No nonprofit is immune to fraud.
Oftentimes, your “most trusted” employee will commit fraud, so it is important to always trust and verify that controls are in place to keep you working on your mission.
Here are some simple guidelines to follow to protect you and your target community:
- Good internal controls protect not only the organization, but they shield you from any false acquisitions or the appearance of misappropriation.
- The key to good internal controls is to have segregation of duties in place. Specifically, the three elements that should be separated are:
- Custody of an asset;
- Authority/authorization over asset; and
- Recording asset.
- If you are not able to properly segregate duties, you should have a compensating control in place, which generally involves more detailed reviews or oversight by yourself and the board.
- Controls can be preventative, which is preferred because they do not let a fraud/error occur. They also can be detective, which allows you to catch the fraud/error after it occurs.
If you are unsure your controls are adequate, O’Leary & Anick can provide an internal control review. O’Leary & Anick’s clients benefit by having a third party involved in the control process, which uses best practices to segregate duties and to enhance oversight. For more information, please contact Kevin O’Leary at 414-892-3215.