Fraud Prevention & Risk Assessments For Nonprofits

The risk of occupational fraud due to corruption, asset misappropriation, or financial statement fraud is always a possibility within any nonprofit organization. But small nonprofits tend to have larger losses from fraud, and are less likely to recover if fraud occurs.

No matter how much faith you place in your employees and volunteers, or how you perceive the strength of your internal control environment, there is always a risk. The vast majority of occupational fraudsters have never been previously charged or convicted of a fraud-related offence. This suggests that most occupational fraud is committed not because it is sought out, but because there is simply an opportunity.

Is your nonprofit At Risk?

  • Does one person have control over multiple parts of a financial transaction? Accounting duties should be separated with a system of checks and balances.

  • Does your trusted accounting manager seem to never take a vacation? Vacations should be mandatory for accounting personnel, to provide cross-training and reveal any potential fraud.

  • Does an independent party reconcile your accounts? If your internal bookkeeper is also responsible for reconciliations (a common occurrence in short-staffed nonprofits), all accounts should be reviewed closely by management and the board.

  • Does your organization have a clear Internal Financial Controls policy? This policy should be communicated to all staff, updated when necessary, and strictly enforced.

While there are many CPA firms, very few focus entirely on nonprofit organizations. The nonprofit accounting specialists at Altruic Advisors have seen many examples of fraud and we understand which weaknesses typically create an environment in which fraud is ripe to occur. We have extensive experience in analyzing the internal controls of nonprofit organizations and recommending steps to reduce the risk of fraud.