Fraud warning signs for Charities

Fraud continues to be a significant risk for all organisations, with incidences of cyber-related fraud increasing. Whilst many frauds are hard to detect the repercussions can be huge, resulting in not only financial loss but also potential reputational damage.

Trustees have a duty to safeguard the assets of their charity, so need to be aware of possible warning signs and know what to do should they spot them.

In this article, we look at some of the potential warning signs for Trustees and charity staff to be aware of.

Change to suppliers bank details

Fraudsters may have hacked into your suppliers emails or may be aware of a supplier/contractor you are using. Always contact the organisation directly to confirm a change of bank details. The email address may look familiar, the letterhead and signature may look correct and the timing of the request may match your expectations – but it still could be fraud.

Emails with instructions to pay

Where instructions to make payments are received via email, even from staff within the organisation, ensure they are confirmed directly before the payment is made, regardless of who the email purports to be from.

Unusual or suspicious payments

Make sure you review the accounts for discrepancies which could highlight signs of false or inflated expenses.

Donation scams

Watch out for unusually large unexpected donations, as well as any complex terms and conditions attached, particularly where another charity is involved or the donation is made in a foreign currency.

New suppliers added to the purchase ledger

Invoicing fraud is where false invoices are processed from fabricated suppliers. Make sure you are aware of new suppliers and how their identity has been confirmed. Have internal controls in place so that such invoices can’t be paid without question or authority.

Unusual behaviour from staff or volunteers

Watch out for people avoiding review or audit, or where an individual looks after the entire financial process, are they reluctant to accept help? Are they working long or unusual hours or reluctant to take annual leave? Has the information presented to the Board suddenly been presented in a different format or become much more complex?

Unexpected transaction activity

Are there a large number of cancelled cheques? Duplicated payments?

If you require any further information please contact us at charites@whittinghamriddell.co.uk or call a member of our charities team on 01743 273273

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