I still cannot comprehend why anyone would try to defraud a charity considering the nature of what they do and the fact that they are dependent on donations from the public, supporters, government grants and financial aids to run. The nature of the charity sector implies that everyone is acting to support a cause or for goodwill purposes and, if fraud were to occur, it would come from an external source. Sadly this is not always true. Anyone who works for a charity will commit Fraud when the right opportunity presents itself.
Charities can be susceptible to Fraud from both internal and external sources. Typical internal Fraud can include an employee keeping donations for themselves, a misuse of charity credit cards or bank accounts, staff members making fictitious expense claims. External Fraud would include the use of false invoices to get money from a charity, Using identity fraud to obtain money from a charity bank account, Phishing scams and fraudulent fundraising in a charity’s name.
The impact of Fraud on a charity’s reputation can be very damaging. Report from the charity commission states that charities, along with individuals and the private sector, “lose billions of pounds each year to fraud”. Clearly more efforts is required to help tackle this menace.
I have compiled a checklist below to make your charity safer;
Ensure you have strong policies in place to discourage and prosecute fraudsters, as this will send strong signals to anyone who may have such intentions.
Ensure that staff members can only access areas of the system that they need. Don't have a blanket "one size fits all" approach.
Verification processes must be adhered to when changes are made to master records, e.g. independently contact supplier/staff, and request written confirmation for changes.
Appropriate segregation of duties should be followed (no one person should start a transaction and end it i.e. recording/reconciliations and authorisations).
Be prepared to conduct periodic unannounced audits, as you will always find a few instances of errors. Even if these errors do not necessarily represent fraud, it gives your employees the impression of a constant oversight and I think this definitely deters the "casual" thief.
While this list is not exhaustive, the following are some of the ways to keep your charity safer.
Thanks for reading!!!!