CalNonprofits Insurance Services

Segregation of Duties and Internal Controls

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February 27, 2018

“I think we should split up.” Hearing those words in the context of your relationship = devastating. But in the context of internal controls at your organization = necessary. With so many components to your organization’s finances, human error may occur, and deterring fraud must be a priority.

So how do you work to ensure any honest (and purposeful) mistakes are caught in a timely manner? Segregation of duties (SOD). This is the concept of having more than one person complete required tasks and workflows. The size of your organization will affect how you segregate duties, which is why we have put together a helpful infographic.

Aside from separating duties, here are a few other things you can do to stay vigilant against fraud:

Understand that it can happen to your organization. It’s easy to believe the best in those around you, but that doesn’t mean your organization is immune. The first step in combating fraud is understanding that it can happen to anyone.

Be transparent. Regularly creating reports showing when money is received and how it is spent is a great way to involve members and donors. Encourage conversation and questions. It’s hard for things to fall between the cracks when there are many eyes watching.

Pay attention. It’s not enough to simply do your part of the duties and not be aware of others. Most fraud is easy to discover, but goes unnoticed because those around the situation aren’t looking for the signs. Once everyone becomes aware, it becomes easier to create a culture of diligence.

Have proper protection; Talk to your insurance broker or request a free consultation today to make sure you are adequately covered with the correct bonds and insurance.

Segregation of Duties: The Building Block for Sustainable Risk Management and Internal Controls

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About the Author

  • Founded in 1984 as a subsidiary of the California Association of Nonprofits (CalNonprofits), CalNonprofits Insurance Services was established during a time of diminishing insurance options for nonprofits. One of the driving reasons for establishing the association was to use the collective influence of the sector to secure more stable and quality insurance. We have developed, and are known for, our wide spectrum of services reflecting expertise in both the insurance and nonprofit sectors, our superior customer service, and our development of exclusive insurance products, including a highly successful dental and vision trust. We insure more than 1,200 nonprofit organizations throughout California and we are the only California brokerage specializing in insurance for nonprofits. Our clients range from newly established nonprofits all the way to venerable organizations with multiple locations statewide.

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