Governor roles & responsibilities
A governor is responsible for ensuring compliance through monitoring all aspects of a school’s performance, while also improving the performance of the school through strategy formulation and policy making.
The minimum governance standards for responsible persons set out by the federal government’s charity registrar, the Australian Charities and Not-for-profits Commission (ACNC) include:
- Act with reasonable care and diligence
- Act honestly in the best interests of the charity for its purposes
- Not misuse the position of responsible person
- Not to misuse information obtained in performing duties
- Disclose any actual or perceived conflict of interest
- Ensure financial affairs are managed responsibly
- Not allow a charity to operate while insolvent.
ISQ’s resources to assist board members in this area include:
- board induction manual
- board charter which outlines the key roles, responsibilities and functions of the school board.
- an introduction to governance presentation
- due diligence checklist
- delegations of authority
- operation of a school board
- Fraud and Corruption Policy
- Related Parties Policy.
Board members may be protected from liability and associated legal costs and expenses incurred in their capacity as a director through:
- indemnities provided by a school in its constitution or by a deed of indemnity granted to individual directors
- Directors and Officers (D&O) liability insurance. Schools should arrange D&O insurance for all board members, and directors should obtain a copy of the current insurance policy to be aware of the extent of coverage provided.
The duty of due care and diligence is a fiduciary responsibility which requires a director to always be honest and careful in their dealings, to inform themselves about all matters which come to the board and to make reasonable decisions which others in their situation would make. ACNC states a director can rely on the special knowledge or expertise of another responsible person, adviser or expert, providing the director adequately informs themselves and makes an independent assessment of that information.
Directors must act in the best interests of the school and not act in their own best interests or for the advantage of another person or organisation. This includes making honest decisions that further the charity’s purposes, as set out in the school’s governing documents.
A director must not use their position to gain advantage for themselves or others, or to the detriment of the school. An example of misusing position is where a director goes outside of process to ensure a company owned or controlled by a friend or relative obtains a contract that is not decided on commercial terms and means that the school pays more than it should for a good or service. Board members are required to declare any related party transactions at each board meeting if applicable.
Any information received in the role of a director must remain confidential and not be communicated outside the boardroom, unless the board agrees otherwise. The information that a director receives in fulfilling their role on the board cannot be used to gain an advantage for themselves or for others.
A governor should not be influenced by furthering a personal interest when carrying out their director duties. Directors must be given the opportunity to be aware of, and declare actual, perceived, or potential conflicts of interest. Conflicts of interests can only be declared by the conflicted person; other members of the school board cannot declare the conflict on their behalf. It is common to have a standing Register of Conflicts of Interest where the conflicts declared by directors are kept. It is also important that at the start of each meeting each director declares any conflicts of interest with respect to the business to be decided and discussed at the meeting.
Directors are to monitor the school’s financial situation and management’s use of company resources. There are four key director duties relating to finances:
- maintaining proper books and records
- financial reporting
- monitoring the organisation’s financial position
- preventing the organisation trading while insolvent.
ACNC prescribes if a responsible person reasonably suspects that the charity cannot pay all its debts when they become due, then that person should take all reasonable steps to prevent the charity from taking on more debt. Section 588G of the Corporations Act also imposes one of the most stringent duties on directors to prevent an organisation trading while it is insolvent or becoming insolvent.
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