Over the last few years we’ve heard many examples of fraud – especially in the not for profit sector when a single person has access to the bank statements and the numbers might only be reviewed by an independent person once a year.
Just recently there was another example locally of a trusted administrator stealing from school finances which is leading to a good discussion of controls on Linked In: School Fraud. Sports clubs, who work so hard to raise funds, are also often victims.
Xero Certified Adviser Heather Smith just put up an excellent post Why I had to cancel my credit card after 30 minutes of using XERO!!
I as you can imagine, reconcile my accounts every month. It is unlikely if I had not had these transactions automatically feed into XERO I would have identified them for a couple of weeks, and by then, someone is the US would have had a lot of fun on my credit card at my expense!
Having multiple users being able to see the numbers in real time is a very effective control to reduce the likelihood of fraud. Often Non For Profits cannot even get Internet Banking so automated bank feeds are big help – allowing a number of people to see the bank account frequently and easily.
On the schools forum there are some ideas around notifying when customer bank accounts are changed in the system. Having the email addresses of people on your Not For Profit board other than the treasurer – so that suppliers can raise an alert when they have not been paid – would also help.
What other controls would be useful to reduce fraud?