The Institute of Community Directors recently released its findings from a survey of 845 not-for-profit organisations. The survey was designed to obtain insights into financial management within the sector including funding, banking, risk management and governance. The full report is available here.
The findings highlighted the difficulty faced by the sector in obtaining and retaining financial expertise at Board level, concluding that:
• 53% of organisations noted difficulty recruiting suitably qualified treasurers
• Most treasurers had been in the position for less than two years, indicating a high turnover
Of particular concern were the following findings in relation to fraud:
• 6% of organisations had suffered from fraud within the last three years (estimated to cost the sector up to $38 million per year)
• 60% of frauds were not reported to the police.
• The average loss from fraud was nearly $34,000.
• 79% of fraud was perpetrated by trusted insiders.
• 31% of organisations felt their employees and volunteers were trustworthy so no formal risk management process was necessary to protect from fraud.
Clearly there is a high degree of trust placed on employees and volunteers, sometimes to the detriment of the organisation. In this regard organisations need to consider whether they have become too reliant on the personal integrity of employees and volunteers. A good start in addressing this is the ACNC Protect Your Charity from Fraud Guide which is available here. Then come and talk to us about how we can help you design tighter financial procedures.
By Claire Harris