must possess the appropriate skills to enable it to be effective in its financial stewardship role and to hold the executive to account for its individual and collective performance. Such skills include:

• Specific industry knowledge to enable an assessment of performance to be compared to best practice;
• Recognised accounting and financial management qualifications and appropriate life and work experience to understand the nuances of the role;
• An enquiring mind and a willingness to spend time and effort to understand the drivers of the business and the performance of the organisation;
• A preparedness to hold those responsible to account for their performance and the business results.

Whilst good financial management does not guarantee future success, poor financial management can contribute to future failure. The board has a key role to play in this area and governance excellence demands it does not absolve itself from or delegate this responsibility.

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