Preventing insider fraud

Amie Woods of the Charity Commission gave the keynote speech on day two of the recent Charity Accountants’ Conference. In covering the current priorities from the Commission’s perspective, she devoted much of her talk to the question of charity fraud.

Quoting from the Commission’s April 2018 report ‘Focus on insider fraud in charities’ she said the absence of appropriate controls was the primary enabling factor in either allowing frauds to occur, or in making the charity more vulnerable to fraud.

In a survey undertaken for the purposes of the report, the Commission found that 43% of respondents suggested the prime factor was excessive trust or responsibility placed on one individual and 24% were due to a lack of challenge or oversight.

The Commission is clearly concerned at the high proportion of serious incident reports that involve charity fraud – while still being concerned that not all reportable incidents are being reported on.

There is a clear lesson here for all charities to:

  • gain an understanding of their own fraud risks,
  • adopt a fraud aware culture that is not based purely in trust
  • ensure that appropriate internal controls are in place, and
  • understand their reporting requirements should a fraud occur.

All these aspects will be covered at SV’s upcoming client seminar of charity fraud being held in Birmingham on 18 October. Click here for booking details.