Too little, way too late. This reeks of dereliction of Fiduciary Responsibilities.

der·elic·tion (der′ə lik′s̸hən)

Fiduciary Responsibilities of Board Members

One of the main responsibilities of board members is to maintain financial accountability of their organization. Board members act as trustees of the organization’s assets and must exercise due diligence to oversee that the organization is well-managed and that its financial situation remains sound. Here is an outline on how board members can fulfill their role as fiduciaries.

What does fiduciary mean?

Fiduciary duty requires board members to stay objective, unselfish, responsible, honest, trustworthy, and efficient. Board members, as stewards of public trust, must always act for the good of the organization, rather than for the benefit of themselves. They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk.

Understanding of financial basics

Not every board member can be a financial wizard. Every board member, however, needs to be a financial inquisitor. It is essential to understand basic terminology, be able to read financial statements and judge their soundness, and have the capacity to recognize warning signs that might indicate a change in the overall health of the organization. If a board member does not understand something, he or she must be willing to find out the answer.

Specific questions board members should ask:

Is our financial plan consistent with our strategic plan?

• Is our cash flow projected to be adequate?
• Do we have sufficient reserves?
• Are any specific expense areas rising faster than their sources of income?
• Are we regularly comparing our financial activity with what we have budgeted?
• Are our expenses appropriate?
• Do we have the appropriate checks and balances to prevent errors, fraud, and abuse?
• Are we meeting guidelines and requirements set by our funders?

(Questions adapted from The Financial Responsibilities of Nonprofit Boards by Andrew Lang.)

I would assume the above relates to "For Profit" also, although there is a logical argument that PTSC has been "non-profit" for several years.