PURPOSE

This board exercise will clarify methods used by your organization to process financial transactions. It will identify who currently handles different accounting tasks and indicate if there is adequate segregation of duties.  Strengthening internal accounting controls protects the organization’s financial assets against theft and protects those performing the financial duties against erroneous accusations.


INSTRUCTIONS

Step One:  Select one person from your board that is willing to compile the answers to this short questionnaire. This person should not be involved in the financial processes of your organization in any way (doesn’t write checks, sign checks, prepare financial statements, reconcile bank accounts, etc).

Step Two:  Make a copy of the questionnaire — available here as a PDF — for each board member and take 10 minutes during your board meeting to have everyone complete it.  Return completed questionnaires to the person selected above. Note: Do not distribute this instruction page with the questionnaire.

Step Three:  Either before your board meeting or after, distribute this same questionnaire to:

  • All staff. If you are a large organization limit this to individuals who are involved in the financial Be sure to include those individuals who handle other financial activities as well (i.e. opening the mail, if you receive payments this way).
  • Any committee members who handle financial activities.
  • Any volunteers who handle financial activities.
  • Any subcontractors or others outside your organization who handle any of your financial activities.

NOTE: Make sure the completed questionnaires go directly to the person in Step One. This can be accomplished by providing a self-addressed, stamped envelope. 


FOLLOW-UP

The answers to the questionnaire will give you the first opportunity to see an overview of who handles what part of your accounting process. Check on such best practices as:

  • Not having the same person writing and signing checks;
  • Not having the same person handling many aspects of the process;
  • Not making debit cards available (which are much higher-risk than credit cards); etc.

Your organization’s board needs to annually discuss how much risk is acceptable and alter your system accordingly. You may need professional help with this. There may be someone with a financial background in your community who would be willing to help.


You can download this exercise for FREE as a PDF to distribute to your board. This exercise is from our workbook, Financial Oversight: 10 minute exercises to get your board informed!


If you or your board is seeking more help with internal controls and fighting fraud, Elizabeth Grant from the Oregon Department of Justice will be offering a session at our Guiding More Good conference in Corvallis, Oregon on February 2nd, 2019. See all the details here!