Instructions: Please watch the link and write a short memo, using a couple of sources.
Fraud in non-profit organizations
Fraud refers to deliberately using deception to gain something illegal or to deny a person from a legitimate right. Fraud is a civil wrong, and a victim can sue his perpetrator in a court of law. A person may commit fraud for monetary gains or other benefits, for example, being eligible for a mortgage (Ewing, 2009).Studies have revealed that small companies are more susceptible to fraud because they do not have anti-fraud measures. Such measures are set up to reduce the duration and cost of frauds. High-ranking fraudsters usually cause the company the most harm because they have more control over the organization’s funds.
Fraud among employees occurs due to pressure, for example, gambling, or personal financial problems. An employee who has access to valuable company information may also get tempted to commit fraud (Petrucelli, 2012). Some people rationalize fraud because they may carry the notion that the company will not notice the missing assets. A company should focus on protecting itself from fraud attempts, rapidly detect the attempts, and knowing what action to take once compromised. It is better to use an external audit rather than the standard audit (Kimmel, Weygandt, & Kieso, 2011). It is also beneficial for a company to carry out annual fraud risk assessments to gauge the probability of fraud occurring and how to manage it.
If a company wants to prevent fraud, the management should set a good example for moral behavior. All financial decisions must be legal and personal financial interests’ should be set aside (Burt, 2014). The organization should also consider some control measures, for example, having many stages of expenditure approval makes it hard for fraudsters to steal from the organization.
Burt, C. (2014). Managing the Public’s Trust in Non-profit Organizations. Dordrecht: Springer.
Detecting and Preventing Fraud and Embezzlement in Your Nonprofit Organization – December 6, 2011. (2016). YouTube. Retrieved 18 April 2016, from https://www.youtube.com/watch?v=6QeSLqF_nog&nohtml5=False
Ewing, B. (2009). The fraud. London: Sphere.
Kimmel, P., Weygandt, J., & Kieso, D. (2011). Accounting. Hoboken, N.J.: Wiley.
Petrucelli, J. (2012). Detecting Fraud in Organizations. New York: Wiley.