Two years ago, the board at Hide Lake School District hired Superintendent Mona Henderson to steer the district out of a budget deficit. Henderson introduced strict budgeting protocols, taking full control of the process and presenting recommendations for board approval. The board typically accepted her proposals with minimal discussion, believing this approach would avoid past financial missteps.

However, a newly elected board member raised concerns, questioning whether the board was relinquishing its obligation to oversee the district’s finances. She argued that rubber-stamping the superintendent’s decisions without deeper engagement might compromise their role as stewards of the district’s financial health. The board president responded cautiously, recalling how a lack of financial expertise among board members had contributed to previous challenges.

This scenario underscores a key point: while administrators like superintendents and their teams bring valuable expertise, the financial stewardship of public entities is a shared responsibility. Governing board members must actively participate in financial oversight, working in partnership with professionals to ensure sound decision-making.

The balance between trusting expert advice and fulfilling fiduciary responsibilities is essential for maintaining the financial health of the organizations they serve.

However, school board members and other elected or appointed governance boards are, for the most part, lay people. They come from different professions and backgrounds – their diversity represents their communities and their interest. Budgeting and other financial management may or may not be among their skill sets.

Why your board needs to understand the finances

 of school board financial deliberations by Georgetown University’s Edunomics Lab revealed that many district budget decisions were on autopilot. Many board members did not ask questions.

various financial decisions were approved via consent agenda

 (which involves approval of numerous items bundled under a single vote with no discussion, typically done for expediency) and some budgetary items were placed on the consent agenda,” according to the study.

Governing boards must understand how their budget works, as well as how 

 to meet their goals. Without this understanding and oversight, board members could miss spending that may be working against the organizations’ overall goals. Worse, they may be overlooking waste or even fraud in the district or organization.

As Dr Chad Bledsoe, President of Montgomery Community College points out,

"The term financial oversight and, by default, risk oversight talks to the idea of governance to ensure that the institution is maintaining fiscal responsibility, that the resources are going where they're supposed to, and that we're meeting the needs of the community by default our programs. The board has the responsibility of ensuring that the institution is meeting its mission, i.e. serving the educational needs of the community. And that can't be done if there is not adequate oversight of financial resources."

District or organization staff should use accurate accounting practices. It’s the board’s responsibility to regularly review financial reports, and members should be able to ask knowledgeable questions.

Frequent financial reports assist board members in addressing issues while problems are still small. The financial reports should be comprehensive and easy to understand.

At the minimum, board directors should become proficient at reading these 

: the balance sheet, the income statement and the cash flow statement.

 provides a quick glance at the district or organization’s current financial condition. The balance sheets should be presented in a standard format that is easy to compare with previous balance sheets. The sheet lists assets first and then liabilities.

 shows revenues for a specific accounting period. This statement provides a detailed breakdown of expenditures. The report should include figures for depreciation, taxes, interest earned or paid, and other non-operating revenues and expenses.

 shows a pattern of incoming funds and outgoing funds to demonstrate changes in the amount of money the company has in hand at any one juncture. The cash flow statement typically has three sections. The first report shows changes due to operating activities. The second report shows the effect of investment activities, such as changes due to purchasing equipment or asset sales. The third report shows cash on hand.

4 tips for boards for improving financial oversight

Here are four simple ways to strengthen your board’s ability to oversee finances:

Hold mandatory financial training for board members. It’s important the board receives the training together so they can ask questions about the process. Engage financial experts, the board’s legal counsel or an outside governance consultant, and make sure that the training is ongoing.

Require that financial reporting is clear and concise and easily accessible, so board members understand the budget and financial information. This will help members to feel confident about making decisions.

Review financial reports regularly at monthly board meetings or work sessions. Don’t wait until the budget development season starts.

Foster a culture of financial responsibility by setting clear goals aligned with the long-term educational goals of the district, holding regular audits, forecasting future needs and creating contingency plans for potential financial challenges.

Creating an ethical culture has a role in oversight

All boards have a code of ethics that describes and promotes ethical behavior among board members. Board directors must emulate the culture in word and deed.

Many boards don’t spend enough time promoting 

, even though they agree that culture is a key driver of ethical behavior. This is especially true when it comes to accurate financial reporting. Some boards schedule dedicated time at meetings or retreats to focus on developing an ethical board culture.

While board members are willing to accept the challenge of overseeing ethics and compliance matters, they're often unsure about what questions to ask and what information they should be looking for.

Developing strategies for ethical behavior and communicating them is a skill they can develop along with an understanding of finances. Many directors need additional training on culture and risk management.

A red flag may be nothing more than an issue that makes a board director uncomfortable, or that doesn't sit well with them. They should be quick to act on past, present or potential areas of fraud.

Addressing issues of ethics is a sensitive area and one that makes people uncomfortable. It's best to deal with issues up front rather than risk a more serious situation down the line.

Ethics and compliance don’t have to feel overwhelming. In our guide we break it all down: why ethics oversight matters plus steps to building stronger governance strategy. 

Navigating ethics for your board

Budgeting and finances can be difficult to tackle, especially for new board members. 

 offers several robust features that can significantly enhance financial oversight for publicly elected boards.

: This tool simplifies the policy lifecycle, from creation to adoption and publishing. It ensures that financial policies and procedures are well-documented, accessible and transparent. It ensures that all financial policies are up-to-date and easily accessible to board members and the public.

: This feature facilitates the management of multiple governing bodies and committees, ensuring that financial discussions and decisions are well-organized and transparent. It keeps the financial oversight process structured and accountable.

: Diligent Community enhances transparency by allowing the livestreaming of public meetings to the public site. Videos can be embedded alongside agendas and minutes, providing the public with real-time access to financial discussions. This fosters trust and engagement by keeping the community informed about financial decisions and processes.

: The platform ensures the integrity of financial data through industry-leading security protocols. It includes customizable user permissions, robust access controls, multi-factor authentication, single sign-on, strict password requirements and annual third-party penetration testing. These measures protect sensitive financial information from unauthorized access and ensure that financial data remains secure and reliable.

Find out how Diligent Community can help your board by requesting a 

Key steps for public boards for building financial confidence for oversight

Director outlook improves slightly in May amid continued headwinds

After a 30 percent decline in March, directors’ rating of business conditions in the U.S. retreated another 5 percent in May, according the 128 U.S. public company board members polled May 12-14 as part of this month's Director Confidence Index, conducted in partnership between Diligent Institute and 

The Index, which measures directors’ confidence in the current business environment, is now down to 4.4, on a scale where 1 is Poor and 10 is Excellent, from 4.7 in March and 6.7 at the start of the year.

Directors’ expectations for what those conditions will be 12 months from now, however, improved slightly in our May polling, clawing back 4 percent of the previous quarter’s 33 percent drop. While a small proportion, we captured a similar uptick in optimism among CEOs in the 

This month’s forecast highlights a potential 9 percent improvement in the business landscape 12 months out, according to our director survey—an improvement the board members polled attribute to a likely positive resolution to the current trade negotiations.

“Government efficiency and fair trade will ultimately improve economic outlook at a macro level,” said Phil Garfinkle, chair of the WidePoint board, noting however that some industries may nevertheless “stumble as they navigate the new horizon.”

Some directors added that the strength of the U.S. economy should also counterbalance the uncertainty surrounding tariffs. “A lot of noise currently with unknowns, but fundamentals are sound,” said one director, echoing others.

As a result, 40 percent expect business conditions will continue to improve over the coming months. That proportion is up from 36 percent last quarter. Perhaps even more telling is that the proportion of directors who forecast things will deteriorate further in the coming months declined by nearly half in May, to 21 percent from 41 percent in March.

“We need to get through the short-term tariff overhang; underlying business activity will strengthen as uncertainty lessens,” said one director.

“The policy transitions underway will be clearer [by this time next year]—and many will contribute to stronger forecast,” added another director who forecasts growth and improvement over the coming months.

Still, 57 percent continue to expect a recession within the next six months—a situation several called “unavoidable."

Overall, 48 percent say despite the uncertainty in the current environment, they remain focused on growth this year, though 36 percent said they are also keeping a close eye on risk mitigation through reforecasting and scenario planning.

More specifically, 39 percent said they are working on diversifying their supply chain and/or revising their pricing model, the two items they say have been the most impacted by recent changes to trade policies.

When asked how all of this is expected to impact companies’ bottom lines, directors shared their forecasts:

65 percent forecast increases in revenue in 2025, down from 69 percent in March.

59 percent forecast profit growth this year, down from 69 percent.

41 percent plan to increase capital expenditures in the months ahead, up from 32 percent in March.

Director Confidence Index: May 2025

Our AI Fact Sheet is your go-to resource for the latest research and insights from Diligent Institute on artificial intelligence (AI)integration and board oversight. Updated quarterly.

Artificial intelligence (AI) is transforming how companies operate, presenting both tremendous opportunities and new challenges for boards and leadership teams. As rapid advancement requires proactive oversight, Diligent Institute’s latest research provides a snapshot of how organizations and their boards are responding—and what actions they should consider next.

See below for a recap of some survey findings from the Diligent Institute on how AI is being used at different organizations and how the board is thinking about AI integration.

: An annual survey of U.S. public company directors conducted in partnership with Corporate Board Member and FTI Consulting.

42% of directors cite optimizing operations and enhancing workforce productivity as the biggest opportunities of incorporating generative AI into their businesses.

32% of directors identify the lack of knowledge and capabilities among leadership as the biggest risk in using generative AI.

80% of public company directors report their company has taken some sort of action regarding rapid changes in AI development and deployment.

44% of companies have incorporated AI into one or more areas of their business, including products and services.

: A quarterly survey of directors and GCs conducted in partnership with Corporate Board Member.

60% of directors said their GC provides minimal to no support to the board in its oversight of AI.

AI Insights from the Corporate Director Podcast

We also feature leaders in AI and governance, risk and compliance on our biweekly podcast! Below, you’ll find some key tips from our recent guests on AI integration.

Key quote: “I think it's probably 3 to 5 years before it would actually be a violation of our duties as General Counsel not to use A.I. The level of discourse will improve because we will see outstanding board texts prepared with the help of AI. You'll see real-time dashboards instead of a businessperson spending all night doing it.”—Cecilia Ziniti, Founder and CEO, GC AI

Incorporating gen AI into business strategy

Key quote: “A robust AI governance framework is crucial. This includes AI ethics guidelines, continuous risk assessment, data privacy compliance, transparency protocols, human oversight, and scenario testing to align AI investments with business objectives while managing risks." —Sophia Velastegui, AI Business Leader, Director and Committee Chair, BlackLine, Former GM of AI Products and Chief AI Officer, Microsoft

Key quote: “The pace of change with AI remarkably rapid. We're now entering the era of autonomous agentic AI, and that really emphasizes the need for directors to obtain ongoing education. You can't oversee something you don't understand. Keep an eye on the regulatory landscape. It's evolving, it's fragmented, and this really affects how and where a company may be able to use generative AI.”—Claudia Allen, Senior Advisor, KPMG Board Leadership Center

Additional resources from Diligent Institute

: This report, created with the Institute of Directors, guides you through leveraging AI responsibly. Based on expert insights, you'll understand open vs. closed systems, protect your data, upskill talent in AI engineering and leadership, ensure transparency and governance, and integrate AI effectively while mitigating risks.

"AI isn’t a luxury for big corporations only; it’s an essential tool for small businesses." —Rob Noble, Chair at The Webinar Vet, MBA-IT and Founder of Fidem Consulting

“Data privacy and security are critical, especially when it comes to AI. Companies need to ensure all policies and protocols are locked down.” —Craig Bentley, Co-Founder of Ignite AI Partners and Branch Chair of the IoD

"Maintaining a diverse team can foster innovation and reduce the risk of groupthink, which is vital for successful AI adoption.”—Pauline Norstrom, Founder and CEO of Anekanta AI

AI is no longer an emerging issue on the periphery—it is a board-level priority demanding deliberate action. Directors who prioritize education, effective governance, and responsible adoption can help their organizations harness AI’s benefits while mitigating risks. Explore Diligent Institute’s resources for deeper guidance and real-world case studies on AI oversight.

Diligent

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Key steps for public boards for building financial confidence for oversight

Director Confidence Index: May 2025

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