Azets Top Tips for Avoiding Fraud

Fraud rose sharply as a result of the pandemic, with the National Fraud Intelligence Bureau (NFIB) reporting an increase of 17% in reported offences for the year to 31 March 2022 compared with the 2021 year. Whilst it is always difficult to guarantee you won’t be affected, there are various steps you can take to protect your organisation. But always bear in mind fraudsters do not care who, what or where you are when attempting to defraud.

Whilst prevention is better than cure, it does take time. You need to prioritise those actions that will have the maximum impact for the minimum investment. Here are our top tips for avoiding fraud:

• Know your charity’s area of risk and profile those risks. This is what an organised fraudster will be doing so you should be following suit.
  
  
• Implement policies where staff can report suspected fraud, for example, a whistleblowing line. This needs to be clear, easily accessible and staff need to be trained on how to report alleged fraud. Your staff are your eyes and ears and are a valuable asset in combating fraud.
  
  
• Make sure everyone has a proper break from work every year – individuals who are committing a fraud, need to be in control of their area at work all of the time, so no one picks it up. Encouraging staff to take a proper break as well as ensuring someone else covers their role is not only a disincentive, but it can also result in frauds being uncovered.
  
  
• With staff continuing to work from home, make sure you consider the fraud risk associated with this i.e. are home systems more susceptible to cybercrime?
  
  
• Be cynical – it’s remarkable how many people impacted by fraud say ‘I should have known’. Don’t turn a blind eye.
  
  
• Spread the paying and recording of invoices across different members staff or Trustees – difficult to do in a small team but crucially important to ensure you only pay valid debts.
  
  
• Review payment runs properly (with supporting documents) – don’t assume everything is OK and leave it to chance.
  
  
• Question your financial results – if you’re not making as much money as you think you should be, then investigate. Are your costs creeping up, or are they inflated because of fraud?
  
  
• Be cautious of over-complicated procedures – being blinded by science does not necessarily mean your employee is a genius. It could be a cover-up to ensure no one understands what is going on.
  
  
• Never pre-sign blank cheques - it sounds obvious, but it happens, and we have witnessed fraud as a result.

Our goal isn’t to scaremonger, and it would be wrong to suggest that you should stop trusting your team. However, in our experience, people who have been affected by fraud nearly always look back and wonder why they didn’t spot it.

We are happy to talk through any concerns you might have about the fraud risk to your organisation. This may include assessing your internal controls and procedures to ensure they are vigilant enough.  For more information email john.howard@azets.co.uk.