16 anti-fraud controls
December 15, 2014 The NonProfit Times
It never lets up, nor should you. In nonprofit operations, that’s usually true no matter what “it” is.
One “it” requires never-ending caution is the area of fraud and fraud prevention. Nonprofits do a lot of fundraising, and they do a lot of work with those funds that were raised, which means the opportunity for fraud exists, all of the time, in a lot of ways, in a lot of places.
During the Summit for New Risk Champions in St. Petersburg, Fla., Melanie Lockwood Herman of the Nonprofit Risk Management Center emphasized the importance of anti-risk controls. She added that the presence of such controls correlates with significant decreases in cost and duration of occupational fraud schemes.
Herman offered 16 anti-fraud measures and said that organizations that implemented any of them experienced considerably lower losses and time-to-detection spans. The measures are:
- Rewards for whistleblowers;
- Job rotation/mandatory vacation;
- Surprise audits;
- Formal fraud risk assessments;
- An anti-fraud policy;
- Fraud training for employees;
- Fraud training for managers and executives;
- A hotline;
- Employee support programs;
- An independent audit committee;
- Management review;
- An external audit of internal controls over financial reporting (ICOFR);
- Internal audits;
- Management of certification of financial statements;
- Code of conduct; and,
- External audit of financial statements.