Eight governance checks every SACCO and MFI board should run

Most boards believe they govern well. That belief survives until a regulator asks for a document. These eight checks take an afternoon, and each one ends in something you either have or you do not.

1. Can every director produce a fit-and-proper file?

Not a declaration that they are suitable, but the form, the qualifications and the background check the regulator requires. If the file is missing for one director, the whole board is exposed, because composition is the first thing an inspection tests.

2. When did the board last set a risk appetite in numbers?

A statement that the institution is prudent is not a risk appetite. The test is whether there is a written limit for non-performing loans, liquidity and capital, whether the board sees those numbers monthly, and what happens when a limit is breached. Most institutions have the policy and none of the tracking.

3. Is there a live conflict of interest register?

And does it show recusals? A register that lists interests but records no recusals means either that nobody has a conflict, which is unlikely, or that the board is not using it. This is one of the fastest findings in any governance review.

4. Have all directors been trained on AML in the last year?

Not the staff. The directors. Anti-money laundering accountability sits with the board, and regulators increasingly ask for the training certificates rather than the policy.

5. Does the supervisory committee report to members or to the board?

This is the most underused control in the sector. Where the committee has genuine access to internal audit findings and reports to the members, it finds problems a year before an external auditor will. Where it reports to the board it is meant to supervise, it supervises nothing.

6. How many of the last four meetings were about strategy or risk?

Read the agendas. If most of the time went to approvals and updates, the board is administering, not governing. The number is easy to calculate and uncomfortable to see.

7. Do the minutes record any disagreement?

A year of unanimous minutes is not evidence of harmony. It is evidence that nobody challenged anything. A functioning board has at least one instance of constructive dissent in most meetings, and the minutes should show it.

8. Were the last three years of audited accounts filed on time?

And with a regulator-approved auditor. Late filing is a governance symptom, not an administrative one, and funders read it that way.

What to do with the answers

Eight checks is not a score, but a board that answers no to three or more of them has a problem it can address before an inspection does. The scorecard on this site weights these dimensions and returns a number, which is more useful for a board minutes record.