Every board member has a role in financial oversight. Even if you don’t have financial expertise, you are still expected to maintain an adequate level of financial intelligence. This means that you need to have an understanding of the fundamental concepts, conventions and principles underlying financial statements.

Top 5 tips to help you boost your level of financial intelligence in the boardroom:

1. Develop a plan and begin the work. Start by reviewing the annual filings of TSX listed companies that you are interested in or work for.

2. Seek out a mentor or someone who has financial expertise. Ask someone you know that has financial expertise if you can spend time with them over the next 12 months, transferring knowledge and helping you understand core financial concepts.

3. Understand the basic financial concepts/principles and how to look at financial statements. CPA Canada has great document you can refer to: https://www.cpacanada.ca/en/business-and-accounting-resources/financial-and-non-financial-reporting/international-financial-reporting-standards-ifrs/publications/reading-financial-statements-what-do-i-need-to-know-faq

4. Do your financial due diligence before joining a corporate board. Review the annual audited financial statements, quarterly financials, Management, Discussion & Analysis (MD&A) and fore-casts/budgets to understand the company’s financial position. Ask yourself the following questions: Is the company solvent? Are they complying with their loan covenants? What is the company’s share-holdings structure, are their Related Party Transactions, what are the outstanding commitments? What is the status of their tax and other filing requirements? Did they receive a clean audit opinion? If not, why and is there a “going concern” note disclosure?

5. Make sure to understand reports on financial statements.

Financial statements are a formal record of the financial activities of a company over a period of time and/or the financial position of that company at a point in time. CPA Canada has issued this guide to help understand reports on financial statements and the different levels of reports (i.e., audit, review or compilation): http://ncca.co/news/understanding-reports-on-financial-statements/

Gaining financial intelligence in the boardroom takes time, focus and commitment. This investment is imperative for every board member to do so in order to make valuable contributions at the boardroom table that drive the success of a business.