Nonprofit accounting audit services can help you weather all kinds of storm. The “storm” most often feared is also a five-letter word: fraud.
Why do we fear fraud so much? It’s a taboo subject at many nonprofits. The word is never spoken. It’s as if by speaking the word, we fear we’ll bring it on ourselves.
Little children do crazy things to wish for bad weather like snow days. They’ll sleep with their pajamas inside-out, for example, following the old schoolyard fable that such sacrifices please the skies and encourage a nice blizzard and its attendance day off from school, sledding and snowman building, and hot cocoa.
We know wearing pajamas inside-out has nothing to do with the weather conditions that foster snowstorms, yet we exhibit the same type of superstitious behavior when it comes to fraud. We’re almost afraid to say the word for fear of calling it down upon ourselves.
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Instead of fearing the word, look it squarely in the eye. Face your fears and take proactive action to build a strong culture of honesty, integrity, and ethics within your organization. Make your organization so transparent that no one will think twice about uttering the word “fraud” because they know it’s impossible within your office.
Nonprofit Accounting Audit Services: Three Steps to Prevent Fraud
While we all wish life came with the same warning-sirens that herald a tornado or other severe weather alert, fraud does give off its own signals. They’re subtle, more like static than a siren, but you can still learn how to detect them in the nonprofit workplace and take steps to clear the static from the air so that fraud is difficult (or, we hope, impossible, for people to even consider). These three steps will be your warning and shelter from fraud.
- Talk about it! Fraud isn’t a forbidden word. Some nonprofit workplaces are so afraid of even mentioning the possibility that they avoid talking about it altogether. If you don’t talk about the potential for fraud in the workplace, your staff won’t be on the alert for it. Make sure that fraud prevention, reporting, and resolution are all part of your employee handbook, training, and accounting practices. Don’t be afraid to talk to anyone who may have information about potential fraud. Keep an open-door policy so that everyone is comfortable speaking up if something happens.
- Be aware: To prevent problems of any type, awareness is critical. Develop a culture of fraud prevention and awareness. Everyone should practice simple fraud prevention procedures such as always have two people count out cash or place checks into the safe. Create a series of best practices for fraud detection and prevention. As the accounting leaders in your organization, you have the opportunity to implement procedures to benefit your nonprofit.
- Practice drills: Once everyone understands that fraud prevention is important to the organization and that the organization is serious about prevention, the last piece in the puzzle is to make sure that everyone understands the steps to take if they suspect fraud. “Practice drills” sound silly until you consider how many other emergency situations we practice for in life. Nearly every school, office building, and hospital practices fire drills and other emergency situations; shouldn’t your organization do the same to protect against losses? Practice “fraud drills.” Identify someone on the team who is a ‘safe’ person to report suspicions too. Have the numbers handy for your nonprofit accounting audit services so that if fraud is detected you have the go-to guys and gals on speed dial for immediate help. Write everything down into a simple procedure list so you have step-by-step instructions and action items at the ready.
With awareness, prevention, and reporting procedures in place, your nonprofit will be on dry ground when it comes to fraud alerts. While we all wish that fraud and other serious workplace events came with some kind of early warning signal, in the case of fraud detection, just being aware can be enough of a deterrent.
Financial Advice and Assistance for Nonprofit Organizations
Beck & Company Certified Public Accounts and Business Advisors specializes in nonprofit financial management, nonprofit accounting audit services, and issues pertaining to the world of nonprofits. We have extensive experience helping nonprofits of all sizes achieve their mission without sacrificing margin. Contact us for more information.