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Internal Controls

Updated: Jul 19, 2023

It’s an old issue, but a key problem for many schools and NFPs is in their financial systems and in particular the state of their internal control systems.

Internal Controls are the basic systems and processes that are put in place to protect the assets of the organisation, in particular cash.

Many NFPs struggle in this area as they often have small numbers of finance staff (hard to segregate duties) there is often very high trust in individuals and the focus of the organisation is often not on business but on the good the organisation is seeking to do.

Over recent years Resolve has worked with a number of organisations that have had major control breakdowns resulting in some cases to significant loss of money.

Some areas to consider looking at to strengthen controls include:

  • Ensuring that all payments are approved/authorised/signed by at least 2 people and no one should know more than their own passwords to bank payment systems or other software.

  • Ensuring that tasks are segregated out, especially people handling cash

  • Ensure that reconciliations are done in a timely fashion and make sure that they are reviewed by a separate person

  • Requiring board approval for any sale/write off of assets

  • Ensure the payroll and any changes to it is reviewed by transmission to the bank

  • Ensure that your auditors are on the ball and give you a Management Letter at the end of your audit, including any control issues.

  • Undertake periodic reviews of financial systems, operations and reports perhaps by an independent organisation to act as a check on your CFO/Business Manager

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