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Tuesday 31 March 2015

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Charities need to be more ‘fraud aware’, says Charity Commission

Written by Andrew Holt
28/01/11

The Charity Commission has encouraged charities to be more ‘fraud aware’, in response to a report published by the National Fraud Authority into fraud across many sectors.

1,000 charities that were surveyed for the report have estimated that the percentage of their turnover lost to fraud is on average 2.5%.

The report shows that fraud in the charity sector represents 3% of all fraud in the UK.

Sam Younger, chief executive of the Charity Commission, said: “We have previously said that fraud in charities has been under reported, which is reflected in today’s report.

"However it also shows that instances of charity fraud remain low and the public can be assured that the vast majority of charitable money is going straight to good causes.

"Whilst no system can guarantee that any charity or business will be totally protected against loss, charity trustees must make sure that they have strong financial controls in place to protect their charities.

"One of the ways they can do this is by using the advice and guidance on our website. Charity trustees must be more fraud aware, and I hope that today's report is a wake-up call to any charity who thinks it will never happen to them."

Last year the total amount of fraud and theft reported to the Commission through serious incident reporting was £21m.

The Commission also helps charity trustees to protect their charities from fraud by producing advice and guidance.

The Commission is reminding trustees to use the guidance available on its website, including checklists to help them minimise the risk of fraud.

In addition to detailed guidance for charities of all sizes, the Commission has produced some simple top tips* for trustees of smaller charities:

1 Make sure you have access to accurate and up to date financial information and monitor the charity’s financial performance against its budget

2 Make sure that cheques and cash are kept securely, banked promptly and recorded in the accounting records

3 Ensure cheque books are kept in a secure place – do not sign blank cheques

4 Make sure there are proper controls in place to protect income received by post and bank it as soon as possible

5 Make sure there are proper controls in place in relation to fundraising events, such as making sure two people handle and record the money received, that money is banked as soon as possible and that collection boxes are numbered and recorded

6 Keep proper records when claiming gift aid – HMRC give advice on what should be recorded

7 Make sure you have a clear policy on paying expenses to staff and volunteers and make sure they are authorised by someone other than the claimant

8 Make sure you have controls to ensure that all income from trading is recorded and received

9 Have monitoring procedures in place to make sure grants have been used for the agreed purposes

10 Report any suspected fraud to the police and to the Charity Commission
taken from CC8, Internal Financial Controls

The Charity Commission regularly issues alerts to charities and the public to warn against possible scams and fraudulent practice, and will be publishing shortly additional new guidance for trustees on Fraud and Financial crime.

The Charity Commission has produced the following publications to help charities which are all on the Commission’s website here

CC8: Internal Financial Controls
here

Internal Financial Controls checklist
here

Reporting serious incidents to the Commission
here

Charities Back on Track 2010 – case studies of charities including cases of fraud
here



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