Why strengthen your nonprofit’s internal controls around financial management?
To prevent fraud and mistakes.
Protect funding and nonprofit status.
And assure board members, donors, and even auditors that your nonprofit is managing its resources – and their donations -- efficiently.
If you think your nonprofit organization can get by without strong internal controls, consider the following:
Internal Controls Reduce Fraud Risk
There are continuous reports of fraudulent activity at nonprofits, who are especially vulnerable due to a tendency towards lower oversight and a more "ad-hoc" operating environment - often consisting of volunteers with higher turnover.
Internal Controls Protect Funding and Nonprofit Status
Failure to comply with current legislation can have significant consequences and could result in the loss of your non-profit status. In addition, more emphasis is being placed on the tighter scrutiny defined under the Sarbanes-Oxley Act of 2002 (SOX), enacted for public companies, when reviewing the internal controls and operational procedures of any type of business entity.
Internal Controls Streamline Your Audit
Auditors are reviewing your internal controls whether you realize this or not, and being prepared in advance can save significant time and effort, as well as improve your overall audit performance. A little proactive effort in this area can create savings that puts money back where it belongs - in your charitable organization.
Internal Controls Instill Confidence
Having strong internal controls sends a message of organizational strength to your employees, volunteers, board members, and donors. You’re telling stakeholders, “We take our financial activities – and the time and money you donate – seriously.”