Protecting Your Organisation From Fraud

Fraud and financial crime has been highlighted as one of the biggest concerns of the Australian public in relation to charities, according to national charity regulator, the Australian Charities and Not-for-profits Commission.

The ACNC said more than half of the allegations of fraud received have related to the conduct and activities of senior and entrusted members of the charity including the CEO, directors and financial officers.

The ACNC also made it clear that despite this, fraud could be committed by any staff member, paid or unpaid, or any other person who is given responsibilities.

The ACNC shares its top 10 tips for organisations to protect themselves from fraud.

1. Clear, written financial procedures and delegations (limits)
Have financial controls that all staff and volunteers follow. For example, always have two cheque signatories and, if possible, two people involved in handling and recording any money received, and set clear financial delegations limiting authority to approve purchases and other transactions to set amounts.

2. Robust human resources procedures
Make sure your recruitment processes are sound and provide ongoing training and communication to staff and volunteers about fraud prevention measures, including financial controls and how to report suspicions.

3. Code of conduct
Demonstrate and encourage ethical behaviour. Display your code of conduct prominently and model it.

4. Financial responsibility
Make sure people with financial responsibility are competent and understand their role and responsibilities. It is a good idea to have written role descriptions setting out expectations of staff, including the financial responsibility they have.

5. Fraud prevention policy
Consider developing a fraud control policy setting out who in your charity must do what to prevent, identify and respond to incidents of fraud.

6. Internet banking security
Make sure your accounts and online banking passwords are secure, and limit who can have access to them. Regularly change your passwords.

7. Limit cash handling
Large amounts of cash can encourage theft and fraud, so limit the amount to be handled by your staff and volunteers.

8. Regularly check your accounts and any grant funding
Review your accounts regularly and identify anything that does not make sense. Keep a record of all grant applications and how the grant funds were used. Monitor your charity’s performance against its budget, and if you see a significant variation in spending or income, ask for more information.

9. Ask questions
Members of your board or management committee should feel comfortable to ask questions about the financial information they receive before each board or committee meeting. If you manage a charity, make people accountable and do not take anything for granted.

10. Understand the importance of reporting fraud
Make sure your staff and volunteers understand the importance of reporting fraud to senior management and that a clear process is in place to report concerns to the police and the ACNC as soon as possible.

This will help to protect your charity from fraud and enable us to work with you to take appropriate steps to better protect your charity.
For more information on protecting your charity visit the ACNC website.