Page 33 - C&A's Nonprofit Board Guide

PENSION COMPLIANCE RISK ANALYSIS

The U.S. Department of Labor (“DOL”) is Most organizations utilize insurance as a way
stepping up the number of audits it is performing, to mitigate risk. Too often, however, no one is
it has added new rules increasing the fiduciary reviewing the organization’s insurance policies
to determine if they are effectively mitigating risk
responsibility of plan sponsors, and the number
ADDITIONAL of employee suits of plan sponsors is on the for the organization. The Board should ensure
that a proper evaluation of the organization’s
rise. It is important for the Board to understand
the organization’s fiduciary responsibility and
insurances is being performed.
ensure compliance with DOL regulations. As
part of its responsibilities, Boards should:
EXECUTIVE COMPENSATION
BOARD RESPONSIBILITIES ► Review with its investment advisors the It is the Board’s responsibility to hire and evaluate
investment choices to determine if investments
the performance of the Chief Executive Officer,
are underperforming and if investment fees
are appropriate; and in many instances, other key members
of the management team. Formal evaluations
M ost Board members ► Have the plan benchmarked to determine if should be performed, and compensation should
fees paid by the plan are appropriate;
understand that it is
be linked to such evaluation. Furthermore, in
their responsibility to ► Meet with your plan auditors (if your plan setting executive compensation, it is important
provide fiscal and programmatic requires an audit) to determine if the plan is to perform a salary study to determine if
oversight and guidance for the in compliance with DOL regulations; and compensation is reasonable and supportable,
organization they govern; however, they are given the compensation of other similar
not always aware of some of the other areas ► Meet with your human resources staff to organizations in your marketplace.
that Board members should be involved with determine how plan compliance is being
in order to properly oversee the organization monitored. These are just some of the main issues that
they are involved in. These responsibilities should be of concern to Board members and
can be performed at the Board level, or In addition, Board members should take the time discussed at Board meetings. The key is to
through a committee of the Board, such as a to read through the plan document to familiarize understand how the organization you’re involved
compliance committee, audit committee, or ► Appointing themselves with the terms of the plan. with operates and the issues that are impacting
finance committee, as described earlier. a Medicaid/ it and its industry. This will help ensure that
Corporate Compliance Officer to oversee INTERNAL CONTROLS you are making proper decisions in helping to
CORPORATE/MEDICAID COMPLIANCE the Compliance Program; mitigate risks and concerns and help move the
Educating the organization’s staff, Board Most Boards believe that the internal control organization forward.
If your organization receives $500,000 or members, and others regarding appropriate environment is the responsibility of management.
more in Medicaid funding, it is required to behavior and compliance; While management is responsible for designing
have in place a formal Medicaid Compliance and implementing an effective control
Program. Even if you don’t receive Medicaid ► Providing staff members with the ability environment, it is the Board’s responsibility to
funding, but you receive funding from to report instances of non-compliance or ensure that the control environment is operating
other government sources, you should still fraud without fear of reciprocation; effectively. This can be accomplished by the
consider having in place a compliance ► Developing a formal risk assessment and Board reviewing controls (documentation of the
program to ensure that the organization is testing strategy; and control environment), hiring an internal auditor
properly complying with contract terms Monitoring areas of non-compliance, to test the control environment, and through
and regulations. This goes beyond a quality ► developing corrective action plans, and discussion with external auditors.
insurance function, and includes: self-reporting where necessary.

There should be regular (at least quarterly)
reporting to the Board as to the status of the
Compliance Program and findings, if any.

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