Helping NGOs do more with their money

Internal control

Internal controls help NGOs handle everyday risks of mistakes, confusion or fraud. They also protect staff from any pressure to mis-use funds and from the suspicion of wrong-doing.

Prevention is better than cure when it comes to theft and fraud.


Internal controls are designed to ensure:

There are two important aspects of an internal control system: the control environment, and the control procedures that take place within that environment.

Control environment

The control environment includes the management style, organisational values and culture. Do management lead by example? Is recruitment done fairly, or is there nepotism? Is priority given to induction, training and internal audit? Are procedures written down and shared?

You can have the best designed control procedures in the world, but in a poor control environment they simply won’t be effective.

Control procedures

Nearly all internal control procedures fall into one of seven categories:

Remember the building blocks

Think back to the building blocks of effective financial management at the start of this section. Internal controls is one building block, but the others also act as controls.

Fraud

Like all organisations, NGOs also face the risk of fraud. Prevention is better than cure! But if you detect it, be sure to act!

See some example fraud policy manuals

 

Balancing act

NGOs have to be flexible and make decisions at the local level. Procedures have to balance (a) keeping control with (b) encouraging flexibility.



Assess your own internal controls using Mango’s Health Check

Mango's Accounting Pack - the user Guide has a detailed description of various types of controls.

See also examples of controls over particular areas (bank, cash, fixed assets etc).


Internal controls are also included in our Getting the financial management basics right course. 

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