CPA gives tips for avoiding red flags for NGOs getting taxpayer money

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(The Center Square) – A certified public accountant that works with nonprofits says if they’re getting public money, they should have internal controls to avoid potential fraud, waste or abuse of taxpayer funds

Increased scrutiny continues to be on how federal tax dollars are being managed by states. Oftentimes, taxpayer funded programs are executed by nonprofits and non-government organizations, or NGOs. Lisa Stevenson, a CPA with NPO Accountants, said in order to avoid bad findings after the fact, NGOs need to be on the ball with internal oversight.

“One of the other easy ones that I feel like doesn't often happen until it gets pointed out is a board member should be reviewing the credit card statement and receipts of the executive director, and not assigning that to a subordinate of the executive director,” Stevenson told The Center Square. “Sometimes it doesn't happen at all.”

She said audits are important, but too often they find problems long after the problem started.

“I feel really strongly that the internal controls have to be in place to prevent it from occurring, because once it gets detected by an auditor, it's already happened,” she said..

Stevenson said it doesn’t matter how the funds are misused, the non government organization will still be on the hook to pay back the taxpayer.

“Let's say it's an executive director and they, you know, commit fraud. They don't care that it's that person they are going to criminally prosecute, but they are still going to hold the nonprofit accountable to repay the money,” she said.

One blind spot for taxpayer accountability Stevenson warned about was that federal audits require single audits of how funds are spent by NGOs, but only if they get more than $1 million from taxpayers. That threshold increased from $750,000 in 2024.

In the state of Illinois, Stevenson said reporting requirements to the Illinois Attorney General are required at $500,000.

“The reason why it’s important is, again, kind of back to because this isn't the organizations’ money,” she said.

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