For Canadian nonprofits, strong financial controls are not just a matter of best practice; they are a fundamental component of good governance and risk management. Financial controls are the policies and procedures you put in place to ensure the accuracy of your financial reporting, prevent errors, and protect your organization from fraud. Without them, you are exposing your nonprofit to significant financial and reputational risk. Learn more about nonprofit financial controls in Canada.
The Association of Certified Fraud Examiners (ACFE) consistently reports that organizations with weak internal controls are far more susceptible to fraud. Their 2025 Report to the Nations found that organizations with anti-fraud controls experienced lower fraud losses and detected fraud faster.
For nonprofits, where trust is the most valuable asset, a proactive approach to fraud prevention is essential.
This guide outlines the key financial controls that every Canadian nonprofit should have in place.
Essential Financial Controls for Canadian Nonprofits
The 2026 Nonprofit Financial Checklist
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1. Segregation of Duties
This is the most important financial control. No single person should control all aspects of a financial transaction.
Example: The person who approves expenses should not be the same person who signs the cheques. The person who opens the mail and logs donations should not be the same person who makes the bank deposit.
2. Bank Account and Credit Card Controls
- Dual Signatures: Require two signatures on all cheques over a certain amount (e.g., $1,000).
- Bank Reconciliations: Have bank reconciliations prepared by someone who does not have cheque-signing authority, and have them reviewed by a manager or board member.
- Credit Card Policies: Set a Clear Credit Card Policy: Define who can use organizational credit cards, what they can use them for, and which approvals they need before making purchases. In addition, require original receipts for every purchase and review all transactions regularly to confirm they are appropriate and properly documented.
3. Expense and Payment Controls
- Approval Process: All expenses should be approved by a supervisor before they are paid.
- Vendor Management: Maintain a list of approved vendors. Payments should only be made to vendors on this list.
- Electronic Payments: Implement dual control for all electronic payments (e.g., one person initiates the payment, another approves it).
4. Revenue and Donation Controls
- Donation Processing: Have two people present when opening mail that contains donations.
- Cash Handling: If you accept cash donations, have clear procedures for collecting, counting, and depositing the cash.
- Donation Records: Maintain a database of all donations and reconcile it regularly with your accounting records.
5. Board Oversight
- Regular Financial Review: The board should review financial statements at every meeting.
- Audit or Finance Committee: Establish an audit or finance committee to oversee the annual audit and review internal controls.
- Whistleblower Policy: Create a safe and confidential way for staff and volunteers to report any suspected financial wrongdoing. According to the ACFE, tips are the most common way that fraud is detected, so having a formal policy is critical.
Implementing strong financial controls can be challenging for small nonprofits with limited staff. Enkel specializes in building and managing financial control systems for Canadian nonprofits. We act as your independent finance department, providing the segregation of duties and expert oversight you need to protect your organization.
Build a foundation of trust with your funders and stakeholders. Contact Enkel today for a consultation on strengthening your financial controls.
