Wylie & Bisset warns charities against fraud risk

Chartered accountant Wylie & Bisset has issued a warning to charities about the risk of fraud.

While the true cost of fraud to UK charities is unknown, the Fraud Advisory Panel estimates that it could be as high as £2bn a year. According to the Office for National Statistics, there were 4.7m fraud and cybercrime incidents in the last year.

According to Graham Gillespie, Wylie & Bisset partner, affiliate member of the Institute of Internal Auditors and a member of the Fraud Advisory Panel, for most charities it is now a question of when, not if, they are targeted by fraudsters.

“An overloaded criminal justice system means that the police can no longer deal with every reported case of fraud,” he warned.

“They might take more notice of a fraud against a charity because of the public interest aspects, but not necessarily, especially if small sums are involved. In any case, there is no guarantee that a police investigation will recover the money lost.

“Because charities can sometimes be viewed as soft targets, it is important that fraudsters and the general public can see that fraud is taken very seriously. That means being proactive in preventing fraud and then handling detected frauds in an open and transparent way.”

Last year Wylie & Bisset was involved in investigating suspected frauds in excess of £3m. Examples of fraud included: supplier payment details (mandate fraud); IT procurement; expenses and the use of dormant supplier accounts or fictitious suppliers/use of bank accounts requiring only one signatory.

Amongst Gillespie’s top tips to charities to prevent fraud are: act quickly to minimise any harm done and maximise legal options; don’t panic, stay calm and follow procedure; find out in advance who needs to be informed; have a ‘fraud response plan’ ready; take steps to preserve evidence and seek professional legal advice.

“Our highly experienced team has a wealth of knowledge and has worked with litigation lawyers and counsel on all aspects of fraud-related criminal proceedings where expert accounting input is required,” he said.

“We work with private and public sector organisations to help mitigate the reputational and financial risks that fraud represents, and our team is also experienced in speaking as witnesses and presenting evidence.”