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Cash-Handling -
Reduce the Risk of Fraud
By Jeni Cladwel, CPA
Senior
One of the more common occurrences of fraud in nonprofit organizations involves the mishandling of cash. This is because it is
the easiest type of contribution to steal and cover up.
 Nonprofits are usually more susceptible to this because they receive cash in the form of donations which may be smaller in size. This means they may not have the proper controls and segregation of duties in place surrounding the handling of cash.
The following are some recommended controls regarding cash receipts: - If cash is received in the mail, two individuals should be present when opening the mail.
- If cash is given in person, provide the donor with a receipt (pre-numbered and 2-part receipts).
- Keep the number of people handling cash to a minimum.
- If checks are received, they should be stamped immediately with "for deposit only - Organization Name."
- Make copies of all checks received.
- Make deposits regularly.
- Keep cash in a locked and secure area until the deposit is made.
- Bank reconciliations should be done monthly.
These controls alone are not enough to prevent fraud; organizations also need to have separate individuals performing these controls.
Here are some examples of the proper segregation of duties:
- The individual preparing the deposit slip should not be the same person going to the bank and making the deposit.
- The individual completing the bank reconciliation should not be the individual preparing the deposit slip or making the deposit. (If there are only two employees, then the individual who prepared the deposit slip should be reconciling the account.)
Another common procedure/control that smaller nonprofits should implement, is requiring the Executive Director to sign off on the monthly bank reconciliations. This is helpful when the accounting/office staff is limited. The Executive Director is usually familiar with the day to day activities of the organization and is more likely to notice if something on the bank reconciliations looks out of place or incorrect. A Board member is also another option to sign off on the monthly bank reconciliations, if the Executive Director is involved with the cash receipts procedures.
These are some suggestions to better protect your organization from fraud involving cash. Cash is a high-risk area in most organizations and implementing proper controls surrounding cash will assist in lowering this risk.
If you have any questions involving your controls and procedures regarding cash receipts, please give us a call.
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WKMR Sponsors Biz Connection Radio Show
WKMR is proud to sponsor the Biz Connection Radio Show, a weekly radio program hosted by Jim Rosetti & Ron Nielsen aimed at the business community. Business owners of large and small companies, and at all stages of their business life, are guests on the show.
Upcoming programs:
Mark will discuss how crowdfunding works and how to use it to raise funds for your business.
October 10 & 11 - C.J. Brown III of Veterans Employment Alliance. C.J., a Vietnam Veteran tells us his story of building Veterans Employment Alliance. He will also discuss the exclusive programs they have to help our Veterans land a career, not just a job.
October 17 & 18 - Cassy Tully of Cassy Tully Fine Art Studio. Cassy will tell us how she has grown her fine art and framing business through strategic partnerships.
The show is broadcast in the Milwaukee area on WZTI-AM 1290 & WZTI-FM 100.3 at 9 a.m. on Saturday mornings. More information on the show can be found at http://bizconnectionwi.com/index.php |
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WKMR Fraud Services
If you suspect fraud may be occurring in your organization, there is action you can take. At Winter, Kloman, Moter & Repp, S.C. our Certified Fraud Examiners (CFE) can assist you with putting internal controls in place to help prevent and detect fraud. Our CFEs have the ability to:
- Identify the underlying factors that motivate individuals to commit fraud
- Examine data and records to detect and trace fraudulent transactions
- Interview suspects to obtain information
- Write investigation reports
- Advise clients as to their findings
- Testify at trial
If you suspect fraud is occurring at your organization or would like help putting internal controls in place, give us a call.
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Contact us:
Brookfield Oconomowoc
235 N. Executive Drive, 1040 Oconomowoc Parkway
Suite 160 Oconomowoc, WI 53066
Brookfield, WI 53005 262.567.6540
262.797.9050
Watertown
138 Hospital Drive, Suite 100
Watertown, WI 53098
920.261.6767
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At Winter, Kloman, Moter & Repp S.C., our not-for-profit team provides quality audit, accounting, tax, and consulting services to a variety of not-for-profit agencies, government funded businesses, private foundations, and assorted charitable organizations. Our experienced team has helped many not-for-profit organizations throughout Southeastern Wisconsin grow and thrive including:
- Human Service Agencies
- Cultural & Arts Organizations
- Charitable & Religious Organizations
- Educational & Day Care Institutions
- Professional & Trade Associations
- Assisted Living Facilities
- HUD/WHEDA Housing Projects
- Government-funded For-Profit Businesses
We concentrate on helping you best manage public or donated funds, analyzing how to get the most from your resources and helping you implement your plans to stretch every dollar. Our team of professionals understands your complex financial reporting needs, and will help you to accurately report your finances in an understandable way. We provide the independent audit and accounting services required by many of your funding sources by taking a value-added approach, implementing ever-changing tax reporting requirements, providing information technology consulting, and working with every aspect of your organization to support your success.
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For archived issues of Not-For-Profit News, click on the link below.
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