Internal Fraud in Nonprofit Organizations —Prevention Comes With Knowledge
During tough economic times, the potential for internal fraud in nonprofit organizations becomes greater. Here are three examples of internal fraud in nonprofit organizations:
- The former executive director of this non-profit pled guilty to wire fraud for stealing nearly $300,000 from the organization.
- The senior accountant for this nonprofit community center sentenced to two years in prison for embezzling at least $130,200.
- Former director of a nonprofit agency indicted on 31 counts for allegedly embezzling over $144,000 from the agency.
No matter how effective you perceive your internal controls—the potential for internal fraud in nonprofit organizations is indisputable. Unfortunately, those in charge seldom consider the likelihood of these crimes taking place. Internal fraud in nonprofit organizations can be contained and you can reduce your risk:
1) Recognize the Threat: Internal fraud in nonprofit organizations is a genuine possibility. The employee most likely to commit internal fraud in nonprofit organizations usually has worked their way into a position of trust, has greatest opportunity, is least suspected, and has little or no supervisory oversight.
2) New-Hire/Volunteer Process: Controlling internal fraud in nonprofit organizations begins with the hiring process. Reduce your risk to internal fraud in nonprofit organizations by conducting inclusive background and credit checks.
3) Multiple Tasking: Ensure that no single employee has the ability to affect every stage of a critical work process. For example, the employee who handles accounts payable should not open incoming mail or be responsible for accounts receivable. This book is loaded with strategies that will help dramatically minimize internal fraud in nonprofit organizations.
4) Supervisory Oversight: Proper oversight and monitoring help to ensure that adequate internal controls are in place and enforced.
These “four steps” will help to deter internal fraud in nonprofit organizations.
If you are want more information about ways to prevent internal fraud in nonprofit organizations order your copy of Business Fraud: From Trust to Betrayal today!