Charity Trustees: what you should consider to reduce the risk of fraud

As it is International Charity Fraud Awareness Week, Trustees should consider several key issues to reduce the risk of fraud on their charity.

The possibility of fraud is a constant risk faced by charities and should not be ignored.  Below is a list which highlights some of the issue’s charities can face. However, nothing can totally eliminate fraud from happening, but by being vigilant and taking basic precautions the risk of a charity becoming a victim of fraud can be reduced.

Financial systems

Regularly review financial controls and systems and ensure that there is an appropriate segregation of duties, particularly for cash handling and electronic payments.

Accounting records

Ensure that accounting records are kept up to date with bank and other control accounts reconciled on a regular basis.  Immediately investigate any discrepancies.

Software

Ensure that all software is kept up to date to reduce the risk of cyber-attacks. Have a policy for passwords and restrict access to key financial software and on-line banking arrangements.

Employees

Make appropriate checks of new employees, particularly for those who will be involved in financial systems.

Suppliers

Ensure there are appropriate procedures in place to check changes to supplier payment details.

Unexpected emails and phone calls

Ensure staff treat all unexpected emails and phone calls with suspicion, especially those purporting to be from banks and those requesting immediate payments.

Be aware

Keep up to date with current and emerging frauds by regularly reviewing updates from banks, media and other sources.

Anti-fraud policy and response plan

Have an anti-fraud policy to inform staff and trustees of procedures and have a fraud response plan so that everyone knows what to do if a fraud occurs.

Think like a fraudster

Brainstorm ideas as to how someone internally or externally could commit a fraud on the charity and then consider the controls and processes required to prevent such attacks.

If you would like further information or would like to discuss the suitability of your processes and procedures, please contact our charities team.