A governing board approves budgets but does not monitor financial performance. What governance failure occurred?

• A. Lack of fiduciary oversight
• B. Oversight of quality and outcomes
• C. Duty of loyalty
• D. Strategic inertia

Answer: (A)

Lack of fiduciary oversight is the issue here. Governing boards have a duty to guard the organization’s assets and ensure responsible financial stewardship, which means more than just approving a budget. They should actively monitor actual financial performance, compare it to the budget, review financial statements and forecasts, assess variances, and demand explanations and corrective actions when needed. Without this ongoing oversight, resources can be misused or squandered, risks go unchecked, and accountability for financial results is weakened.

The other options don’t fit as well. Oversight of quality and outcomes focuses on program effectiveness and results, not finances. Duty of loyalty relates to avoiding conflicts of interest and acting in the organization’s best interests, which isn’t specifically about monitoring financial performance. Strategic inertia describes failing to adapt strategy, not the board’s duty to watch financial health and hold management accountable for financial results.