Non-profit organizations: how remote work impacts your financial processes and controls

Remote and hybrid work are no longer trends — for those whose jobs allow them to work remotely (either fully or for part of their week), it’s becoming the norm and it’s likely here to stay.

The first waves of COVID prompted vast numbers of employees at non-profits to work from home full time. Some non-profit organizations (NPOs) were well prepared to handle the sudden change to their financial processes and controls, especially if they had adequate policies in place that enabled them to be agile. The same principle applies in the current era of hybrid work: up-to-date and appropriate financial policies, procedures, and controls are what will allow you to work seamlessly, manage funds, and step confidently into the future.

Update your financial policies and internal controls, and put them in writing

Why it’s important

Many NPOs didn’t enter the pandemic with a written financial policy manual detailing how they would oversee and manage financial transactions remotely. While some have now written their financial policy and procedural manuals during the past few years, others still don’t have one to this day.

Having your financial policies in writing is important for several reasons:

• It sets clear expectations for how to handle funds, approve transactions, and pay expenses.
• It allows you to maintain consistency and replicate processes over and over again. This minimizes the possibility of procedural mistakes or inaccurate data, which could be caught in an audit.
• It facilitates Board review and approval in executing its fiduciary responsibilities.
• It acts as a training and reference manual in case a key employee, for whatever reason, is suddenly not available.
• It can protect you against operational risks, fraud, and legal exposure.

On top of having your policies, procedures, and controls in writing, ensuring they’re clear enough for all staff to access, follow, and understand is critical. This is done through the use of plain language, being transparent, and where appropriate, soliciting input from your finance team and managers so the policy is fair for all.

Written financial policies and procedures will allow management and Boards to ensure that risks to the organization are assessed and mitigated, appropriate internal controls are in place so that transactions are managed appropriately, and the NPO’s central mission and purpose are not jeopardized.

What can also be included

A comprehensive financial policy and procedural manual can include multiple elements:

• Updates to internal controls and approval processes that used to happen in person.
• Descriptions of tools and use of financial systems that enable transactions to happen remotely.
• Instructions on how each employee can help prevent human errors and data breaches.

Internal controls are particularly important to clarify, especially since transaction approval and financial disclosure are so central to running an NPO. For example, if your NPO required two signatures on every cheque or invoice, walking down the hall to get that done may have been simple with employees working in person. Remote work makes this process no longer feasible and prompts management to develop new internal controls, so your NPO can continue to safely and securely manage funds.

When was the last time you reviewed and updated your NPO’s financial policies, procedures, processes, and controls? With the help of a third-party advisor, you can update them to align with the modern realities of hybrid work. The final product becomes a living policy and procedural manual document that you can update as your circumstances change.

Getting started

If you haven’t reviewed or updated your financial policies and internal controls in some time, the task may seem daunting. Change management is seldom easy, and the early transition phase is where things are most likely to go wrong.

Breaking the process down into phases can help you manage it.

Begin by doing an internal assessment. Read your financial policies and highlight the areas where you see gaps; spot the low-hanging fruit you want to clarify or solve. It’s also recommended that you interview your staff, particularly your finance team, in a setting that maintains confidentiality and candor. See what they’re currently doing, then ask them questions such as:

• Do you see opportunities to do things more efficiently?
• Are there tools and resources that you need, or that would make the finance department’s work more effective?
• What are the risks you see in your current processes for managing transactions and the movement of funds remotely? Do you have controls in place to mitigate those risks?

After the assessment phase, re-write your financial policies, procedures, and processes to reflect the appropriate controls, making sure it’s to the level of clarity required by your team to follow. Ensure you place robust internal controls in the proper places. Present it to your NPO’s Board, and then the rest of the team once you have their green light.

Don’t do it alone

Updating your financial policies and procedures for hybrid work is not always easy, but it’s a critical part of carrying your NPO into the future, reducing risk, and staying compliant. Working with a third-party advisor can help at each phase, from the assessment to drafting the policies to training employees and volunteers.