GOSHEN- Orange County District Attorney David Hoovler is advising local nonprofit organizations to review internal financial control procedures and implement changes to internal financial controls if those procedures are lacking. Hoovler’s recommendation comes after his office secured a guilty plea in a case where the former Financial Secretary of the Washington Heights Fire Company in the Town of Wallkill admitted to stealing $17,947 from a fire parade fund.
Internal controls are financial management practices that are used to prevent misuse and misappropriation of assets. A lack of internal controls can lead to issues such as theft or embezzlement. Internal controls are generally described in written policies that the nonprofit will follow. The goal of internal controls is to create business practices that serve as “checks and balances” on staff in order to reduce the risk of fraud.
Hoovler recommends nonprofits adopt a policy requiring that employees may only be reimbursed for expenses that are approved in advance, in writing. He also suggests that organizations segregated duties and require that the person who logs in checks received in the mail not be the same person who is responsible for depositing checks. Similarly, the same person should not both prepare the payroll, and also distribute or have custody of the payroll checks. He also recommends regular review of all expenditures by an outside party.
“The operations of nonprofits are too important and the efforts of those who run them too significant to suffer financial losses that can be prevented,” said Hoovler. “While my Office will continue to investigate, prosecute and hold responsible those who enrich themselves at the expense of a nonprofit, these entities are well served to implement and enforce rigorous controls to prevent the crimes in the first place. I urge the board members of every nonprofit to remain diligent and not hesitate to report any malfeasance they uncover to law enforcement.”
