Page 286 - Washington Nonprofit Handbook 2018 Edition

• Standards of conduct are documented in an employee manual and in
Board policies.

B. Governance Policies

Instituting governance policies that prevent the opportunity for an individual
to make a decision that may be influenced by personal interest, is central to
creating an internal control system. Here is a list of suggested policies:

• Executive Compensation Policy – This policy describes the process of
setting executive compensation. It is important to ensure there is
integrity to this process to avoid the conflict of senior management
making decisions about their own compensation. (See Chapter 68 on
Setting Executive Compensation.)

• Conflict of Interest Policy – This policy describes the process of
managing conflicts of interest for board members and key employees.

• Record Retention Policy – This policy describes the process of
determining when to destroy organizational records. Managing
financial records effectively is essential to proving or disproving fraud.

• Whistleblower Policy – This policy describes the process of employees’
ability to report potential wrongdoing by others involved in the
organization (supervisors, management, other employees, board
members) without fear of retaliation.

• Gift Acceptance Policy – This policy describes the process and criteria
of determining whether the organization should accept a gift.

• Investment & Spending Policies – These financial policies describe
processes and criteria in making decisions on investment or spending.

2. Risk Assessment: Risk is defined as the possibility that an
event will occur and adversely affect the achievement of objectives. Risk
assessment involves a dynamic and iterative process for identifying and
assessing risks to the achievement of objectives. To assess risk accurately,
the objective being accessed must be specific.

WASHINGTON NONPROFIT HANDBOOK -275- 2018