1. An organization’s internal controls monitor, measure, and direct against risk and fraud. Established written policies and procedures guide behaviors and outcomes and should be periodically reviewed to ensure everything is in order.
  2. Set clear separation of duties that ensure no one person is able to initiate, approve, record, and reconcile a transaction. At minimum, two people are involved in financial functions and tasks, while a stronger practice is to separate duties across at least three people.
  3. Safeguards should be in place to identify possible fraud as well as ways to keep the organization and its participants from committing fraud.
  4. Board members are responsible for fulfilling three fiduciary duties: Duty of Care, Duty of Loyalty, and Duty of Obedience.

Here are some questions to think about...

  • Does your nonprofit have any financial oversight concerns that could negatively affect the organization’s work or reputation in the community?
  • Is your nonprofit performing a regular risk assessment that includes considerations for business, operational, and fraud risks? For the nonprofit’s size and complexity, is your risk assessment approach lacking, too much, or just right?

Next steps...

Chapter Materials

Oversight Checklist

Use this checklist to assess areas of financial oversight in your organization.
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