Understanding internal controls – Why nonprofits need both preventative and detective policies

Description

Abstract: According to the Association of Certified Fraud Examiners’ (ACFE) Occupational Fraud 2022: A Report to the Nations, the average loss for nonprofits was $851,000. The ACFE report found that almost 30% of the victim organizations lacked adequate internal controls to prevent fraud from occurring. In addition to minimizing fraud, comprehensive internal controls also help ensure accurate accounting records and financial statements. This article discusses four critical measures that nonprofit organizations can use to help combat fraud. A short sidebar covers how motivation and rationalization play a part in a fraudster’s thought process.