NonProfit Risk Management Guide: Internal Controls Checklist for Nonprofits

Tim Gaffney, Georgia NonProfit Insurance Problem Solver

As the most trusted Georgia nonprofit insurance problem solvers, we take the needs of our clients very seriously. In addition to providing each organization the custom coverage that meets their needs, our team is dedicated to helping organizations avoid loss in the first place.

Peak-seasons like the holidays increase a nonprofit’s risk exposure for losses related to employee practices–including employee theft, mishandling and fraud.

A proven method to prevent such events from occurring in the first place involves establishing a controlled environment within your organization. Our NonProfit Insurance Georgia problem solvers suggest you review the “internal control checklist” below in order to see where you stand when it comes to establishing the right environment.

Click here to learn about the 4 components of establishing a controlled environment! 


1. Do you have an up-to-date accounting procedures manual?

2. Does your financial secretary or treasurer keep records of cash collections and prepare supporting documentation for disbursements?

3. Are office areas locked when not in use?

4. Are accounting records safeguarded at all times?

5. Is an internal Audit Committee operational?

6. Are your accounting records and underlying internal controls audited annually?

7. Are all employees who have access to cash bonded?

8. Do you issue receipts for all cash received?

9. Do you encourage donors to use checks in making their gifts?

10. Are cash receipts always counted by at least two people?

11. Are cash receipts counted in a secure area?

12. Do money counters verify that cash is same as amounts written on receipt stubs?

13. Are all checks received restrictively endorsed as soon as possible?

14. Are cash and checks deposited as soon as possible after receipt?

15. Is cash safeguarded in a safe, lockbox, or protective container prior to being deposited?

16. Is all cash received deposited in the bank?

17. Are deposit slips saved?

18. Are incoming mail and in-office contributions handled by people who are not responsible for your accounting records?

19. Has your bank been instructed in writing never to cash checks made payable to your organization?

20. Do you maintain contributions records for all donors?

21. Are contribution records reconciled to total contributions in your accounting records?

22. Do you prepare requisition slips for cash disbursements that do not have standing authorization?

23. Do you use pre-numbered purchase orders for all purchases that do not have standing authorization?

24. Are all invoices approved by a person in authority before payment is made?

25. Are invoices checked for accuracy before being paid?

26. Are invoice approvals and accuracy checks documented?

27. Are all disbursements, except for minor items, made by serially numbered checks?

28. Do you use check protector?

29. Do you require at least two signatures for all checks?

30. Do all check signers inspect all supporting documentation before signing?

31. Are invoices and supporting documents marked canceled or paid when checks are issued?

32. Are all voided checks so marked and retained?

33. Is preparing a check made payable to “Cash” prohibited?

34. Are blank unused checks safeguarded at all times?

35. Is a petty cash fund used for minor disbursements of cash?

36. Are vouchers prepared for all disbursements from the petty cash fund?

37. Are transfers between bank accounts always properly authorized?

38. Are reconciliations of all bank accounts prepared monthly by an individual who is not involved in handling cashing or writing checks?

39. Is your petty cash fund reconciled on a surprise basis at least once per year?

40. Are the account balances in your books reconciled with the amounts presented in the financial reports?

41. Are valuables (securities, important documents) afforded protection in a bank safe deposit box?

42. Are two signatures required for access to the safe deposit box?

43. Is an updated inventory of securities, valuables, equipment, and other noncash assets maintained?

44. Are regular reviews made to determine if insurance coverage is adequate?


December 10th, 2012 by Georgia Non-Profit Insurance