The AICPA Auditing Standards Board (ASB) issued Statement on Auditing Standards (SAS) No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement.
Bylaws are the legally binding rules that outline how the board of a nonprofit will operate. While they are unique to each organization, bylaws generally have a similar structure and use. Because the amendment of this document usually requires a super-majority vote of the board or in a formal membership organization the members may need to approve changes to the bylaws, it is not practical to include all detailed guidelines in this document. A separate set of policies and procedures will clarify further how decisions are made.
One of the legal obligations for board members is a duty of loyalty. One aspect of this duty expects board members to keep confidential issues confidential.
Every nonprofit needs operational guidelines for staff and the board. The purpose of the policies is to serve as a guide for actions and behavior and as a reference for ethical decision making.
Not every board needs an investment committee. If the organization has sizable assets, an endowment, and/or a planned giving program, it probably should form an investment committee.
