Fiduciary Duties Matter
by Autrey James
To achieve long term success in our post, it is critical to ensure that our post finances are transparent to all our members, that we use generally accepted accounting practices to ensure continuity in the post financial records and we always meet our fiduciary obligations to the post corporation. The fiduciary duty encompasses three specific obligations or duties that officers owe the corporation. Fiduciary Duties Matter and they include:
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- The duty of care
- The duty of loyalty, and
- The duty to avoid self-dealing transactions
Duty of Care
In the case of post finances, the duty of care means that you follow the rules of the corporation which are laid out in the Constitution, bylaws and Articles of Incorporation. However even if the rules don’t specify in the case of operating a business the use of generally accepted accounting practices can be viewed as the minimum standard of care in your post. If you are not familiar with the standard, I refer you to page 13 of the “Post Operations Manual and Post Building Guide”, where you will find a good start on how to lay out your post accounts in a way that is easy to understand.
Duty of Loyalty
The duty of loyalty means that you do not put your own interest ahead of what’s best for the post. It may be easy for the individual keeping post accounts to simply balance the checking account and call it a day. However, this does not give the post members a true accounting of assets and liabilities or the financial stability of the post. Therefore, it is in the best interest of the post to create and adopt a budget and stick to the budget or modify it if needed.
The Duty to Avoid Self-Dealing Transactions
The final piece of the puzzle is to avoid self-dealing transactions. A self-dealing transaction in one in which a decision maker stands to benefit from usually financially. Make sure that every expenditure is authorized according to the guidelines in the post constitution and bylaws. Make sure that prior to authorizing an expenditure that the decision makers are fully informed about details of any proposed expenditures, and that decision maker who is in the position to benefit from the transaction recuses him or herself from the decision involving the transaction.
Hopefully if you keep these duties in mind it will make your service to veterans, the community, state, and our nation a little easier and will help to ensure your post succeeds over the next 100 years.
Author: caLegion Contributor
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