People who are trustworthy want to insure that there is no chance that anyone can accuse us of impropriety. Also, we want to insure that our employees, volunteers and donors are never put in a situation that might compromise their integrity. That’s why we need to be extra careful that we have proper controls on all our organization's money and assets.
The importance of a good set of internal controls cannot be emphasized enough as a method for protecting the organization’s finances. Several Chicago based arts organizations have been set back due to employee theft or embezzlement. Specific concerns to consider in creating internal controls include:
| | » | Creating a written set of documents which describes your internal controls in detail. |
| » | Periodically reviewing the internal control policies and update when needed. |
| » | Requiring all employees to take a week's vacation each year as this greatly helps uncover any fraudulent activity. |
| » | Cross-training all employee job duties to provide coverage when employees are sick or on vacation. This also helps to uncover fraudulent activity. |
| » | Performing background checks before hiring new employees. |
| » | Separating accounting duties. Use dual control in job functions, such as having one person prepare check payments while another signs the checks and reviews vendor invoices. |
| » | Asking your outside accountant to perform unannounced spot audits. |
| » | Thoroughly investigating your outside accountant, just as you would hire a new employee. |
| » | Backing up your computer system regularly. |
| » | Using qualified, trained and trustworthy employees to monitor the cash-related procedures. |
The Basics
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