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Fraud

Know Your Scammers – Cyber Fraud Signs

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Many of us grew up with Saturday morning children’s cartoons. Is it me, or did every cartoon villain look the same? They always tiptoed towards their intended target and hoisted big empty sacks over their shoulders (the better to cart away their loot!). Everything about them screamed VILLAIN in all-caps. 

Well, of course, it was easy to identify the bad guys in those old cartoons. After all, they were created for children’s entertainment, and kids like things simple. But don’t we all? We all long for it to be easy to identify the “bad guys” out there, and that includes cyber crooks as well as the classic cartoon crooks.

As organizations struggled to cope with the many changes initiated by the coronavirus pandemic, cyber crooks were already on the hunt for their next victim. Many found easy targets among the small businesses, including nonprofits, in turmoil. Without the routine of daily interactionism among employees, easy access to communications to reach fellow workers to ask questions, and looser security among IT networks to enable workers to work from home, cyber crooks didn’t need to tiptoe around in the dark. They acted boldly, and many succumbed to their lures.

Don’t be caught by cyber crooks this year. Know the signs of cyber fraud and protect your nonprofit from the current scams as well as general scams aimed at stealing your data.

Email Fraud – CDC Fake Emails

It was inevitable that criminals found a way to exploit people’s trust in the CDC. One common cyber fraud scam sent emails purporting to be the CDC to organization owners with a link in the email text encouraging them to click for more information.

Savvy recipients spotted several issues with the “CDC” emails that can help you recognize and avoid such phishing emails in the future.

  • Recipients hadn’t contacted the CDC and wondered how the CDC obtained their email addresses.
  • Sharp-eyed people recognized that when they held their mouse over the CDC link, it pointed to another website. 
  • The wording, spelling, and grammar weren’t quite right in the email. It was as if someone had run the text through Google’s translate feature. (Perhaps they had)
  • The email requested personal information to respond, including the recipient’s email address and corporate login information. The CDC wouldn’t ask for that information.

These are all signs of a typical phishing email. Other signs include a generic salutation, fuzzy logos (because they are cut and pasted from the web), or fonts that look odd compared to actual communication from the company, firm, or government agency.

When in doubt, never click a link. Instead, log into a fresh browser screen and visit the site on your own. If there is no message pertaining to the topic of the email, it’s likely it was a phishing scheme.

Specific Nonprofit Risks

As a nonprofit organization, you’re probably soliciting donations online right now to make up for lost revenues from cancelled in-person events.

However, constituents are bombarded right now with both legitimate and not-so-legitimate requests for funds from charities and fraudsters pretending to be charities.

How can you help them distinguish between actual charitable solicitations and fraudulent ones?

  • Remind constituents that they can always visit your website and donate on their own—they do not need to do so through the link in your email (a cyber crook would never say this).
  • Through your website, continually offer updated information on funding campaigns, progress towards goals, and financial information.
  • Remain transparent with all financial dealings.

The key to helping constituents feel comfortable enough to give online is to maintain clear and honest communications about your nonprofit’s finances. Now is the time to offer great transparency into your organization’s finances and to reassure donors at every step of the way that their money is being put towards the work of the organization.

Mitigating Cyber Security Threats with the Right Technology

Awareness and training go a long way to reduce the risk of cyber fraud, especially phishing schemes like the first one we described. Nonprofits can also reduce their risk by maintaining dedicated VPN lines, special inbound connections with encryption that keep their servers secure.

Overworked IT departments, older software, and similar factors can make your nonprofit vulnerable. Close these gaps now before it’s too late. In 2019, data breaches exposed over 4 billion records, and the companies in the thick of such data breaches found themselves embroiled in months of clean-up work. Not all of these companies were big corporations, either. Small businesses and nonprofits are especially vulnerable because cybercriminals know they don’t have a big team of IT professionals on call to handle cybersecurity.

Take time now to update your systems, review cybersecurity procedures, and work with a company such as Welter Consulting to prevent cyber fraud. Criminals don’t tiptoe through backyards carrying big sacks like in the cartoons. They sneak in through emails, attack vulnerable software, and look for small businesses unable to fight back. The time to shore up your defenses is now.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Simple Steps You Can Take to Prevent Cybercrime

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If you’re not taking steps to reduce your risk of cybercrime, you should. Nonprofits aren’t immune to attacks from criminals, and, in fact, the opposite may be true. Many cybercrimes target small businesses and nonprofits because criminals know that these organizations lack resources, such as insurance or IT specialists, to fight back. Instead, they often submit to the criminals’ demands and pay the ransom. The criminals can then head to their next victim without punishment.

It’s time to reduce cybercrime risk by taking proactive steps. While you cannot eliminate the threat from attacks, you can certainly take steps to minimize risk. It’s like installing sturdy locks on the door of your home, an alarm system, and a webcam; it won’t stop someone determined to break in and steal your possessions, but it sure makes it harder for them to do so, and easier to catch them.

Five Tips to Reduce a Nonprofit’s Risk of Cybercrimes

  1. Improve password strength: Please, say goodbye to using “password123” or “namename123” as your passwords. Yes, according to MetroNews, people still use passwords like 1234567. Despite news of security breaches affecting millions of people (and their credit rating), people continue to use weak passwords. Don’t allow this within your organization. Insist that everyone choose strong passwords and change them monthly. Strong passwords are difficult for the average person to guess, do not include common words or phrases, and include capital letters and lower case letters as well as symbols and numbers. Think that’s a tall order? It could save you a great deal of trouble later by making the proverbial “lock on the door” very strong and keep attackers from easy entry into your database or website.
  2. Review your cybersecurity strength: Conduct a cybersecurity audit or work with us to conduct one. A cybersecurity audit examines all areas of your organization where attackers may gain entry and cause trouble. It also helps you pinpoint things you’re doing right so you can replicate them. AICPA provides a free guideline to help you conduct your audit.
  3. Update your software and website: All software needs to be updated to patch known problems and fix gaps that hackers exploit for nefarious reasons. When your software prompts you that it needs to update, please don’t ignore the message or quiet it and forget it. Websites also need to be updated frequently. WordPress, a common framework used to build websites, typically includes codes called plugins, which are areas hackers are known to exploit. These should be checked and updated regularly, which can be done from the administrative panel in WordPress. Other site providers and frameworks have similar places to update software.
  4. Provide training: Train employees to recognize attempts to gain access to systems. Some common things to watch for include phishing schemes, which trick people into revealing passwords through phony reset messages or similar emails; scams that encourage you to click on a link, thus infecting your computer with a virus or similar code; or downloading a ‘free’ item that includes malicious code embedded in it. Another method that criminals use to gain access to company systems is to pretend to be the CEO or another public-facing executive and request information from someone about the system or their password. By teaching your staff all of these methods, you help raise awareness of what they may encounter and encourage the appropriate steps to confirm any requests for passwords and confidential information. Write and document all procedures and provide training to both new employees and refresher training for current employees.
  5. Back up everything: If a security breach occurs, you may be locked out of your systems. It’s a nightmare that some companies face, and it can be costly to fix it. By backing up your systems, you’ll be able to access and replace any information that may be compromised by an attack.

Take Cybercrime Seriously

Take cybercrime seriously. An ounce of prevention is always worth more than a pound of cure.

If you need help with a cybersecurity audit or more information, please don’t hesitate to contact Welter Consulting for information.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Cyber Defense – Five Steps to Improve Your Peace of Mind

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If you think you’re immune to cybercriminals because you run a nonprofit organization, think again.

Cybercrimes against nonprofits are more common than you think. According to the Nonprofit Quarterly, there has been a 270 percent increase in the number of attacks against business, with small businesses and nonprofits at higher risk than ever before.

Why? It’s simple: easier targets. Criminals know that nonprofits and small businesses are less likely to have the time, patience, and resources to fight back when they’re the target of an attack. They pay up rather than risk the resources, capital, and reputation that might be spent defending against the attack.

It’s been said that the best defense is a good offense. That certainly goes for cyber defenses. There are five things a nonprofit can do to defend against the most common cyber-attacks. Taking these steps may mean the difference between sending an “I’m sorry” email to your constituents and business as usual.

Five Steps to Defend Against Nonprofit Cyber Attacks

There are many things you can do to prepare for and defend against cyber-attacks, but the following stand out as being simple, easy to implement, and within the abilities of most nonprofits.

  1. Educate employees about threats: Keep up to date about the latest types of cyber threats and educate your employees about the signs of such attacks. Employees may not know about ACH attacks, for example, which target them through emails pretending to be from the CEP to gain access to company bank accounts. These and other attacks pose serious threats to nonprofits but can easily be thwarted through education and vigilance.
  2. Encourage reporting of potential attacks: Encourage your employees to ask for help if they think they’ve accidentally clicked on a bad link or given out information to potential cyber thieves. Make it safe to do so and avoid repercussions that could discourage them from reporting. Early reporting of possible breaches enables you to take swift action to batten down the hatches against further problems.
  3. Establish offline ways to confirm financial transactions: Ensure that employees can confirm transactions or the release of vital information offline through a phone call to a senior executive. Offline ensures that a link in a phishing email won’t take the employee straight back to the scammer for confirmation. It also puts in place a series of checks to stop possible mistakes.
  4. Create backup systems and files: The use of cloud-based software such as cloud-hosted fundraising and donor management software protects files against viruses on your network by hosting them off network and onto a more secure cloud system. Other software such as Abila Cloud Accounting secures valuable financial detail through controlled access to accounts and financial systems.
  5. Prioritize updates: It’s tempting to click “ignore” when a pesky update notice pops up on your computer. Patches and updates close gaps in software codes that can be exploited by thieves, so don’t neglect updates. Conduct regular software updates on all of your systems. Cloud-based software updates automatically and in the background so you don’t have to remember to update it. That’s another reason for choosing cloud systems for accounting, financial management, donor and fundraising management, and more.

Do you remember a television commercial featuring Smoky the Bear? Smokey’s slogan was, “Only you can prevent forest fires.”

Well, only you can prevent cyber-attacks by taking the appropriate steps to protect and defend your organization. If you believe in your mission, then you know it is worth the time and effort to secure valuable resources against external threats like a cyber-attack.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

12 Steps to Improve Internal Controls

By | Accounting, Audit, Fraud, Internal Controls, MIP Fund Accounting, Nonprofit | No Comments

There’s no better time than now to review and analyze your organization’s internal controls. We’ve broken up the intimidating task of updating and maintaining proper internal controls while being slightly more focused and productive, with these 12 simple yet necessary steps.

Step 1: Map out your current processes and workflows. Detail out internal accounting procedures with a simple step-by-step checklist or list of rules. Clearly identify how long each step of authorization should take to process.

Step 2: Identify clear separation of duties. Open your workflow documentation back up and assign owners for each procedure, and other process owners who may be involved in authorizations, approvals, or reviews.

Step 3: Bring in an outside expert to review your current processes. Leverage outside expertise like certified fraud examiners (CFEs) or attorneys specialized in evaluating and improving internal controls. They can help identify any gaps or vulnerabilities.

Step 4: Find a new home for your documentation. You’ll want to maintain documentation of your processes in a commonly-used location that is easily accessible by staff. It will need to be continually updated as needs shift throughout the year.

Step 5: Review security permissions in your fund accounting system. Your technology should fully support your desired workflows encompassing your separation of duties. Update your security settings to limit system access, based on defined roles and security groups.

Step 6: Set up monitoring alerts. Ideally, your fund accounting system can be set up with active monitoring alerts to quickly notify other staff about key activities, such as when checks are printed, but not recorded, or vendor hold payment status is changed.

Step 7: Create a digital audit file. Here you’ll organize and maintain artifacts for future audits, including bank statements and reconciliations, investment summaries, fixed asset and depreciation schedules, documentation of donor pledges and grant funds received, and year-end accounts payable and expenses.

Step 8: Update your employee onboarding. Now that your documentation is up to date, you’ll need to update your new employee onboarding to reflect the changes. It’s important to promote a shared commitment of financial responsibility from the start with a new employee.

Step 9: Set a reoccurring monthly budget review. The budget is not just a planning tool – this is a key internal control. Schedule monthly budget reviews for reconciliation, explaining variances to the budget keeps proper checks and balances across departments.

Step 10: Recruit for an audit committee. You’ll want to institute a strong audit committee of independent members (typically from the board) who are familiar with finance and accounting. They should select and review the independent external auditors and help monitor for fraud.

Step 11: Schedule an internal audit. The best prepared organizations perform internal audits to ensure key control activities are being followed, and to identify any reconciliation discrepancies. Find an appropriate time for your team and stick to the date.

Step 12: Set up quarterly staff trainings. You must reinforce your controls with periodic trainings. Take the time now to get these on the calendar and build into the agenda time to discuss any shifting accounting standards for which you may need to adjust.

Remember, the objective of internal controls is to put “checks and balances” in place to help manage and preserve the charitable assets of the organization. It builds a foundation of policies and procedures that ensures employees act responsibly and ethically and prepares the organization for expected scrutiny (for example, audits and budget reviews) and tough to predict events (for example, staff turnover).

Here are a few resources to help you implement the 12 Steps to Better Internal Controls:

 

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.