The guiding principles for protecting your charitable business against fraud

As mentioned in our previous article, fraud is an underlying problem for charities and raising awareness is key to combating the issue.

During ‘Charity Fraud Awareness Week 2019’, the Charity Commission published a one-page summary detailing the 8 guiding principles on tackling fraud in charities. They are as follows:

1. Fraud will always happen – simply being a charity is no defence.
   Charities are just as likely to be targeted by fraudsters as any other entities. Even the best prepared organisations can’t prevent fraud.
2. Fraud threats change constantly.
   Thanks to digital technology fraud evolves continually, and faster than in the past therefore charities need to be alert, agile and able to adapt their defences quickly and appropriately.
3. Prevention is (far) better than cure.
   Effective prevention can avoid potential financial loss and reputational damage. It is far more cost-effective to prevent fraud than to investigate it and remedy the damage done.
4. Trust is exploited by fraudsters.
   Charities rely on trust and goodwill, which make them even more susceptible to fraud. They should develop a strong counter-fraud culture to set up robust fraud prevention controls which challenge unusual activities and behaviour.
5. Discovering fraud is a good thing.
   The first step in fighting fraud is to find it, which requires charities to talk openly and honestly about it. When they don’t, it’s the fraudsters who benefit.
6. Report every individual fraud.
   The timely reporting of fraud to police, regulators and other agencies is fundamental to strengthening the resilience of individual charities and the sector as a whole.
7. Anti-fraud responses should be proportionate to the charity’s size and fraud risks.
   The vital step in fighting fraud is to implement robust financial controls and get everyone in the charity to sign up to them.
8. Fighting fraud is a job for everyone.
   Everybody has a part to play in fighting fraud – trustees, managers, employees, volunteers and beneficiaries. Trustees in particular should manage fraud risks actively to satisfy themselves that the necessary counter-fraud arrangements are in place and working properly.

If you wish to discuss how best to protect your charitable business against fraud, please contact a member of our EQ Charities team via charities@eqaccountants.co.uk or contact one of our offices.