New guide arms charities to combat fraud

To arm charities to combat fraud, Chartered Accountants Australia and New Zealand in collaboration with Social Business Consulting have released Charity Fraud: Tools for Prevention.

Fraudsters undermine a charity’s good work. Frauds can lead to financial losses, reputational damage, and diminished public confidence in the charity sector as a whole. Measures to fight fraud are critical.

The guide draws on research from two surveys conducted in 2022. It also provides charities and those who advise them with an extensive toolkit to prevent, detect, report, and investigate fraud.

The survey asked respondents about their fraud experiences and what they did to prevent them, as well as recording charity demographic data. Their responses created new data about fraud’s prevalence, prevention methods, and their effectiveness.

‘The most effective fraud-prevention measure is to train, and keep training, your staff. Fraud is conducted by people’, a survey respondent wrote.

The survey showed that 34 per cent of Australian respondents and 14 per cent of New Zealand counterparts had experienced suspected or proven fraud in their domestic operations in the past two years.

In charities with international operations, 61 per cent of Australian respondents and 40 per cent of their New Zealand counterparts experienced either suspected or proven fraud in the past two years.

Most charities reported greater fraud losses in domestic rather than international operations. The median loss for Australian charities was A$45,000, one respondent losing A$600,000.

The median loss for New Zealand charities was NZ$5,000, one organisation reporting losing NZ$50,000. In international operations, charities reported smaller amounts: the median was less than AU$1000 for Australian charities and less than NZ$5000 for NZ counterparts.

Charity Fraud: Tools for Prevention offers a suite of tools and includes a wealth of resources, templates, real-life case studies, and good-practice models.

Under an umbrella of an overarching fraud prevention framework, the guide suggests strengthening policies and procedures around managing finances, conflict of interest, delegation of authority, donor acceptance, code of conduct, due diligence, and screening.

The guide’s toolkit includes:

  • Prevention measures to stop fraud or deter people from contemplating it
  • Detection activities to determine when and if fraud has occurred
  • Reporting to safely evaluate suspected fraud and notify relevant interested parties
  • Investigation and responses to determine if a fraud has actually happened, its extent and consequences, and
  • Feedback and adjustment measures to inform and improve overall fraud prevention based on changes in circumstances, employees, technology or regulations and actual fraud experienced.

 The guide suggests that charities ethically conduct these activities, employees, volunteers, and board members behaving with honesty, integrity, and transparency.

 You may find the guide at