1. Maximizing Nonprofit Internal Controls
An Essential Guide for Even the Most Pure
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A conversation with:
Hilda Polanco FMA & Ruth McCambridge Nonprofit Quarterly
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2. Welcome & Introductions
Today’s Presenter
10/4/2012
Welcome & Introductions
Hilda Polanco
Founder & CEO

3. Welcome & Introductions
Internal Controls What Comes to Mind?
10/4/2012
Welcome & Introductions
fiduciary oversight
fraud prevention
policies and procedures
monitoring controls
reconciliation processes
segregation of duties
preventative controls

4. Welcome & Introductions
Internal Controls Three Key Areas
10/4/2012
Welcome & Introductions
Influencing Culture
Policies & Procedures
Leveraging Technology

5. Financial Management Initiative
Influencing Culture
10/4/2012
Financial Management Initiative
Leadership can influence controls by:
Setting the Right
Tone at Top
Creating a Culture of Financial Discipline
Promoting Transparency
- Example - MetCouncil (maybe?)

6. Financial Management Initiative
Influencing Culture
10/4/2012
Financial Management Initiative
What steps can leadership take?
Goal
what this looks like :
what this looks like:
Organizational Culture
Processes/Transactions
Setting the Right •
Leadership leads by example •
Leadership
is not exempt from
Tone at the Top
internal controls activities (e.g.
leadership submits receipts for
approval)
Creating a Culture of • F
iscal policies and procedures •
Staff are regularly trained on
Financial Discipline
manuals are “living”
new policies
documents •
Budgets are approved by the •
Leadership regularly monitors
Board and regularly monitored
financial results
by leadership and Board
Promoting •
Leadership promotes and •
Establish policies
that promote
Transparency
encourages an open and
transparency: (e.g.
transparent environment
whistleblower, conflict of
interest)

7. Financial Management Initiative
Policies & Procedures
Financial Management Initiative
Control activities are achieved through:
Policies
Resolutions adopted by the Board
Procedures
Specific tasks and measures developed and implemented by management

8. Financial Management Initiative
Policies & Procedures
10/4/2012
Financial Management Initiative
Five Policies that Reduce Risk
Policy
what this looks like :
what this looks like:
Organizational Risk Reduction
Processes/Transactions 1
Revenue
/ Donor •
Provides
a check and balance for •
Regular reconciliation between
Acknowledgement
funds flowing into the organization
finance and development 2
Approval
Processes / •
Ensures staff are aware of •
Purchasing
approval thresholds
Credit Cards
organization -
wide purchasing policy •
Clarity on appropriate use of credit
cards
and allows management to review
Agreements
expenses 3
Segregating Payroll •
Ensures no
one person has control •
Staff additions/changes and payroll
Responsibilities
over payroll (often a nonprofit’s largest
processing are performed by
different people
expense)
Conflict
for both board and staff
of Interest disclosure form 4
Conflict of Interest / •
Promotes
transparency •
Whistleblower •
Whistleblower
hotline •
Creates
awareness of how to protect 5
Cyber Security •
Staff training
on what to do when
against threats to privacy/systems
Evaluates tradeoffs between security
and efficiency
encountering suspicious s / •
phishing attempts

9. Financial Management Initiative
Leveraging Technology
10/4/2012
Financial Management Initiative
Examples of technology controls:
Software Integration
Business Rules
Restricted Access
Audit Trails
Automation and workflow
How paperless processes and new technology demands business rules to be thought through and incorporated into implementation, now codifying our internal controls and forcing us to execute them more efficiently

10. Financial Management Initiative
Leveraging Technology
10/4/2012
Financial Management Initiative
Partnering with your Bank
Incorporating Automated Bill Pay
Pre-established online approvals
Paperless documentation
No blank checks
Positive Pay / Reverse Positive Pay
ACH Block and Filters
Electronic Funds Transfer
Purchase Cards
- Used to rely on humans to perform internal controls, you can now use technology to do them for you but it has forced us to follow our own policies

11. Financial Management Initiative
Internal Controls Recap & Takeaways
Financial Management Initiative
Influencing Culture
Leadership can help set the tone to create a culture of financial discipline that promotes transparency
Policies & Procedures
Policies and procedures set by the Board and implemented by leadership can operationalize strong internal controls
Leveraging Technology
From automation to banking services, technology can increase internal controls while increasing operating efficiency

12. Questions?

13. Resources StrongNonprofits.org
9/25/2012
Resources
StrongNonprofits.org
In collaboration with the Wallace Foundation, FMA has created a library of tools and resources to help organizations become “fiscally fit” Four Topic Areas: Planning | Monitoring | Operations | Governance

14. Resources Online Tutorials for StrongNonprofits.org
FMA offers complimentary orientation one-hour webinars that feature an overview of the website and drill down on several of its key resources
Upcoming webinar dates:
May 16, 2017 at 2:00pm ET
To register, or see upcoming webinar dates:
For a 15-minute, on-demand webinar tour
of the site:

15. Fiscal Management Associates, LLC
9/25/2012
Fiscal Management Associates, LLC
Established in 1999 to serve not-for-profit organizations around the country
Provides customized financial management, accounting, software, organizational development, human resources, and other consulting services
Works directly with organizations or through funder-supported management and technical assistance programs
FMA's mission is to empower not-for-profit organizations with the knowledge and skills to successfully serve their constituents and fulfill their missions
Hilda Polanco, CPA, CCSA®, CGMA
New York | Chicago | Oakland
@FMA4Nonprofits
/FiscalManagementAssociates
linkedin.com/company/fiscal-management-associates-llc

16. Thank you for joining us!
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