Accounting Today published an excellent article written by Charlie Jones called “Why Nonprofits Are More Susceptible to Fraud.”
It’s an excellent primer with information that every nonprofit should arm itself with in order to protect the organization from fraud that could damage public trust and compromise your mission
In the article, Jones explains three elements of The Fraud Triangle:
1. Outside Pressures (things like high bills and addictions)
2. Opportunity
3. Rationalization
The articles also includes a checklist of financial controls to help you protect against fraud including:
- Encourage direct deposit for employees.
- Review payroll reports throughout the year and on a scheduled basis.
- Reconcile bank statements promptly.
- Require original receipts for reimbursements and have them canceled to prevent reuse by someone independent of cash disbursements.
- Segregate accounting from cash receipt reporting.
- Ensure that the monthly close occurs at the end of each month on a timely basis.
Click here for the complete list and full article.
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