Criminals now use AI to pose as your executive director, CEO, or a trusted vendor, and one approved payment can be large enough to end an organization. Your best protection is a few simple controls: confirm every payment or banking change by phone, turn on your bank's fraud tools, and put a second set of eyes on the books every month.
That was the warning Amy Nienast, CPA, Director of Operations for our Controller and CFO teams, brought to a recent panel for the Minnesota Society of CPAs (MNCPA). The full session is reserved for MNCPA members, so here are the ideas every nonprofit leader and board member should hear, plus a five-minute check you can run today.
AI-driven fraud usually looks like an ordinary request from someone you trust. A message arrives that sounds like your executive director, asking for a wire, a gift card purchase, or a change to a vendor's bank account. The tone is right, the timing feels urgent, and nothing looks off.
Most nonprofit fraud advice still focuses on internal controls, like who signs checks and who reconciles the bank account. Those still matter. Amy's point is that the threat has moved outside the building.
It's external fraud that you really want to be concerned about, because right now the fraudsters, they are using AI and they could take you out and your organization out in a heartbeat.Amy Nienast, CPA, All In One Accounting
Describing what our team sees through Code Red Alert, our real-time fraud response program, Amy put it plainly: "With AI, they can intercede and become your ED or your CEO and start requesting things. It's scary. It's real. Like it looks real."
When fraud hits a nonprofit, the people who carry the consequences are its leaders. Their names show up in the news, in board meetings, and in conversations with funders, whether or not they did anything wrong.
"We really talk about protecting their assets," Amy said. "To me, it's protecting the organization, but also the leadership of the organization, because who do you see in the paper when there's alleged fraud happening? It's all the leaders."
Strong financial controls protect the mission, the money, and the reputations of the people who give their careers to the work.
A small nonprofit builds strong oversight by borrowing it from the people and tools already around it. Amy's advice was three words, repeated for emphasis: "Leverage, leverage, leverage. Leverage your resources."
Her list is practical, and most of it costs little or nothing:
This matters most for organizations crossing into audit territory for the first time. In Minnesota, a charitable organization with more than $750,000 in total revenue must file audited financial statements with the Attorney General's Office under Minnesota Statutes section 309.53. Audit fees are rising, and some firms are becoming more selective about very small or higher-risk clients, so arriving organized makes a real difference.
Your auditor wants your organization to succeed. Many nonprofit leaders brace for audit season as if it were an inspection, and that anxiety often keeps them from asking for help when it would be most useful.
"They're part of your team," Amy said. "You need them. They're not out to get you. They want you to be successful."
Treating the auditor as a partner turns audit season into a source of board confidence. Questions get answered earlier, surprises shrink, and the final report tells a story the board can stand behind.
Run this five-minute check to find out. Tap each control your organization already has in place, and start with any you leave unchecked.
Tap every statement that is true today. Nothing is saved or sent anywhere.
We treat fraud response as part of the job, every day. Protect Assets is one of our three Uniques, and Code Red Alert is how it shows up: when anyone on our team sees fraud or potential fraud on a client account, they escalate within 15 minutes. A false alarm is always better than a missed threat.
Our Accounting Clarity® process builds those controls in from the start. In the Tenacity phase, we establish accurate baselines and the controls that protect them. In the Commitment phase, books close on time every month, so problems surface while they are still small. That frees leaders to focus on the mission, with confidence that its resources are safe.
For a deeper look at how these schemes work, watch our Protect Your Assets webinar replay.
Amy leads operations for our Controller and CFO teams and works closely with nonprofits, road construction companies, and higher education institutions. She specializes in single audit and compliance accounting, helping organizations stay audit-ready all year.
Positive Pay is a bank service that compares each check presented for payment against a list of checks your organization actually issued, and holds anything that does not match until you approve it. ACH filters and blocks do the same for electronic withdrawals. For a small nonprofit with a lean finance team, these tools add a layer of oversight that would otherwise require extra staff. Most banks offer them for a modest fee, and they stop altered checks and unauthorized debits before money leaves the account. All In One Accounting recommends them as a baseline control for nonprofit clients of every size.
A Minnesota charitable organization needs an audit when its total revenue exceeds $750,000 for the year. Under Minnesota Statutes section 309.53, the annual report filed with the Attorney General's Office must then include financial statements audited by an independent CPA. Funders, grant agreements, and federal awards can trigger audits at other levels, so check those requirements too. Organizations approaching the threshold for the first time benefit from preparing early: clean monthly reconciliations, documented controls, and an auditor engaged before year end. All In One Accounting helps nonprofits arrive at their first audit organized and confident.
A nonprofit should treat its auditor as part of its team. Auditors want the organizations they serve to succeed, and they are a valuable source of guidance on controls, risk, and reporting throughout the year. Reach out with questions before fieldwork, share changes in programs or funding as they happen, and ask what the auditor would like to see done differently next year. This approach reduces surprises, shortens the audit, and gives the board more confidence in the results. All In One Accounting keeps nonprofit books audit-ready every month so the conversation with the auditor stays productive.
Fraud is getting harder to spot, and lean nonprofit teams carry the most risk. Our fractional controller and CFO teams use the Accounting Clarity® process to build the controls that protect your mission and the leaders who run it.
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