Effective Internal Controls In Non-For-Profit Organizations

Misappropriation and Embezzlement schemes There are various reasons for fraud existing: Non-For-Profit Organizations often have few internal controls, and income is typically not connected with a good or service. When a person who is entrusted with assets misappropriates them for personal use, the embezzlement will produce. It ordinarily involves an employee or agent entrusted with assets of an organization. The misappropriation and embezzlement schemes including as following:
(1) Skimming schemes For receiving donations, there is a frequent threat, skimming, to Non-For-Profit Organizations. The “skimming” means that cash removes from a victim entity before its entry into an accounting system. The result of skimming is that the victim Non-For-Profit …show more content…
(2) Effective internal controls for the Non-For-Profit Organization Nonprofit leadership is tasked with using resources to further the mission of the organization. The ideal controls vary among organizations, and the results of the fraud risk assessment should be the primary guide for implementing fraud-related controls. To reduce the fraud risk within the Non-For-Profit Organizations, managers should do the following things: separation of duties, review of expense accounts, audit practices for fraud prevention and transparency. For separation of duties, there are some methods, which managers can follow. To prevention of skimming and theft of cash, the following duties should be separated: cash and check receipts, bank deposits, deposit receipt reconciliation, posting of deposits and cash disbursements. And if the Non-For-Profit Organizations want to avoid payroll schemes, they should separate payroll preparation, payroll disbursement, payroll distribution, payroll bank reconciliations, and human resource …show more content…
According to the above passage, we can learn that the common fraud schemes and the methods of fraud prevention, which can protect the Non-For-Profit Organizations to avoid fraud problems. In my opinion, I believe the effective internal controls for the Non-For-Profit Organizations is the most important things to reduce the fraud risks because leaderships focus on fighting fraud from a prevention standpoint, and the supervision and management start from the basic level. And yet for all that, to help the Non-For-Profit Organizations avoid fraud problems, every leadership, employee, and volunteer need to comply with the mandatory rules and potential