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Not for profit fraud warning despite improvement

Australia’s only survey on fraud in the not-for-profit sector has revealed that the incidence of fraud among respondents has fallen over the past two years and involves relatively small amounts of cash or inventory when compared with large public and private companies.

The 2010 survey, conducted biannually by leading national accounting and advisory firm BDO, revealed 15 percent of respondents reported suffering a fraud in the past two years, compared with 16 percent in the 2008 survey and 19 per cent in the 2006 survey. However, police are not usually informed.

Highlights from the BDO Not-For-Profit Fraud Survey 2010:

  • The number of respondents who see fraud as a problem in their organisation has fallen sharply to 14 per cent from 20 percent in the 2008 survey
  • The person committing fraud in NFPs was usually in his or her 30s or 40s and holding a paid non-accounting position.
  • Volunteers were rarely involved in fraud (only 12 percent of cases)
  • The principal motives for the frauds were financial pressure, gambling and maintenance of lifestyle
  • The reported large frauds were also low in value compared with other studies, with an average value of $26,132. In comparison, a 2008 study showed the average fraud among large public and private organisations was $291,515

Chris Skelton, BDO’s National Lead Partner, Not-For-Profit Sector, said most NFPs did not report fraud to police because they feared adverse publicity and loss of donations and agency funding. He feared NFP’s might be getting complacent with their financial controls with this news and cautioned against it.

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David Olsen

David Olsen

An undercover economist and a not so undercover geek. Politics, business and psychology nerd and anti-bandwagon jumper. Can be found on Twitter: <a href="http://www.twitter.com/DDsD">David Olsen - DDsD</a>

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