Fighting fraud before it ever begins is a key responsibility for nonprofit accountants and their finance team. The days of reacting to fraud after it happens are behind us. Organizations need to normalize talking about fraud in order to prevent it from ever happening to begin with.
Implementing strong internal controls is one of the best ways to prevent fraud at an organization. According to the New York State Office of the Attorney General, standard internal control practices include:
- Using general organization-level controls to monitor who is accessing financial data and when;
- Implementing general rules in your technological solution to not allow errant parties access to financial data;
- Segregating duties in the accounting department to create a system of checks and balances;
- Abiding by the Sarbanes-Oxley Act and creating an anonymous tip line to report financial mismanagement; and,
- Authorizing and tracking users that handle purchasing and accounts payable.
Utilizing software that has built-in internal controls can help monitor user access and provide audit trails, making fraud prevention simpler. Cloud-based servers limit access for internal employees to protect who can access your client’s data. Having strong internal controls deters data theft caused by cyberattacks and fraud. Your organization can set rules and monitor user permissions to access specific applications, workflows or files. Safeguarding sensitive financial and proprietary data is critical for business continuity and operational success.
Cloud computing offers endless potential, but you need to ensure your client is using the right solution. Properly equipped, cloud-based fund accounting solutions for nonprofit organizations feature multiple layers of security and encryption to ensure your client’s data remains safe and secure.
What differentiates cloud-based fund accounting solutions? Different vendors have different levels of security in the cloud. These safeguard security layers might include limited user access and permissions, encrypted data and communications, and SOC compliance endorsed by the AICPA and its Statement on Standards for Attestation Engagements (SSAE). When it comes to financial data, you want your client’s data in an environment with multiple security layers to prevent potential fraud or data breaches.
To meet the needs of remote and hybrid work arrangements and avoid volatility in business operations, migrating to the cloud has become crucial. In this era of remote work, having the ability to access your client’s data wherever you are is crucial. Organizations that work in a cloud environment have the opportunity to realize cost savings, enhanced security, accessibility for a hybrid or remote workforce, and the potential for better audit controls with a solution that is scalable. The future is cloud computing, and as the workforce stays remote, your firm can have confidence in moving to a cloud environment.
