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Nonprofit Genie (FAQs) | Funds Management
| What are internal controls? | |
| 01-17-2006 | |
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Internal controls are a set of policies and procedures which help ensure operational efficiency and prevent the deliberate or misguided use of funds for unauthorized purposes. Nonprofit organizations need strong internal controls because they hold a public trust which is conferred upon them with their tax-exempt status and because they must ensure that donated funds are used for the purposes which donors intended.
A key principle of internal controls is the segregation of duties so that no financial process is handled by a single person from beginning to end.
Board members, executive directors, and staff all have essential roles to play in setting up and maintaining a working system of internal controls.
The following workshops provide more information on this topic: Financial Management Concepts Reading and Using Financial Statements
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