The risks faced by Not For Profit (NFP) organisations come in many different forms. It is the responsibility of your allocated risk manager or risk management committee to look for the processes within your organisation that could cause harm, asking the question “does this task/activity/situation/event have the potential to harm people, property, income or organisational goodwill?”.
Financial risks are one of the key areas that concern Community Underwriting clients. Here is a quick checklist to get you thinking about the financial risks that may be faced by your organisation:
- Does your board have access to the information required to make informed business decisions? This might include balance sheets, cash flow reports, Profit and Loss Statements, etc.
- Do you have appropriate procedures in place to help prevent or expose fraudulent activities?
- Do you have an audit process in place?
- Do you have set spending limits for members of your organisation? Are these adhered to?
- Have you adequately budgeted for paying all employee entitlements/all outstanding taxes, if your Not For Profit organisation was forced to close?
- Are your budget reporting systems set up to alert you if you are trading while insolvent?
Once you have identified your risks, you can then move on to evaluate them in order of priority and implement processes to avoid them, manage them or insure against them.
The Australian Charities and Not-for-profits Commission (ACNC) website also provides some interesting Quick Tips for Basic Financial Controls to put in place for your community organisation, to ensure it runs effectively and can meet its debts. Click here to view the ACNC’s Quick Tips.
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