The perils of bad governance

When a board of directors, senior staff, volunteers and members of a not-for-profit are marching to the same beat, an organization can do great things and win the admiration of the community at large. But when they fall out of step - when the board loses control of the ED or the organization squanders the respect of its members or volunteers, for example - things can go very wrong, very fast.

The Toronto Humane Society is a case study of a dysfunctional charity, and an excellent example of the high price an organization pays for slipshod governance. Much of the goodwill and financial support that the organization accrued has been lost among lurid stories of mismanagement, tortured animals and seized documents.

In April, the Ontario Superior Court of Justice ordered that a special general meeting of members be held on May 30th to elect an entirely new board (though previous board members can stand for reelection). The reasons for the decision can be found here. And now in preparation for this election, three organized factions of the membership are back at it, vying for control of the embattled charity. Click here for the story from the Toronto Star.

Defining the relationship between the board, staff and the members is one of the greatest challenges for a not-for-profit. And the best way to do it is with iron-clad, agreed-upon governance policies that clearly set out roles, responsibilities, processes, and limitations.

Chapter 2 - Governance in Not-for-Profit PolicyPro (NPPP) features model policies 2.01 - Board of Directors, 2.02 - Board Processes, 2.03 - Roles and Responsibilities, 2.04 - Ethics and 2.05 - Risk Management. For more information about NPPP and to try a 30-day trial, click here.

<< Top of Page

New IFRS XBRL taxonomy released

On April 30th the International Accounting Standards Committee (IASC) released a new version of the IFRS taxonomy (a translation of IFRSs into XBRL) that is consistent with both IFRSs and IFRS for Small and Medium-sized Entities (SMEs), the first time both have been integrated into a single taxonomy.

XBRL facilitates simpler and faster filing and comparison of IFRS financial data by companies, regulators, investors, analysts and other users of financial information.

Click here for more information.

The upcoming 2010-03 release of Finance and Accounting PolicyPro includes updates to all the policies in chapter 7 - Accounting and Reporting, including policies 7.01 - Use of Generally Accepted Accounting Principles and 7.08 - International Financial Reporting Standards.

<< Top of Page

Is EPR inevitable?

On Earth Day, the Ontario Minister of the Environment delivered a speech in which he stated his government´s intention to shift the entire cost of the provincial household Blue Box recycling program on to the backs of the companies that produce the recyclables (they currently pay 50 percent). Click here for the CBC.ca story.

The minister´s speech presages a new, stronger focus on extended producer responsibility (EPR) in the province´s Waste Diversion Act. EPR is a policy approach in which a producer´s responsibility, physical and/or financial, for a product is extended to the post-consumer stage of a product´s life cycle. EPR (including take-back programs, for example) shifts responsibility upstream in the product life cycle to the producer and away from municipalities, and in doing so provides incentives to producers to incorporate environmental considerations in the design of their products.

Although the cynical among us might be tempted to characterize the minister´s comments as Earth Day greenwashing, the migration to EPR across Canada has been happening for some time. In October 2009 the Canadian Council of Ministers of the Environment (CCME) agreed in principle to Canada-wide strategies for Extended Producer Responsibility and sustainable packaging.

Canadian manufacturers, importers and retailers might want to consider adding EPR to their risk management assessments in the coming year. But EPR shouldn´t be thought of as just a another burden to be borne by business and passed on to consumers. Smart organizations will also see it as an opportunity, a way to make product stewardship and EPR a cornerstone of a powerful green marketing program, and an excellent way to gain a competitive edge.

All the policies and overviews in Operations and Marketing PolicyPro have been added to the electronic version of Finance and Accounting PolicyPro (FAPP) with release 2010-01. OMPP includes 50 policies and in-depth overviews in chapters dealing with Environmental Management, Design and Development, Manufacturing and Sales and Marketing. For more information on FAPP, click here.

<< Top of Page

Ontario announces plan for partnership with NPOs

On April 22nd, the government of Ontario announced that it will develop a long term plan for its partnership with the not-for-profit sector in collaboration with the Ontario Trillium Foundation.

The government will undertake research across the province, including:

• Reviewing the structural and legislative framework within which Ontario's not-for-profit sector operates
• Exploring how to better coordinate the government´s approach to the sector
• Researching models of government-not-for-profit sector partnerships in other jurisdictions

and will complete a report containing the results of the research and recommendations later this year.

As the Minister of Citizenship and Immigration commented: "The process will explore how to better coordinate the government´s approach to the sector, in terms of policies, procedures, operational mechanisms, research and communication."

For more information, click here.

<< Top of Page

Privacy risk management

We´ve written before in Inside Internal Control about Privacy by Design (PbD), an approach developed by Dr. Ann Cavoukian, the Privacy Commissioner of Ontario, that proactively embeds privacy protection by default in the design of an organization´s practices and products.

Now the Commissioner has released a paper that discusses the integration of PbD principles into a Privacy Risk Management (PRM) framework, built on the model of ISO 31000. The paper is aimed at organizations that already have privacy and risk management capabilities in place. As Dr. Cavoukian writes: "By embedding privacy into their existing risk management framework, they will be able to manage risks associated with the protection of personal information, in much the same fashion as any other business risk."

Click here for a link to this very useful document. And click here for more Privacy by Design papers.

Confidentiality and Privacy policies are featured in all Internal Control Library publications. See policy IT 8.04 in Information Technology PolicyPro, policy NP 1.08 in Not-for-Profit PolicyPro, and policy GV 1.11 in Finance and Accounting PolicyPro.

<< Top of Page

Does your organization have a violence prevention policy?

If you´re an Ontario employer, effective June 15, 2010 you will be required by law to have a workplace violence policy in place.

Does this mean that employers in other provinces and territories are off the hook? Not necessarily, says Yosie Saint-Cyr, LL.B. in a recent post on the First Reference blog. Occupational health and safety laws in BC, Alberta, Saskatchewan, Manitoba, Nova Scotia, PEI, and Newfoundland and Labrador directly address the problem of workplace violence as a health and safety hazard. In the remaining jurisdictions workplace violence and harassment falls under the general duty clause, which requires the employer to take every precaution reasonable in the circumstances for the protection of a worker.

Want more information? First Reference recently published Workplace violence and harassment prevention: A practical guide for employers that helps employers develop policies that can be implemented in a workplace violence and harassment prevention program. Click here to order a copy. And you might also consider attending our annual Ontario Employment Law Conference on June 2nd, where experts from Stringer Brisbin Humphrey will discuss the new law in depth.

<< Top of Page

About Inside Internal Control

Editor: Colin Braithwaite, Managing Editor, Internal Control Library.

Please do not reply to this Email.

Inside Internal Control is a complimentary service published by First Reference Inc. and is sent to you monthly. Each issue provides headlines and summaries of news that affects internal controls and policies in Canada.

Please forward Inside Internal Control to your colleagues.

Please send any comments or suggestions about Inside Internal Control to the editor. For information about the Internal Control Library, click here. For more information about First Reference, including our terms of use, disclaimer, privacy policy and other legal matters, visit www.firstreference.com.

This publication is written for informational purposes only and should NOT be relied upon as legal advice or opinions. The reader should always obtain legal advice from a qualified lawyer or other qualified professional, which will be responsive to the case or circumstance of the individual. Please note that the content provided in this Bulletin or any content contained in or made available through any third party website linked to from this newsletter, is provided "as is" without representations or warranties of any kind. All representations and warranties in respect of Content or Third Party Content, express or implied, including, without limitation any representations to warranties or conditions regarding accuracy, timeliness, completeness, non-infringement, merchantability or fitness for any particular purpose are hereby disclaimed.

Copyright ©2010, First Reference Inc. All Rights Reserved.