How safe is your nonprofit organization’s data and information? Do you have internal controls and safeguards in place to protect your organization’s most valuable information, or do you leave the security of your data up to chance? Many nonprofits assume that if they have nonprofit software, they’re data is automatically protected. However, with the rise in internal fraud and theft, it has become harder to detect fraud, especially if you are using your software’s most basic features (or an outdated solution). With a lack of internal controls and lax financial oversight, many nonprofits are losing valuable funds and information to fraud and theft.
While setting up internal control policies that focus on job responsibilities and processes are important areas to address in the fight against fraud, relying on these policies alone will not offer your organization thorough protection. In order to truly deter and detect fraud, you will need to integrate your nonprofit technology and solutions into your security controls. This will provide you with full protection so you can not only detect fraud when it occurs but prevent it before it even happens.
We’ve created five tips to help you bridge the gap in your financial management strategy and make the most out of your nonprofit software. Keep the following in mind as you go about implementing fraud protection policies and processes:
- Enable audit tracking features. If your current fund accounting software solution does not have audit tracking capabilities, you should start looking for a new solution. Audit tracking of changes helps you not only detect and deter fraud, but it also comes in handy during your nonprofit’s annual audit and review. Make sure you conduct a periodic review of the information captured in the audit log, and always review any security change information. Try to use this tool as a proactive way to review system changes for questionable activity rather than simply a research tool to aid in fraud detection after it has been committed.
- Encrypt sensitive information. Whether it be financial or personnel data, every organization has data and information they don’t want easily accessible. In today’s world, protecting this data from sources of internal or external harm is crucial. Be sure to leverage any data encryption functionality your nonprofit software solution has to offer. This will reduce the risk of someone accessing and altering the information in your system, as well as protect any sensitive information (such as employee social security numbers).
- Use role-based security features to maintain segregation of duties. Achieving a greater level of segregation of duties for your organization does not have to be difficult; it really is just as simple as using the advanced security settings of your nonprofit software. These settings can be used to enforce your internal policies within your fund accounting software system and – when possible – only allow users to access the accounts they need for their role within the organization.
- Use system alerts to enforce policies. Some nonprofit software solutions allow you to create user-defined alerts that will notify you of certain activities, such as checks issued over a certain amount, a low bank account balance or checks issued to a particular vendor. By notifying certain individuals when specific events require action, you can begin enforcing and automating the internal control process.
If you aren’t using technology to protect your organization, you need to start today. Nonprofit software can give you the boost you need to remain in control of your organization’s data, information and finances. Give us a call to find out how you can best utilize the features within your nonprofit software solution to protect yourself against internal and external fraud.