Small charities usually cannot afford enough staff to put in place great internal controls. If you want a few ideas on how to make modest improvements at low cost, Charles Hall suggests How to Lessen Segregation of Duties Problems in Two Easy Steps.
(Cross post from my other blog, Nonprofit Update.)
Second set of eyes on bank statements
First idea is to have someone other than the bookkeeper look at the bank statements on a regular basis. This doesn’t mean redoing the reconciliation. Merely looking at the statement for unusual or weird or odd items is sufficient. What this does is expose the activity on the statement to another person.
This is a superb way to improve internal controls when there aren’t enough people to split responsibilities. I frequently recommend this idea to my clients.
Check out the article for more details.
Small scope surprise audits
Second idea is surprise audits. These are not be a full-blown audit but a very small spot check of one specific issue.
Perhaps it could be counting the petty cash. Perhaps it could be re-performing one must bank reconciliation. Perhaps it could be looking at the clear checks for one month watching for proper signatures and appropriate supporting documentation.
This might need to be contracted out to your external auditor or a CPA who is a friend of the ministry.
Check out the article for a deeper explanation.
Either of the steps would be a big improvement in the internal control environment and would have surprisingly low cost in terms of time and effort.