Some frauds are quite audacious and yet quite simple. It is common for the building company undertaking work on your premises to put up advertising hoarding to announce their presence. Fraudsters have been contacting the client (often a school or university) to advise them of a change in bank details for the building company. A neat way to divert funds that would probably not be detected for some months.
Here are the top ten things to consider in terms of preventing fraud in your charity:
1. There is a lot of fraud in charities so don’t imagine your charity is immune – it isn’t. You can reduce the risk of fraud, but you cannot eliminate it.
2. Most fraud is not very sophisticated – it is often simple, and can be simply prevented with good old-fashioned controls.
3. The thing about controls is that you have to implement them! For example, getting blank checks signed is bypassing the control – you are asking for fraud.
4. A common fraud in charities is internal and perpetrated by finance staff – false purchase invoices slipped into the system and paid as part of the batch.
5. Note that this fraud relies on a lack of attention by the manager authorizing the purchase invoice for payment. This is a good example of a control (authorizing) being ineffective because it is not implemented as it was designed. If implemented properly, this should be a strong control.