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ARTICLE · 15 SEPTEMBER 2006

Reducing The Risk Of Employee Fraud

Smith & Williamson
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It is a common misconception that the smaller the charity the less susceptible it will be to employee fraud. In reality smaller charitable entities are likely to have more simplistic controls, which can lead to temptation getting the better of a minority of employees.

United KingdomStrategy

It is a common misconception that the smaller the charity the less susceptible it will be to employee fraud. In reality smaller charitable entities are likely to have more simplistic controls, which can lead to temptation getting the better of a minority of employees.

The risk of fraud may be split into two categories:

1. the risk that charitable funds might be misappropriated

2. the risk that a fraud might lead to misstatement in the financial statements

The duties of trustees

The fundamental duty of every trustee is to protect the property of the charity they serve and ensure that the resources attributed to the charity are allocated in such a way as to achieve its charitable objectives. If the trustees are not seen to have considered internal controls nor implemented or tested them, it is possible that the trustees might be found to have been negligent and become liable for such fraud.

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