Public library trustees are responsible for ensuring that the finances of the public library are managed in accordance with public sector accountability and with the highest level of accuracy and transparency. While fiduciary responsibility and duty of care applies to all areas of governance work, they are most often associated with financial oversight..
To fulfill their fiduciary responsibility it is expected that each trustee performs their board duties with the highest level of integrity and in the best interest of the public library.
To fulfill their duty of care it is expected that each trustee will perform their board duties with utmost care and thoroughness and that their board work is informed and accurate to the level that would be expected by any reasonable person.
To fulfill their fiduciary responsibility and duty of care in financial oversight a trustee should:
- avoid conflicts of interest
- be forthright regarding potential pecuniary interests
- maintain confidentiality (as with all legal, land, and labour board discussions).
- be fully informed
- attend all meetings well prepared and having read the reports
- be engaged and participate at meetings with relevant questions and discussion
Public library trustees are responsible, as specified per board type in the Library Act, for ensuring appropriate practices in securing, overseeing, and if required the auditing, of the organization’s finances. It is the responsibility of the board, with guidance from the library director, to set the priorities for the expenditure of funds, approve an annual operating budget, and monitor the operating revenue and expenses. The public library director is responsible for the day-to-day management of the budget.
Securing the Finances
The board approves the annual operating budget for the public library and the process by which the funding for the budget is requested, received, and accounted for. The level at which the board is involved in the process, from delegating to the library director to proposing the budget to funders (such as mayor and council), varies across public library types and sizes.
The stronger the relationship between the board and funders (particularly with local elected officials), the stronger the viability of the organization. The board chair, with support from the library director, should present the budget to local government funders.
Overseeing the Finances
The board is responsible for requiring regular and accurate financial reports. Each trustee — not just the treasurer or the finance committee — is responsible for reviewing, understanding, and seeking clarification on the reports through their established governance process, such as through the finance committee and/or at the board meeting.
The library director is responsible for the operational management of the finances to achieve the board’s strategic priorities and the sustained operations of the public library. Many public library board financial reports are “rolled up”. This means that all budget lines in a category — such as all staff salaries, rather than each staff salary — are compressed to a level that makes sense for board oversight and to align with what the board is monitoring in their strategic priorities. For example, the board might see a rolled-up line item for library programming or children’s library programming, rather than each expenditure for delivering each program.
It is most important that the board receives regular and accurate reporting that would alert the board to successes and potential risks for achieving their strategic priorities and to potential risks to the viability of the organization.
Auditing the Finances
The board is responsible for ensuring that an audit or review, by an independent and certified accountant, is done annually and made accessible to the public. As well, the board is responsible for ensuring that the organization’s Statement of Financial Information (SOFI) is filed accurately and on time.
Regardless of public library type or size, the financial responsibilities of the board are to
- have knowledge of the organization’s base revenue, expenses, and funders
- be aware of supplementary sources of revenue, such as through grants and service agreements
- understand the financial needs of the organization’s operations, particularly what is needed for achieving strategic priorities while maintaining and/or expanding core services, hours, and staffing levels
- acquire — through direct asks, partnership development, and advocacy — funds needed for organizational sustained growth and strategic expansion
- establish the annual budget
- present the budget to funding authorities
- understand the legal regulations and reporting requirements for funding
- delegate budget management to the library director and set thresholds for authorized expenditures
- ensure a financial oversight process is established and followed with appropriate thresholds, checks, and risk-mitigation practices
- ensure an annual audit or review and the filing of the organization’s Statement of Financial Information (SOFI) are accurate and on time
Provincial Reporting and Accountabilities
To ensure public accountability and financial transparency, public libraries that receive provincial grants or funding must submit three reports to the provincial government as part of the public library accountability framework. Each year BC public library boards receive letters outlining the purposes of each grant, expectations on use of those funds, and reporting deadlines. The board, through the library director, is responsible for submitting financial, written and statistical reports.
The three reports are:
- Annual Survey of BC.’s Public Libraries
- Provincial Public Library Grant Report (PLGR) — The PLGR provides an opportunity for libraries to showcase their achievements throughout the year and demonstrate how they support both local and provincial priorities.
- Statement of Financial Information (SOFI) — All British Columbia public libraries and library federations that receive provincial grants (and independent entities from local government) are required to submit an annual SOFI, as per section 2 of the Financial Information Act (FIA).
Detailed information about these reports, including instructions and deadlines, is available through the provincial website in the Reporting and Accountability section.
Public library boards are responsible for ensuring each of these reports are submitted accurately each year. In the case of the SOFI, the board chair is required to sign the report as part of the official report.
If you are not familiar with these reports, you may want to ask your board chair or library director about your board’s process for providing oversight of these submissions.
Indicators of Effective Board Performance
The following are indicators of effective board performance in financial oversight:
- The board discusses thoroughly, at a strategic governance level, the annual operating budget of the library before approving it.
- The board seeks advisement from the library director during the budget process in considering the most effective allocation of resources.
- The board receives financial reports on a regular basis that are understandable, accurate, and timely.
- The board ensures an annual audit or review and considers all recommendations made in the independent auditor’s report and management letter.
- The board focuses on policy development and implementation for financial compliance and oversight, not on day-to-day or month-to-month budget control and review.