Financial Management & Oversight Flashcards
7 cards from real CED practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Management & Oversight flashcards as text
A nonprofit's board treasurer notices that actual program expenses are 25% over budget midyear. What is the MOST appropriate immediate action?
Answer: Request a variance analysis from the CFO and convene a finance committee review
A variance analysis identifies the cause of the overage and informs corrective action before the finance committee decides next steps.
Which financial ratio best measures an organization's ability to meet short-term obligations without selling long-term assets?
Answer: Current ratio
The current ratio (current assets ÷ current liabilities) measures short-term liquidity without relying on long-term asset sales.
An executive director receives a restricted grant for a specific program. Which practice ensures proper stewardship of those funds?
Answer: Track the grant in a separate fund code and report expenditures to the funder per grant terms
Restricted funds must be tracked separately and spent according to funder stipulations, with reporting demonstrating compliance.
What is the primary purpose of an audit committee in a nonprofit organization?
Answer: To oversee the integrity of financial reporting, internal controls, and the external audit process
The audit committee provides independent oversight of financial reporting integrity and the relationship with external auditors.
A Certified Executive Director is reviewing the statement of cash flows. Which section reveals whether the organization can sustain operations from its core mission activities?
Answer: Operating activities
Operating activities show cash generated or used by the organization's primary mission-related programs and administrative functions.
Which internal control is MOST effective at preventing check fraud in a small nonprofit?
Answer: Requiring dual signatures on checks above a defined threshold
Dual signatures create a two-person authorization requirement that deters and detects fraudulent disbursements.
When preparing a multi-year capital campaign budget, which cost is most commonly underestimated by executive directors?
Answer: Campaign staff salaries and benefits over the full campaign duration
Multi-year staff costs, including benefits and potential salary increases, often constitute the largest and most underestimated component of capital campaign expenses.