Internal Controls and Fraud Prevention in Non-Profit Organization

2789 Words12 Pages
INTERNAL CONTROLS AND FRAUD PREVENTION IN NON-PROFIT ORGANIZATION WRITTEN BY DAVID SANNI Designed to provide information on key areas that can strengthen the internal control system of VI-MID-ISLAND SERVICE (VIMS) Submitted To VANESSA OLTMAN Faculty of Management Vancouver Island University Nanaimo, BC, Canada (Nov/15/2012) Table of Content 1.0 INTRODUCTION 3 2.0 NATURE OF FRAUD IN CANADIAN NON PROFIT ORGANIZATION 3 2.1 TYPE OF FRAUD IN NON PROFIT ORGANIZATIONS 3 2.2 PERPETRATORS OF FRAUD IN NON PROFIT ORGANIZATION 4 2.3 IMPACT OF FRAUD TO NON PROFIT ORGANIZATION 4 3.0 COMPREHENSIVE…show more content…
Non-profit median loss was $100,000 per fraud occurrence and represented 10.4% of the total organizations studied. How ever comparing to overall data else where we found out that losses in Canadian non profit organizations is low, but that could be misleading for some reasons. Much fraud goes unreported, while some organizations are reluctant in releasing information on fraud to protect the image of the organization. And also many fraud outcomes in Canadian media are not reported compared to other country. 2.1 TYPE OF FRAUD IN NON PROFIT ORGANIZATIONS There are two categories of fraud that can be perpetrated against a non profit organization, which are internal and external fraud. Internal fraud is a fraud committed by an insider of the organization such as employees, directors and officers. While external fraud is committed by person outside the organization such as fundraisers, sub-recipients, programme participants and vendors. Internal fraud can also be classified into two categories misappropriation of funds and fraudulent financial statement. Assets misappropriation appears to be the most common fraud in non profit organization such as: • Revenue and cash receipt scheme: Skimming which is known as stealing of cash before they are been recorded in the accounting record or Theft of merchandise which involves stealing items donated. • Purchase and disbursement scheme: Credit card
Open Document