Internal Control Examinations for Nonprofits

By: Doug Cashdoug cash

An internal control examination evaluates the existing internal controls over your nonprofit’s assets. Its purpose is to identify any areas of risk or vulnerability, as well as assure you of where your controls are strong. The assessment includes the following:

  • Interviews of key accounting personnel to identify important cash internal control deficiencies
  • Recommendations for corrections of any key internal control deficiencies identified during the assessment
  • Analysis of selected documents and/or data for anomalies or unusual transactions for a one- to two-month time period
  • A timely and easy-to-understand report providing internal control recommendations and any findings identified

Fraud is on the rise. The Association of Certified Fraud Examiners (ACFE) estimates the average organization loses up to five percent of its revenue to employee theft. The 2016 “ACFE Report to the Nation” indicates that nonprofits suffered a median loss from fraud of $100,000. A nonprofit can limit its exposure to fraud by eliminating as many of the existing opportunities as possible. By conducting an examination of internal control, a nonprofit takes the first step to reduce these opportunities and provide a climate of prevention and detection that promotes an honest working environment.

Any nonprofit organization can be a victim of fraud. The vast majority of organizations, no matter the size, will benefit from having an internal control examination performed. According to the ACFE, “The presence of anti-fraud controls was correlated with lower losses and quicker fraud detection.”

Identifying potential internal fraud risks is not just a matter of good stewardship. It will help your organization improve efficiency and reduce risks—financial, operational, and reputational. Eide Bailly’s Certified Fraud Examiners have the investigative techniques and technical skills needed to detect, investigate and prevent fraud. We work closely with you in a friendly, supportive manner to understand your needs and provide a thorough report to help you make confident decisions to safeguard your organization. Our Forensics staff includes Certified Fraud Examiners, Certified Public Accountants, Accredited Business Valuators, Certified Forensic Interviewers, former law enforcement professionals, and computer forensic specialists. When you work with Eide Bailly, you’ll be connected to the professionals you need to keep your nonprofit on track for success.

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