Segregation of Duties

Posted on Wednesday, April 09, 2014

Frequently nonprofit organizations have a limited staff of one or two individuals performing all of the accounting work.  Although it may be more difficult, even the smallest nonprofit should strive to segregate duties as much as possible.  The responsibilities of authorizing transactions, recording transactions and maintaining custody of assets should be divided to the furthest extent possible to reduce the risk of misstatement and fraud.  Below is an example of segregating duties between a two and three person staff.   

2 Person Staff

Executive Director

Accounting Staff

3 Person Staff

Executive Director

Accounting Staff #1

Accounting Staff #2

For those organizations that do not have multiple accounting staff, non accounting personnel such as an office manager can be trained to perform less technical duties.  Also board members, such as the board treasurer, can be utilized to further segregate duties.

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

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