Five ways to protect your charity from fraudulent activity
As reported by BBC last month, a former finance manager who worked for Age UK has been jailed after admitting stealing almost £460,000 from the charity. Rachel Limbrick, 58, who worked at Age UK Gloucestershire, pleaded guilty to fraud by abuse of position in November.
Age UK Gloucestershire said of the incident: “We provide direct support to over 10,000 older people. They feel they have been betrayed; the impact on employees is psychological. They have to deal with the day-to-day loss of trust.”
No one wants this to happen to them, and importantly no one ever expects someone to do this to a not-for-profit entity. While mistakes can happen, there are a few things you can put in place in a bid to mitigate the risks of something awful like this happening to your charity.
1 .Ensure ALL payments are signed off by at least two people. This also includes online payments – most major banks now allow dual-signatory workflows with online banking too. This approach is very much deemed best practice these days and is inline with Charity Commission guidance.
2. Make sure that bank reconciliations are reviewed on a regular basis by someone other than the person doing the day-to-day book-keeping. Review your own practices and see who reviews what, and how this process can be improved.
3. Ensure management accounts are regularly being reviewed and any anomalies get queried. Small anomalies have the potential to be overlooked or easily explained, but these can add up as we saw in the Age UK example. Consider setting up a finance sub-committee to review any queries in more details than the main board.
4. Ensure all new bank details are run through your bank’s payee checking service and any anomalies queried. Phone calls must be conducted to anyone sending you invoices with new banking details to ensure those payment details are indeed legitimate.
5. Ensure you do spot checks on invoices and payments made. We appreciate mistakes can happen, but spot checks will help to identify any recurring mistakes that could lead to much bigger and systemic issues.
Ellen McAnaw, defending Limbrick, told the court: “The first time she stole money she felt physically sick, then she did it again and again and it became an addiction because of the lack of oversight from the charity.”
Protect your team, and your charity’s interests by implementing some additional check and challenge opportunities and look out for trending mistakes. Above all, take action before anyone has the opportunity to create significant problems for you.
If you would appreciate an independent audit of your financials to ensure best practice is being displayed, contact Andy Nash today who specialises in charity and third sector accountancy by info@enaidaccountancy.co.uk Tel: 02922 741174.
