Internal Controls - Self Assesment Checklist.docx
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Internal Financial Controls for Charities.pdf
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Internal controls are of course essential to have in any organisation and often relate not just to money but also resources as well.
Accountants need to ensure internal controls are effective and uncomplicated other wise they will not be followed. It is unrealistic to have a control which requires five trustees to sign a cheque. However there is no control in place if only one person is authorised to sign all cheques. Finding the right balance can be difficult.
A charity could have completely sound controls in place, but because they are awkward to complete in practice and don't really meet the needs of the charity the control's are not followed. The staff who will be using the controls are often the best knowledge sources to work with to create the best internal control systems.
Make sure your controls are strong enough to withstand external scrutiny at the same time as thinking of the people using the controls. The people who are actually implementing the controls will be disheartened and unenthusiastic if the system seems to be working against them. Even if the staff don't ignore the control completely they will become unmotivated which makes people more prone to making mistakes.
Supporting internal controls
Your whole organisation must support the Internal Controls that an accountant puts in place. If even a small part of the organisation dose not support them this can have a very damaging affect. make sure the account you are using to create your internal controls understands the needs of your organisation and staff.
If ,as an example, one internal control is to only collect change in plastic donation boxes to prevent people using pockets or caps (highly unprofessional). You must provide the plastic donation boxes. Other wise it will end up being collected in caps and pockets making internal control pointless.
INTERNAL CONTROLS - Threats
Check the suppliers website make sure it uses a sensible domain name. See if you can find anybody else using that particular supplier (maybe in a forum or on a Facebook page). Confidence can sometimes be placed to easily in suppliers and partners. Below are some ways you can make sure that your suppliers and the people you work with are reliable and trustworthy.
Have different members of staff research the supplier separately. Different people approach this kind of task in different ways so having a second opinion can be very useful. With Partners that you intend to work with, make sure they hold the same values as your non profit organisation. Also ensure you find out their track record before working with them. There is a surprising amount of information available on the web. Use it!
Ensuring charity money is well protected can be difficult especially in small charities. The best way is to split roles up. For example, always make sure one person prepares the gift aid return and another checks the return and submits it. This makes it much more difficult for either person to commit fraud and also helps prevent errors.
In small charities this may not always be possible but try to ensure roles are regularly shared and try to avoid a person becoming isolated or protective over there role. The best way to ensure internal controls are implemented and successful is to build your organization on ethical principles in relation to finances. Treating suppliers well, making payments promptly and treating staff fairly are all ways a charity can be ethical.