Fraud in Charities – Expenses Fraud

In a series of blogs for Charity Fraud Awareness Week, our Head of Charities and member of the Charity SORP Committee, Jenny Simpson, looks at payment fraud and what you can do to protect your charity against it.   Today she looks at expenses fraud;

The circumstances surrounding the fraud

Over the course of a number of years the Chief Executive and Finance Manager of a charity made fraudulent expenses claims for non-existent business travel totalling several thousand pounds.  Under the charity’s financial procedures, the Finance Manager was responsible for authorising the Chief Executive’s expenses and vice versa.

What you can do to protect your charity

Ensuring that no one person can initiate, authorise and make payment of a liability through the segregation of duties is a fundamental internal control but in this case the policy allowed the parties to approve each other’s expenses which facilitated their collusion to perpetrate the fraud.

In practical terms, unless one of the Trustees is prepared to be on hand regularly to approve the Chief executive’s expenses then they will have to be authorised by someone else in the senior management team, usually the Head of Finance. One safeguard would be for a Trustee to periodically review the expenses claimed by the Chief Executive.  Whilst this will inevitably be after the expenses have been paid, it would protect against long-term, low-level fraud.

This blog is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not be used as a substitute for taking professional advice in any specific situation. Wylie & Bisset LLP (and its subsidiary Wylie & Bisset (Audit) Limited) will accept no responsibility for any actions taken or not taken on the basis of this blog. If you would like further advice or would like to discuss any of the issues raised in the blog then please get in touch with your regular Wylie & Bisset contact or use the contact form on our website

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