What should financial parameters be determined by according to best practices?

Establishing financial parameters through the board of directors aligns with best practices because it emphasizes governance and accountability in financial decision-making. The board typically holds the ultimate authority and responsibility for an organization’s financial health and strategic direction. By having the board define financial parameters, organizations ensure that these boundaries are aligned with their overall mission, vision, and long-term objectives. This process allows for comprehensive oversight, enabling the board to consider a multitude of factors, including risk management, resource allocation, and compliance with legal and ethical standards.

In such a context, the involvement of the board fosters transparency and ensures that the financial perspective is integrated into the governance structure of the organization. It also helps establish a consistent framework for evaluating performance and making informed decisions about budgetary priorities. Engaging the board can facilitate better alignment of financial practices with public expectations and stakeholder interests.

While staff decision-making, the input of external financial advisors, and public opinion may inform discussions and bring valuable insights, they may not provide the strategic oversight and accountability that board involvement guarantees. Thus, the alignment of financial parameters with the guidance of the board of directors is a cornerstone of sound financial management practices.