Reporting and Operations

Internal Controls for Small Organizations

Proper internal controls are essential for all organizations. An important part of ensuring internal controls work effectively is to make sure everyone - including the board, executive director, treasurer, administrator, and other responsible parties - understands their roles and responsibilities when it comes to managing the organization's finances. This includes approving cash receipt and disbursement processes, overseeing expenses, utilizing a budget, and making sure funds are never missing or mismanaged.

Critical to the implementation of strong internal controls is an appropriate level of segregation of duties. This involves dividing responsibilities among different people to ensure that no one person has too much control over any one aspect of the organization's finances. At times, this can be challenging for a smaller organization to accomplish due to the size of the staff and/or the number of volunteers; however, you will find in the following sections guidance to help you achieve effective internal controls no matter your size organization.

Amy Kriz, CPA

American Petroleum Institute (API)