For the most part, those involved in the NFP sector rely on trusting other members of the organisation.  Trust however can come easily in this sector where everyone pitches in to help an organisation.  We rarely consider anyone would have an ulterior motive and in fact, most times people don’t but life happens and circumstances change.

A lot of fraud that takes place in this sector is created because personal situations have become difficult for a person and when they are faced with mounting bills at home yet they have access to funds through the NFP, the temptation becomes too great to skim off the surface from the NFP funds and alleviate the issues at home.

There are of course more prominent fraud cases whereby someone has intentionally set out to defraud an organisation either on a regular basis of smaller amounts or of one large amount.

Regardless of the situation, fraud is fraud and needs to be treated as such.

A recent report by the Institute of Community Directors, has shown that 79% of all fraud cases in the community sector are perpetrated by internal stakeholders.  This figure is startling when you consider how easy we put trust in a person to handle the finances of an organisation.

It is essential to the success or an organisation that fraud prevention is put in place from day one.

Below are some ideas on how you can prevent fraud in your organisation:

1. Double check that everyone undergoes a police criminal history check (keep in mind these are state based so what is clear in one state may not be in another but it is at least a starting point for most people);

2. Always make sure that two people at minimum need to sign or authorise transfer of funds including payroll, invoices and donations;

3. Ensure that Accounts Receivable and Payable are cross checked by two members and that purchase orders are issued for all purchases made by the organisation;

4. When outsourcing, ensure you have checked the company details and directors etc. to ensure there is no conflict of interest;

5. Make sure statutory and organisational reporting is up-to-date. Delays in reporting are the easiest way to hide fraudulent transactions.

Ultimately, if a few procedures are put in place you will save a lot of angst and lost funds in the long run.