Top tips to Protect your Charity from Fraud

Does the cost-of-living crisis heighten the risk of fraud for charities?

It was a question posed by Sussex and South East accountancy firm, Carpenter Box, at a recent Not for Profit Workshop, given that financial fraud within UK charities has previously been estimated by the National Fraud Authority at around £1.3bn.

  • To coincide with Charity Fraud Awareness Week (27th November – 1st December), the firm, which has offices in Worthing, Gatwick, Brighton, Chichester and London, suggests the following steps to mitigate the risk of fraud:
  • Develop and publish a clear zero tolerance fraud policy supported by senior management and circulated to all staff and volunteers.
  • Have a clear whistleblowing process in place to encourage staff to report any potentially fraudulent activity anonymously.
  • Undertake regular risk assessments, internal audit reviews and account reconciliations.
  • Ensure financial processes and controls are strictly observed and insist on supporting documentation before paying invoices or expenses.
  • Verify payment requests and don’t permit the sharing of passwords or passcodes.
  • Undertake comprehensive induction training and due diligence for all new staff, as well as getting to know them well. When staff or volunteers leave, take back any IT equipment that belongs to the charity and change relevant passcodes.
  • Pay close attention to financial information, monitor MI and follow up on any unusual expenses/trends.
Robin Evans, Carpenter Box Partner and head of the Not-for-Profit team,

Robin Evans, Carpenter Box Partner and head of the Not-for-Profit team, commented:

“Critically, should any potential fraud be detected, charities need to have a clear plan in place that allows for rapid action to minimise any loss and recover funds.”

“Of course, beyond financial risks, fraud can also lead to reputational damage, impact on donations and affect staff morale, not to mention the considerable time and cost of investigation and any subsequent disciplinary or legal procedures. For all these reasons, it’s imperative to create a secure operating environment and disseminate relevant policies and procedures across the organisation.”