When we talk about Internal Controls it is usually in relation to larger not for profit organisations.  But what about the small ones?  Should they have internal controls, too?

Internal controls are described as “Methods put in place by a company to ensure the integrity of financial and accounting information, meet operational and profitability targets and transmit management policies throughout the organization.”

While the description makes it sound complex, internal controls are designed to make sure that the financial system is operating as it should be.  It doesn’t matter if your organisation is small, it needs to have some sort of internal controls in place.

Defined responsibility.  Who is responsible for each aspect of your financial system?  Who collects and counts the money?  Who is responsible for doing the banking?  Who checks the calculations and invoices before they are paid?  Is the volunteer treasurer solely responsible for your accounts?

Limits.  Have you set limits on the amounts of money any one person can authorise?  Yes, even for petty cash.

Signatories. How many signatories will you have to sign each cheque and what happens if one is unavailable?

Record keeping. Who manages the paperwork? Where are the records kept?  How is security managed?

These are just some of the internal controls that every organisation should have in place regardless of size.  It doesn’t matter if yours is a tennis committee or the committee of a large charity, the precise management of your financial system is vital to your long term survival.

Admin Bandit accounting software for volunteer treasurers helps you manage your finances with transparency, meaning that the responsibility for checking the accounts can be shared.    That’s one of your internal controls taken care of straight away.

If yours is a small not for profit, don’t assume that you don’t need internal controls.  Put them in place and save yourself potential dramas in the future.