Managing Fraud Risk Through Strong Governance

The Association of Certified Fraud Examiners estimates that fraud costs organizations, on average, 5% of their annual revenue. Globally, that’s more than $4.5 trillion lost each year. This is a huge problem for all manner of organizations, and strong corporate governance is a critical ingredient in managing that fraud risk.

Corporate governance, or simply “governance,” refers to the way an organization manages accountability, fairness, and transparency in its relationship with its stakeholders. And although the concept may seem like something that only applies to large or publicly traded organizations, that is not correct. Strong corporate governance is necessary for managing fraud risk at organizations of any size.

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COVID-19 Related Fraud Schemes

The coronavirus pandemic has given rise to a host of fraud schemes attempting to profit off the crisis. According to the Federal Trade Commission (FTC), consumer complaints for COVID-19 related scams topped 7,800 in early April, totaling $5 million, with an average loss of $598. U.K. victim losses are currently at just over $1 million.

These scams tend to fall into one of three categories. The first is your typical “snake oil salesman” type, where the fraudster is selling false promises in the form of goods or services. The second category revolves around computer-related scams that target networks and mobile phones in an attempt to gain access to sensitive data.

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Occupational Fraud at Not-for-Profits: Red Flags and Preventative Steps

As we approach International Fraud Awareness Week (November 17-23, 2019), it is a great time to review the basics of occupational fraud and why fraud awareness is especially important for not-for-profits. Occupational fraud is any fraud committed against an organization by its own officers, directors, or employees. This article addresses why not-for-profits are frequently vulnerable to fraud, the financial and reputational impact of fraud, why people commit fraud, behavioral and operational red flags of fraud, and most importantly, a few simple and inexpensive steps you can take immediately to help mitigate the risk of fraud in your organization.

Why Not-for-Profits are Vulnerable to Occupational Fraud

All organizations,

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Bad Actors and Charities Are a Bad Mix: What the Form 990 Can Tell Us About the College Admissions Scandal

The Key Worldwide Foundation, formed in 2013, now finds itself at the center of the college admissions scandal grabbing headlines the last couple weeks. Over the years, millions of dollars had flowed through the charity as part of the scheme without IRS detection.

Watching the story develop, it was interesting how quickly attention turned to how the IRS should have done more to stop the misdeeds of the scofflaws and how the Form 990 should have uncovered these transgressions. It is important to understand the purpose of the Form 990 and everyone’s role in producing the Form 990.

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Data Mining and Procurement Cards: Using Technology to Reduce Risk

I recently attended a training that discussed procurement cards—both their increased popularity and the risks associated with using them.

During the training, I shared that we have been using technology to help mitigate these risks. This technology can also help reduce risk in many other areas as well, including payroll and disbursements.

The Issue with Procurement Cards

Procurement cards are becoming a more common method of simplifying the purchasing process.

But as popularity and use grow, so does the number of transactions. This growth lessens management’s ability to effectively monitor use of these cards.

As a result,

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