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Nonprofit Financial Controls Audit Checklist

A comprehensive checklist for auditing nonprofit financial control systems, covering budgeting, cash management, expense tracking, and financial reporting to ensure fiscal responsibility and transparency.

Nonprofit Financial Controls Audit Checklist

by: audit-now
4.6

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About This Checklist

The Nonprofit Financial Controls Audit Checklist is an essential tool for ensuring fiscal responsibility and transparency in nonprofit organizations. This comprehensive checklist addresses key aspects of financial management, including budgeting, cash handling, expense tracking, and financial reporting. By systematically reviewing financial control practices, nonprofits can safeguard their assets, prevent fraud, and maintain donor trust. This checklist helps organizations identify weaknesses in their financial systems, improve compliance with accounting standards, and enhance overall financial health.

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Industry

Nonprofit and NGOs

Standard

Nonprofit Financial Reporting Standards

Workspaces

Nonprofit Finance Office

Occupations

Financial Controller
Nonprofit Accountant
Executive Director
Board Treasurer
Audit Committee Member
1
Have the financial policies been reviewed and updated?

Select 'PASS' if policies have been reviewed and updated, otherwise select 'FAIL'.

To ensure compliance with FASB ASC 958 and IRS Form 990 requirements.
2
Is there a segregation of duties in financial operations?

Indicate whether segregation of duties is implemented.

To prevent fraud and ensure financial integrity.
3
How often are internal control assessments performed?

Enter the number of times internal control assessments are performed per year.

Regular assessments help identify weaknesses in financial controls.
Min: 1
Target: annually
Max: 12
4
Is there an audit trail for financial transactions?

Select 'PASS' if an audit trail exists, otherwise select 'FAIL'.

An audit trail is essential for tracking financial transactions and ensuring accountability.
5
Is the budget aligned with the organization's mission and strategic goals?

Select 'PASS' if the budget is aligned, otherwise select 'FAIL'.

Ensures that financial resources are directed toward fulfilling the nonprofit's mission.
6
Does the board conduct regular financial reviews?

Indicate whether the board conducts regular financial reviews.

Board oversight is critical for maintaining financial accountability.
7
How often are donors provided with financial reports?

Enter the number of times financial reports are provided to donors per year.

Transparent reporting fosters trust and accountability with donors.
Min: 1
Target: quarterly
Max: 4
8
Is there a conflict of interest policy in place and implemented?

Select 'PASS' if the policy is in place and implemented, otherwise select 'FAIL'.

Helps to prevent conflicts that could compromise the integrity of the organization.
9
Are financial practices compliant with grant requirements?

Select 'PASS' if compliant, otherwise select 'FAIL'.

Ensures that funds are used appropriately and in accordance with donor expectations.
10
Is an external auditor engaged for annual financial audits?

Indicate whether an external auditor is engaged.

External audits provide an objective review of financial statements.
11
What percentage of funds are unrestricted?

Enter the percentage of unrestricted funds in the total budget.

Higher unrestricted funds allow for greater flexibility in operations.
Min: 0
Target: 50
Max: 100
12
Is there regular financial training provided to staff?

Select 'PASS' if training is provided regularly, otherwise select 'FAIL'.

Training enhances understanding of financial policies and procedures.
13
Are fundraising expenses monitored and reported?

Select 'PASS' if expenses are monitored, otherwise select 'FAIL'.

Monitoring ensures that fundraising efforts are cost-effective and transparent.
14
Are annual financial statements reviewed by the board?

Indicate whether the board reviews the annual financial statements.

Board review of financial statements is critical for oversight and transparency.
15
What is the average time taken to close the financial books each month?

Enter the average number of days taken to close the financial books.

A timely closing process reflects effective financial management.
Min: 1
Target: 15
Max: 30
16
Is training provided to board members on financial policies?

Select 'PASS' if training is provided, otherwise select 'FAIL'.

Training ensures that board members understand their financial oversight responsibilities.

FAQs

This checklist covers cash management, expense approval processes, segregation of duties, financial reporting procedures, budgeting practices, and internal audit mechanisms.

It's recommended to conduct a financial controls audit at least annually, as well as when there are significant changes in financial personnel or systems.

Yes, by identifying areas for improvement in financial management and control, this checklist can contribute significantly to an organization's financial sustainability and efficiency.

Absolutely. The checklist includes items related to compliance with nonprofit accounting principles, such as fund accounting and restricted fund management.

By ensuring robust financial controls and transparency, this checklist helps organizations demonstrate fiscal responsibility, which can greatly enhance donor trust and confidence.

Benefits

Strengthens internal financial controls to prevent fraud and misuse of funds

Improves compliance with nonprofit accounting standards and regulations

Enhances transparency and accountability to donors and stakeholders

Facilitates more accurate financial reporting and budgeting

Increases organizational efficiency in financial management