Internal controls when you are very small

CKB works with some very small nonprofits. Very small as in there is one employee and Cathy. Even if—perhaps especially if—your org is super-wee, you need to have as many internal controls in place as possible to keep things from going haywire. An internal control is a process for handling money that helps protect your organization from fraud, theft, abuse, and other bad things. Blue Avocado, an excellent site for nonprofits that’s included on our Links page,  offers the following thoughts on how teeny-tiny organizations can maintain basic internal controls:

  1. Set the control environment (make sure people know there are policies that must be followed).
  2. Define clearly who is responsible for what.
  3. Physical controls (lock it up).
  4. Always have two people count cash.
  5. Reconcile your bank statements!

Read a detailed explanation of each point, plus additional notes on payroll and checks, from Carl Ho at Blue Avocado.

UPDATE: The American Institute of CPAs has a good and related take: “4 Critical Reasons Startups and Smaller Organizations Need Internal Control.”

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