Internal controls are the policies and procedures that safeguard an organization’s assets, ensure the reliability of financial reporting, and promote compliance with laws and regulations. For nonprofits, where public trust is the currency of operation, a sufficiently designed and effectively operating system of internal controls is essential . Auditors, funders, and boards are placing greater emphasis on how nonprofits safeguard their finances, and even small teams must show clear review processes and documented checks and balances . The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides the most widely accepted framework for internal control, which includes five integrated components: control environment, risk assessment, control activities, information and communication, and monitoring activities . For nonprofits, key control activities typically include segregation of duties (authorization, recording, and custody of assets should be separated), physical controls over assets (locked cash drawers, restricted access to check stock), and independent reconciliations (bank statements reviewed by someone not handling cash). Perhaps the most common recommendation for understaffed nonprofits is to implement compensating controls when full segregation is impossible. For example, if one person handles both cash receipts and bank reconciliations, a board member or executive director should review the reconciled statements monthly. Documentation is critical: all controls should be put in writing, not just “understood,” and evidence of reviews should be retained . Think of internal controls like seatbelts—you barely notice them until they save you . The 2026 Nonprofit Internal Control course offered by the New Jersey Society of CPAs emphasizes that the importance of internal controls applies regardless of a nonprofit entity’s nature, size, or complexity . Information technology general and application controls are also critical, even in less-complex IT environments . At Nova Tax & Accounting Services, our Assurance and Compliance for Nonprofits team can help you document your internal control environment, identify gaps, and implement practical solutions that protect your organization and satisfy auditor expectations.

In the for-profit world, closing the books monthly is standard practice. For many nonprofits, however, financial reporting happens quarterly or even annually—a gap that leaves leadership flying blind and creates risk during audit season. In 2026, with increased scrutiny from the IRS and grantors, establishing a disciplined monthly close process is no longer optional; it is a competitive necessity and a compliance imperative. Best practices for strengthening the monthly close process begin with establishing a standard close calendar that has clear cut-off dates for submitting expenses, recording revenue, and completing reconciliations . This calendar sets expectations for staff and leadership, reducing the end-of-month scramble. Documented month-end checklists are a key tool, particularly for organizations experiencing growth or turnover. Each checklist item should specify who is responsible, what documents are required, and when the task must be completed. Additional recommendations from the 2026 Keiter Not-for-Profit Seminar include prioritizing reconciliations based on risk and materiality . For example, cash and investment accounts should be reconciled daily or weekly, while smaller accounts may be reconciled monthly. Nonprofits should also reconcile pledge and contribution activity between the development department and accounting to ensure that promised donations are accurately recorded and tracked. Restricted net assets should be reviewed on a regular basis—not just at year-end—to ensure compliance with donor-imposed restrictions. Finally, grants and contributions should be recognized properly throughout the year, following the five-step model for revenue recognition . A disciplined close process supports timely, accurate reporting and reduces audit adjustments. It also empowers leadership with real-time financial data, enabling better decisions about program spending, fundraising targets, and cash reserves. At Nova Tax & Accounting Services, our Accounting & Bookkeeping team can help your organization develop and implement a monthly close process tailored to your size and complexity.

A nonprofit’s financial health begins with its people. Yet many organizations in Ashburn, Loudoun County, and across Northern Virginia operate with accounting functions that are understaffed, poorly structured, or overly reliant on a single individual. As we move through 2026, the pressure to strengthen financial infrastructure has never been greater—from increased IRS scrutiny to rising expectations from grantors and board members. For many mid-sized organizations, a core accounting team should include a controller or finance director, a staff accountant, and an accounts payable and receivable specialist . Depending on the complexity of operations, additional roles such as a grant accountant, payroll specialist, or financial analyst may be appropriate. Strong technical skills are essential—including proficiency in nonprofit GAAP, fund accounting, grant compliance, and internal control frameworks—along with analytical and communication skills . Common pitfalls discussed in recent nonprofit seminars include over-reliance on a single individual who holds all financial knowledge, lack of documented processes, delayed reconciliations, and failure to properly track donor restrictions . Segregation of duties remains a foundational internal control: the person who authorizes transactions should not be the same person who records them or reconciles bank statements. When staffing limitations make full segregation impossible, compensating controls—such as management review of reconciliations and surprise audits—are essential . The 2026 update from Keiter’s Not-for-Profit Seminar reinforces that investing in appropriate accounting structures is not an expense but a strategic investment in mission sustainability . For nonprofits seeking to build or strengthen their accounting function, Nova Tax & Accounting Services offers Consulting to help design the right organizational structure, develop job descriptions, and implement the internal controls that funders and auditors increasingly demand.