The course is divided into five sections, which build that foundational literacy brick-by-brick:
Financial Literacy: A Director's Duty—Learn why every director is expected to know the financial basics as a legal and practical matter—and how that knowledge provides an opportunity.
Financial Statements: A Refresher—Cement your understanding of balance sheets, income statements, and cash flow statements, and learn how to begin analyzing them in your role as a director.
Financial Basics for the Oversight of Strategy and Business—This is a primer on how to apply what you learn from the financial statements in the boardroom, with an emphasis on four areas: asset management, profitability, cash flow management, and raising capital. This section covers the key ratios and financial analysis that every director needs to know how to apply, no matter whether your organization is large or small or whether it is public, private, or nonprofit.
Financial Basics for the Oversight of Disclosure and Securities Compliance—This section focuses on basic financial issues of high concern for publicly traded companies (or companies about to go public). For those companies, directors must also be cognizant of the expectations of equity markets, stakeholders, and regulators and how they will view the company's financial statements.
Financial Basics and Auditing—This final section gives you a glimpse ahead into more advanced matters of corporate finance and acquaints you with the role of auditors and the board's audit committee.
Every section of the course includes video commentary from Michael Pocalyko; Pocalyko is a director and one of NACD's primary thought leaders on accounting, finance, and investigations.
The course also suggests questions that directors may want to ask management; includes links to many additional tools and resources that you may find useful; and offers opportunities to benchmark or reflect on your—and your organization's—financial knowledge and practices.
This course was produced during the summer of 2020, amid the COVID-19 crisis and a resulting economic downturn.
Who Should Take This Course?
This online course is available to all members, but it will be especially relevant to these audiences:
Where This Course Fits With Other NACD Resources
NACD anticipates that members will take this course after they have completed our Director Professionalism® course (live or virtually), which includes a brief introduction to finance. This course should provide those members with greater fluency in how to read, interpret, and oversee the three most common forms of corporate financial statements.
If you would like to dig deeper into how to read and analyze financial statements, you may also wish to read the NACD Handbook, Getting Behind the Numbers. You can access that resource from links within this course.
Unless you are an accountant already or have extensive experience as a financial expert, NACD recommends that you complete this course before you move along to more advanced learning on overseeing corporate finance.
After completing this course, among other things, you should be able to do the following:
Recall specific examples of how the practical duties of a board member, existing laws, or financial market policies mandate that directors attain a sufficient level of financial literacy.
Identify the three principal financial statements and give examples of the line items within them.
Recall several ratios and other common standards that may be used to analyze information in the financial statements.
Categorize financial ratios by the analytical purpose to which they are most appropriately applied.
Identify common ways that corporate financial data may affect the expectations of shareholders and other stakeholders.
Recognize the typical roles of board committees in financial oversight.
At the end of the course, you will be directed to take a short exam based on these learning objectives. You must pass that exam to earn credit from NACD for completing the course.
It will take you between 2 and 3 hours to complete the course, although you do not need to finish the course in a single sitting. Rather, when you return, the course will resume where you last left off.