Understanding fraud and current trends

Understanding fraud and current trends

By on Jan 7, 2024 in Best Practices, Blog, Government and Public Sector, Non Profit, Public Libraries |

By Asha Vyas, Training Content Specialist, Your Part-Time Controller, LLC

Opportunity, pressure, and rationalization…these are the reasons behind an individual’s decision to commit fraud and libraries, nonprofits, and businesses are as vulnerable as any other institution.

Fostering your strong ethical culture can mitigate fraud risk. Culture is reflected in the tone at the top.

Add ‘Culture’ to a fraud risk mitigation plan

  • Establish management goals for culture
  • Evaluate threats to culture
  • Address culture at all levels

Fraud of any size is particularly insidious to an organization’s reputation. The perception of trust and financial support from public funds or donor makes this topic relevant for continuous anti-fraud updates to staff, patrons, volunteers, and the board.

Organizations susceptible to fraud tend to have common characteristics

  • Lack of internal controls, particularly separation of duties
  • Lack of policies
  • Lack of oversight

Current Fraud Trends

Cybersecurity breaches, even small ones, require attention. Cyber fraudsters intentionally stalk employees over weeks, sometimes months or longer, to find individuals who might overlook small details and overshare personal information. Fraudsters take time to infiltrate in small ways to test security and establish patterns to create an exceptionally realistic swindle.

General steps to help protect your library from a cyber-attack

  • Use password manager software
  • Use strong passwords [do not re-use them!]
  • Control access and use multi-factor authentication [MFA]
  • Update your systems and anti-virus software
  • Routinely back up your data, including offline/offsite storage
  • Prohibit automatic forwarding of emails to external addresses
  • Add an email banner to messages coming from outside your organization
  • Prohibit personal use of company devices and networks

Although cyber schemes are growing, your organization should still move towards a paperless environment. In fact, it is best practice to move digitally, but be cyber-aware, protect your data, and update your policies and processes like digital separation of duties for accounts payable and payroll with appropriate management oversight.

Anti-fraud tips

  • Provide ongoing anti-fraud training and education to staff, volunteers, and the board [include specific and situational examples!]
  • Create a culture of fraud/anti-fraud awareness and zero tolerance for fraud
  • Perform fraud risk assessments
  • Update policies
  • Establish a whistleblower hotline or other effective reporting mechanism
  • Management and board oversight

Fraud prevention begins with culture and the tone at the top. To best prioritize limited resources, focus on implementing cost-effective anti-fraud measures and targeting the most common risks and schemes. A plan and quick detection are critical to minimizing the occurrence and cost of fraud.

Managing a fraud mitigation plan is a complicated topic and YPTC is available to assist with resources, checklists, and experienced staff.  For more information about this topic, click here to watch the webinar or here to contact YPTC for assistance.

© 2023 Your Part-Time Controller, LLC

Asha Vyas is a Training Content Specialist with Your Part-Time Controller, LLC [YPTC]. YPTC provides customized accounting and financial management services for over 1200 nonprofits nationwide. Since 1993, YPTC has built transformative, personalized solutions based on clients’ financial needs, including cash flows, funding streams, financial concerns, and internal control challenges. YPTC is committed to educating organizations through webinars and resources that provide relevant takeaways and best practices. To learn more about YPTC and browse our content, visit www.yptc.com.