Detection/ Prevention Fraud Policy for Non-For-Profit Organizations When most think of not-for- profit organizations they know the nature behind the organization is a do-good culture. The missions behind these organizations are often to do good for others mostly the less fortunate society. With many knowing the organization is for the good of others it could make them vulnerable to fraud. A not-for-Profit organization places a greater trust in their employees because of the meaning behind the cause. However in today’s society fraud has increased and in that type of environment would allow a lot of illegal activity to take place. By setting up a detection/prevention fraud policy would hopefully diminish the chance of fraud.
Fraud awareness
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(CBIZ)
Individual Risk Factor Management: Ideal fraud prevention controls
1. The organization will create, maintain and demonstrate a culture that will be honest with high ethical standards. There will be a code of conduct with zero tolerance for unethical behavior.
2. There will be a separation of duties making sure certain jobs will be performed by different employees.
3. There will be a review of expense accounts all employees will need to submit along with the original receipts and itemize expense report. As well periodically there will be an audit review for travel and entertainment accounts.
4. There will be a restriction on funds requiring the purchasing employee to report in detail what the purchase was for.
Fraud Education Training Policy:
• All managers, employees, and volunteers will have training quarterly to review fraud education policy to keep all employees aware. o Topics include the fraud triangle: Perceived pressures/incentive, opportunity and
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A person who doesn’t authorize transactions or have custody of the assets should perform the reconciliations. • Perform ratio analysis – compare number of donors with contributions, compare number of employees with payroll expense.
• Review all general ledger adjustments.
• Conduct surprise audits.
• Institute job rotation and mandatory vacations. (Fraud Booklet)
Organizational Audits and the Audit Function:
The Audit committee team that this organization has hired has the authority to conduct or authorize any investigations with complete access to all the organizations records, books, documents and all personnel and facilities of this organization.
Audit Committee functions responsibilities:
• Review all the financial statements and consider when complete and reflects all generally accounting principles.
• Go over all annual report and regulatory filings.
• They will review significant nonstandard journal entries especially the ones near the year-end.
• The team will take the lead in any investigation if an employee is suspected for fraud or abuse.
• Review and go over any results with the management’s
To begin the audit, a review of previous 2 years of financial statements, provided by current or previous auditors for any unusual business transactions relating to revenue.
2) What does it mean for an organization to be ethical in its communication and practices?
4. All employees will be honest and responsible in their work, speech, and all communications, including personal and organizational finances, never seeking special favors, or borrowing from other employees or from those doing business with this organization.
We as business owners, management and or in a role of authority must set, address and comply with a solid foundation of ethics. “A code of conduct is the single most important element of your ethics and compliance program. It sets the tone and direction for the entire function. Often, the code is a standalone document, ideally only a few pages in length. It introduces the concept of ethics and compliance and provides an overview of what you mean when you talk about ethical business conduct.”
Also he may conduct bank reconciliations on pertinent accounts to make sure no discrepancies or misstatements are found. The auditor should also perform vertical and horizontal analysis for the income statements and balance sheets by the use of ratios.
At Company X, it is our upmost desire to comply with rules and laws pertaining to our business, and to hold our values at a spectacular level. Our company values include responsibility, equality, honesty, confidentiality, respect, and integrity. These values are the building block of our company, and should be followed by all employees, management, and any persons associated with our business. By adhering to the code of conduct, our work environment will be comfortable and reliable, and will help avoid unethical behavior.
The company should also focus on the segregation of duties in the organization so as to have proper distribution of the duties. The company should also focus on managing the cash properly. The company should also focus on prenumbering the documents and the check as it will help in reducing the likelihood of the unauthorized transactions and embezzlements, all the documents should be accounted in sequence periodically.
In preparing for the audit all aspects of a company need to be reviewed. For the preparation of the audit several things must be considered as define in the following pages.
|Develop Audit programs for the substantive audit procedures for the balance sheet and income statement |35 |
Today’s business world presents numerous ethical issues. In today’s world above board/moral ethics in organizations do not often materialize intuitively. Organization must strive to provide employees with a clear understanding of the overall company vision. This will aid employees in practicing the code of ethics, policies and procedures in the workplace. Companies must be unwavering in continuously delivering the uppermost ethics of provision in which customers, applicants and employees are entitled to under fair business practices. One major core value is to uphold responsible and fair business practices.
A not for profit organization is a corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive (Legal, 2013).” There are immense community benefits as a not-for-profit generally accepts everyone regardless of ability to pay. Nonprofit organizations are granted tax-exempt status which helps them to provide services to the public and are expected to be effective managers of their finances as well as being efficient (Financial Management, 2010). In doing so, they can gain exemptions from federal and state incomes taxes and have the ability to solicit tax-deductible contributions (Financial Management, 2010). Organization must follow legal financial
The purpose or aim of every organization is to establish such an organizational culture and behavior among its employees that helps in achievement of ideal ethical standards. There are certain determinants that play a critical role in helping achieve the right organizational culture. Some of these include personal moral intensity, social ties, codes of ethics, locus of control and Machiavellianism. These
An auditor would be interested in the above section, but just as important would be the Investing and Financing Activities sections. Auditors need to know where the company invested its money and where it received its money in order to figure out whether
What are the limits? NPO differs from for profit sector on different key areas namely the motivation factor, the funding and the staff. In the not-for-profit sector, the goals are focused on providing services or benefits to the members or client or furthering a cause. Any excess revenues earned do not go back to the owners but rather put towards furthering the cause. Funding is also different in NPOs; the variety of funds for NPOs can come from donors, government grants or foundation grants. Lastly, a big key difference between the for-profit and not-for-profit sectors is the use of volunteers. While some NPOs may have paid staff running the organization, most NPOs usually run on a volunteer basis. The Board of Directors is also sometimes run by volunteers. These differences affect and place some limitations on the design of the internal auditing function. Nonetheless, the impact of NPOs on our economy, by its size and presence in different areas, makes internal audit a key factor for success in the NPO.
• Integrity Every member of our organization behaves in an ethical manner. We will do the right things for the right reasons.