charity fraud awareness
DESCRIPTION
Charity Fraud Awareness. Lisa Heading Fraud Prevention & Investigations Unit December 2012. Content:. What is Fraud? What leads people to commit Fraud? Stats / figures and why Charities are vulnerable Protecting against Internal Fraud – Red Flags Anti-Fraud Programme - PowerPoint PPT PresentationTRANSCRIPT
CONFIDENTIAL
Charity Fraud Awareness
Lisa Heading Fraud Prevention & Investigations Unit December 2012
© Z
urich
Fin
ancia
l Ser
vice
s
2 CONFIDENTIAL
Content:
• What is Fraud?
• What leads people to commit Fraud?
• Stats / figures and why Charities are vulnerable
• Protecting against Internal Fraud – Red Flags
• Anti-Fraud Programme
• Best Practice Recommendations
• Q & A Session
© Z
urich
Fin
ancia
l Ser
vice
s
3 CONFIDENTIAL
What is Fraud?
The Charity Commission and the Serious Fraud Office define fraud as:
‘a form of dishonesty, involving either false representation, failing to disclose information or abuse of position, undertaken in order to make a gain or cause loss to another’.
Zurich expands this definition to: • Misappropriating, concealing, diverting or obtaining money, assets
including data, information or services by deceptive means;
• Misusing one’s position through unlawful or improper acts with the intention of causing financial loss to Zurich, its customers, employees and / or suppliers;
• Any false representation, or material non-disclosure, which is intended to be misleading with the intention of securing a financial or other gain, or causing a financial loss or reputation risk.
© Z
urich
Fin
ancia
l Ser
vice
s
4 CONFIDENTIAL
Opportunity• The ability to commit
fraud – what’s the environment like?
• Culture?• Controls - lax / non-
existent?• Governance – poor
oversight?
Motivation• Financial difficulty• Need for money• Greed• Maintenance of
lifestyle
Rationalisation• “No-one will miss it”• “Merely borrowing”• Employer dissatisfaction• Need outweighs the risk/crime
What leads people to commit Fraud?
The Fraud
Triangle
© Z
urich
Fin
ancia
l Ser
vice
s
5 CONFIDENTIAL
Annual Fraud IndicatorMarch 2012
© Z
urich
Fin
ancia
l Ser
vice
s
6 CONFIDENTIAL
Protecting against Internal Fraud
33% of reported fraud is identified through whistle-blowing and tip-offs; 15% is identified by management, 15% by audit and 12% by accident. A far greater amount goes undetected.
One way to protect against fraud is to look out for the warningsigns (Red Flags), such as:
• changes in the behaviour of employees or volunteers;
• new staff resigning quickly;
• an increase in the number of complaints being made;
• transactions taking place at unusual times or not being recorded on a timely basis;
• discrepancies in accounting records;
• unexplained items on reconciliations;
• missing documentation; and
• missing funds or assets.
© Z
urich
Fin
ancia
l Ser
vice
s
7 CONFIDENTIAL
Anti-Fraud ProgrammeThe most effective way to deal with internal / external
fraud is to develop an anti-fraud programme, appropriate and proportionate to the size of the
charity.
Areas to be considered include:
C – Controls - robust financial controls
H – Heighten fraud awareness by training all staff and volunteers
A - Anti-corruption policies and procedures
R – Reporting - whistle-blowing policies
I – Implement fraud risk assessments
T – Tone at the Top
I – Insurance (theft)
E – Employees - robust recruitment and screening procedures
S - Segregation of duties and authorisation limits
© Z
urich
Fin
ancia
l Ser
vice
s
8 CONFIDENTIAL
Benefits of an Anti-Fraud Programme
The benefits of an effective anti-fraud programme cannot be
understated.
These include:
• reduced risk and impact (financial and reputational) of fraud or error;
• less disruption dealing with fraud or error after the fact;
• greater likelihood of achieving charitable objectives;
• early warning of problems;
• better decision making;
• better allocation of resources;
• more effective communication with stakeholders; and
• effective continuity planning.
© Z
urich
Fin
ancia
l Ser
vice
s
9 CONFIDENTIAL
Best Practice Recommendations to minimise the risk of fraud:
1. Critically review your financial controls at appropriate intervals, keeping them up-to-date.
2. Segregate duties – don't allow one or two people to be in charge of your charity's financial controls.
3. Make sure all of the separate parts of the financial records agree with each other and always keep receipts.
4. Avoid weakening your financial security for the sake of saving time; e.g. Never pre-sign blank cheques, even where a second signature is required.
5. Keep a register of valuable assets and property and inspect them periodically.
© Z
urich
Fin
ancia
l Ser
vice
s
10 CONFIDENTIAL
6. Ensure online banking arrangements are secure and protected with dual-level authorisation.
7. When recruiting staff, especially those who handle finances, make appropriate background checks and references.
8. If the charity makes grants to beneficiaries or other organisations, carry out appropriate due diligence checks on applicants.
9. Ensure Trustees receive and consider regular reporting information about the charity's finances.
10. If you suspect or become aware of fraud, make sure you know what to do and whom to inform. Prompt and appropriate action will
help limit any damage.
(Cont) Best Practice Recommendations to minimise the risk of fraud:
© Z
urich
Fin
ancia
l Ser
vice
s
11 CONFIDENTIAL
Any Questions?