The CPA Desk

A Thought Leader Production by PKFTexas

Help Your Not-for-Profit Run Smoothly with Internal Controls

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s guest host and I’m here with Nicole Riley, one of our Audit Senior Managers on our Not-for-Profit team. Welcome to the Playbook Nicole.

Nicole: Hi, how’s it going?

Jen: Good. Now I’ve heard you giving advice to various non-profits and I’ve heard you emphasize internal controls and how important they are. Can you share a little bit about that?

Nicole: Well, internal controls really are all about fraud. It’s about having the right controls in place in the first place to prevent fraud from ever happening, or if you do have fraud, when you have good controls you detect it right away, so you don’t have that issue where you hear about frauds that go on for seven, eight years and steal millions. It also helps to deter fraud. So, when someone feels like you’re looking over their shoulder, they tend not to commit fraud and steal from the organization.

Jen: Now does that happen a lot with non-profits? Do you see that? Are there some common things that you see that happen more frequently than others?

Nicole: Not that we see a lot of fraud, but we do see a lot of issues with internal controls, segregation of duties being the biggest where they just don’t have the staff size to be able to split duties between different people. So, you have one person that can write checks and records the invoices and then reconciles the bank statements so they have control over all aspects.

Jen: So, then they bring in someone like us to help them put processes into place, or how would that work?

Nicole: Well, usually during an audit we always get an understanding of controls, but if they wanted to bring us in for consulting, we could really look at their controls; what’s in place, and what their weaknesses are. We have some, even just some key things where you have an executive director look at the payroll reports after they come back to make sure that everybody on the payroll report is an employee. Or, having the executive director open the bank statement and look at it every month so they can look and make sure the checks that actually went out the door and the things that got paid,

Jen: Are what’s supposed to be paid.

Nicole: Right.

Jen: Perfect. Well, that sounds great and I’m going to get you back to talk a little bit more about that next time. Does that sound good?

Nicole: That sounds great.

Jen:  Awesome.  To learn more about how we can help your not-for-profit, visit pkftexas.com/NotforProfit/. This has been another Thought Leader production brought to you by PKF Texas’ Entrepreneur’s Playbook.