ETHICAL
MATTERS
Disputed Numbers
The Manager
of Finance at ABC Association is growing increasingly
uncomfortable with the rosy outlook and projections that
the Executive Director is providing to the Board of Directors.
The Manager has forcefully presented these
concerns in private meetings with the Executive
Director and in management meetings. While
the unrealistic projections are primarily related
to projects under the Program Manager's area of
responsibility, the Manager of Finance knows that the
Executive Director set the targets over the objections
of the Program Manager. It now appears that the
Program Manager is destined to "take the fall"
for the increasingly evident deficit.
What
advice would you give the Manager of Finance?
The Manager of Finance must tread
carefully, as the dispute relates to forecasts not
facts. Reasonable
people can have significant disagreements over financial
projections without any wrongdoing being involved. The Manager should strive to double-check whatever facts are
available, such as sponsorship commitments or current
expenses that might be eliminated due to donation of
in-kind services from corporate supporters.
However, the duty is clear.
The Manager of Finance works for the
organization, even though the reporting relationship is
to the Executive Director. If the Manager of Finance is correct in believing the
forecasts are unreasonably rosy, the organization is
being put at risk.
False information now could delay corrective
action. By
the time the deficit it evident, the corrective action
could come too late to save programs and services to
members and other customers.
The organization will have less capacity to
achieve its mission and its current strategic plan.
In any case, the Manager has the right
to sleep with a clear conscience, and hiding these
concerns would offend the personal integrity of most
people.
The Manager has exhausted internal staff
options, and must now consider whistle-blowing to the
Board, or at least a Board member.
That often leads not only to job loss but also to
difficulty finding new work at the same level.
The manager could reduce the risk by being open
with the ED, so there could be no accusation of going
behind the ED’s back.
Also, coming forward in the company of the
Program Manager would have much greater credibility than
going forward alone.
The process would vary depending on the
Manager’s normal access to directors.
Usually, the senior financial person has a direct
working relationship with the Treasurer and
Finance/Audit committees.
Perhaps the next in-year financial statements
could be re-worked to include TWO projection columns –
an optimistic and a conservative view.
That would be better than personalizing the
dispute. If
the financial software doesn’t support this format,
the information could be exported to a spreadsheet for a
one-time added page in the financial package.
The Board members involved will, if they
pay any attention at all to their responsibilities, ask
about the assumptions behind the two sets of
projections. That
new information would let them make a more informed
decision about what financial information to present to
the Board.
If there is no such regular access, or
the next meeting is not timely enough, the Manager could
ask the Treasurer for a special meeting.
If at all possible, have the ED and Program
Manager present.
The Manager of Finance should take care
not to be perceived as acting in order to help a friend,
or as part of a conspiracy against the ED.
The Program Manager should be able to speak up
directly.
While waiting for the meeting to take
place, the Manager of Finance, unfortunately, should
update his or her resume!
In effect, the actions are showing a lack of
confidence in executive leadership, and the working
relationship may not survive it.
Boards can be incredibly slow to act on concerns
about an ED, since they dread the recruitment and
transition. Even
if the directors share the Manager’s concern about the
projections, there is no guarantee that will affect the
ED’s employment.
 Jane is Principal Consultant of Mills Garthson & Associates, dedicated to strengthening Canada's nonprofit sector through enhanced leadership and ethics. She is a founding member and former Chair of the Ethics Practitioners’ Association of Canada, and was Executive Director of a provincial federation. She has provided ethics training to organizations such as the United Way of Greater Toronto, International Institute of Public Ethics and
CSAE. Jane can be reached at
www.millsgarthson.ca
or 1-877-645-5417.
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