Why All Non-Profits Need Internal Controls – Regardless of Size
Internal controls make up the backbone of any non-profit – without reviewing and testing them, the organization’s mobility is going to be limited. Yet establishing a solid set of internal controls can be exceptionally challenging, even for larger organizations – and many non-profits don’t even know where to start: Do we have segregation of duties and accounting processes? Is our information technology infrastructure secure? Does our board governance align with our staff and mission? What other internal controls do we need? The questions for non-profit leaders begin to stack up quickly.
In the latest episode of Thrive Non-Profit Success Stories video series, top non-profit pros Patrick Frambes and Christa Woelfel talk internal controls, and how helping non-profits identify and implement these controls are making our clients’ lives easier, every day.
For many organizations, going through a financial review or audit may seem like a rigorous enough examination of the organization’s financial wellbeing. After all, the audit is enough to apply for a loan or additional funding, so why should any organization invest in additional internal testing?
The answer is simple. As technology and business strategy changes, so does risk. In today’s interconnected world, it becomes more important than ever to evaluate and test your internal controls regularly to ensure you’re operating effectively, and your reporting is reliable.
Outside of the scope of a financial statement audit, our non-profit team works with clients to really dig deeper on certain transactions, and make sure that things are accounted for properly and accurately supported. Our goal is to successfully provide management with measurable assurances that their facilities are operating effectively and efficiently.
Another control non-profit leaders can use to lower the odds of workplace theft is ensuring job duties are well segregated. Segregation of duties often gets murky when you’ve changed staff, made upgrades to software, or started using different technology. When these types of changes happen, the original segregation deteriorates rapidly, often without anyone really realizing it. An internal review can examine your business process, match processes with job descriptions, and ensure that software settings only allow employees to complete the tasks necessary to perform their jobs.
Smaller organizations with limited accounting staff sometimes need to get event more creative. Fortunately, the answer is not always creating more work for somebody or breaking one complex role into several. Smaller non-profits can often assign somebody else outside of the accounting department to help provide that segregation of duties and security over their assets.
For non-profits of all sizes, our experienced and dedicated team of professionals helps you build, test, and improve your internal controls with an:
- Internal control review. Starting with identifying the risks you face, we’ll evaluate the controls you have in place via interviews with management and staff, site visits and observations. You’ll receive a findings report that includes recommendations and best practices to help your organization thrive.
- Internal control testing. A follow-up to an internal control review, this is a hard look at all or select risk areas. By selecting a sample of documents and transactions, we’ll test for adherence to policies and procedures to gauge the effectiveness of the controls.
Watch a brief Thrive Non-Profit Success Story to see how Barnes Dennig used internal controls to provide time-saving options to a small non-profit with limited resources – and helped them build a strong foundation for growth.
If you’re concerned about your risk, then you should test and improve your internal controls. Contact us to see how we can help you identify potential risk and implement controls to mitigate that risk – and build a better, brighter future.