Getting tough on fraud top tips

Fraud is a problem across all areas of the economy, including the NFP sector.

Protecting yourself against fraud and reacting effectively to fraud has never been more important. Fraud can lead to significant losses, reputational damage and – in the case of big frauds – sometimes the collapse of an organisation.

Effective fraud advice can help you significantly reduce costs and enable you to spend more of your resources on outcomes that matter.

Here are six tips on how NFPs can tackle fraud:

  • Strengthen your culture – An anti-fraud culture needs senior management support and has to be led from the top.  Introduce a fraud policy, incorporate an external whistleblowing service (such as and a fraud-response plan.  Place fraud as a repeat agenda item at regular management meetings; this will focus your thinking on the constant threat to your organisation.  Train your staff to look out for fraud indicators.
  • Prevention is better than cure – Spending relatively small amounts of time and money on fraud prevention and detection could save you significant amounts of time and money in the future.  Remember, the biggest threat to your organisation is not always a financial one – the reputational damage caused by fraud, especially if it is shown that you made no attempt to minimise the risk.
  • Look for weaknesses – There are many red flags that can give you an indication that all is not well.  You are particularly vulnerable when cash payments are involved, so try to reduce these to a minimum.  Always ask for evidence of expenses and periodically check a random sample in detail to make sure all is well.  Internal fraud may be small in value but over time these small amounts could represent a significant loss.
  • Keep monitoring – Tackling fraud is an ongoing challenge.  Fraud monitoring should not be something that is reviewed once a year on a tick sheet; it needs constant review.  If you want your organisation to become more fraud resilient, you need to continually work at reducing the threats.
  • Audit – External auditors have specific fraud responsibilities under auditing standard ASA 240 The Auditor’s Responsibility Relating to Fraud in Audit of a Financial Report.  Engage your auditor about fraud.  Consider using external auditors to provide your board with additional assurance on such issues as credit-card expenditure and key internal controls.
  • Don’t bury your head in the sand – Fraud opportunities exist in organisations big and small.  It’s not good enough to say, ‘We don’t have a fraud problem in our organisation’.  The fact is that you have probably not yet uncovered it.  Don’t wait for fraud to deliver a knockout punch; think about what preventative measures you could introduce.  If you spot that something is amiss, get help sooner rather than later.

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