Consent agenda supports governance

Today I received a couple questions that are a day-to-day, okay perhaps month-to-month issues in governance. An auditor raised an issue that the Board’s minutes did not show that the Board reviewed two typical pieces of business.

For the non-credit union reader, the Federal Credit Union Act and many state acts specify that the Board set loan rates. We will leave alone at this time that this auditor had written up something that this organization practiced during several previous audit periods.

Essentially, the first question was how can we satisfy the audit recommendation and carry on our business in the way we think proper? And, can a review of delinquent loans appear on a consent agenda? Non-credit union readers can benefit from the following discourse by substituting any high-level former Board decision, or by substituting any monitoring by the board of a substantial operational area.

Here I focus on the organization’s need to make operational decisions at the right level and by the right people in the organization. We are not here considering strict compliance with governing documents (laws, regs, policies). Consent agenda can facilitate decisions appropriately delegated by a board yet requiring action by the board. For example, if required to act on loan rates, a credit union Board can do so without debate or discussion. The Board delegates that duty to a competent executive. The executive can implement the decisions right away. The decisions receive the official blessing of the Board when it approves the consent agenda. For further information of consent agendas, see my Model Rules of Order, at http://www.danclark.com/articles/index.shtml.

Generally, there is no requirement for a Board to approve a report so, let's not put any on the consent agenda. For example, I know of no requirement that a credit union board see and review a detailed delinquency list. While providing detailed lists has been a long-time tradition and may have at times proved valuable, detail was never required. When a credit union was very small, the Board members might have known people on the list; but that's rare today.

A credit union Board may have adequately addressed its fiduciary responsibilities regarding delinquencies (substiute one of your non-profit's traditional health checks) when: (1) the summary of delinquency is a part of monthly reports (2) reports are listed as attachments to the meeting agenda evidencing distribution to the directors (3) there is evidence (trends charts, management narratives) that the board is aware of the status of delinquency (any key performance measure), knows the normal range, and directors discuss and inquire of management when it's out of nominal range.

I look forward to reading the comments of readers on this piece.