Member Article

Charities must assess fraud risk, says expert

Charities must take steps to assess and prevent the risk of fraud, according to a North East accountant.

The Government is currently undertaking steps to set a cap on tax relief for charitable donations, and Phil Loveday from chartered accounting firm UNW is advising charities to be aware of the risk of fraudulent activity.

He said: “The publication of the Charity Commission’s strategy for dealing with fraud, financial crime and financial abuse is particularly timely.

“Before joining UNW, I spent 10 years in charge of the Fraud Squad with Northumbria Police and
I know all too well how common fraudulent activity can be – right across the spectrum - and how
damaging it can be for organisations.

A recent survey by the National Fraud Authority discovered that the sector is losing around 1.7% of its annual income to fraud, which accounts to around £1.1 billion across the whole sector.

The most common types of fraud cited were payment fraud, fraud by employees and volunteers and cyber fraud.

Mr Loveday continued: “Given that charitable organisations often employ volunteers who may not always receive the necessary background checks, it is extremely important for the
appropriate risk assessments to be taken.

“In these challenging times charities are finding it increasingly difficult to attract funding, so it is a
tragedy when monies that have been raised, are allowed to be salted away by fraudsters. By taking some simple precautions, many risks can be avoided.”

The Charity Commission is now working to cooperate with the sector and other government agencies to detect, deter and disrupt fraudulent activity in Charities.

It is also in the process of co-leading a joint charity fraud project, which will bring together a number of organisations to reduce the risk of fraud, and the group will shortly be publishing useful information for both charities and the public on how to protect themselves.

This was posted in Bdaily's Members' News section by Ruth Mitchell .