Monday, January 26, 2009

Disposing of Assets

Assets can be a significant investment for an organisation. Those assets can have value to the organisation at the time those assets are due to be disposed of.
The risk is that assets that may have a value to the organisation at the time of disposal are not disposed of in a method that is in the best interests of the organisation.
Methods of Mitigate the Risk

An organisation should set out a clear policy on how assets of the organisation will be disposed of when they are not longer needed by the organisation.

If the asset has some value the organisation needs to clearly define what is to happen. A transparent method of disposal needs to be in place. Examples of this include:

  • Motor Vehicles – It may be decided that all motor vehicles that are no longer needed by the organisation will be sold at auction and that any employees or volunteers wishing to purchase a vehicle may do so but only through the auction process;

  • Computers – It may be decided that all computers be sent to auction when they are to be disposed of and employees or volunteers wishing to purchase a computer may do so but only through the auction process; or
    It may be decided that employees or volunteers can ‘purchase’ a computer when its useful life has been reached by the organisation. Any such purchase price could be a pre-determined percentage of the original purchase price.

In general if the asset is something that will have no value if attempted to be sold, it can be appropriate to allow employees and / or volunteers to take the asset at no cost. However this needs to be done transparently. For example a disposal form is completed and the employee and / or volunteer signs the form acknowledging that they have received to asset in a ‘as is’ condition. The form can then be used as a reason for the asset to be written off / removed from the asset register.

Sunday, January 18, 2009

Corporate Credit Cards

Many organisations use corporate credit cards which provide the card holders with a convenient way of conducting business. Rather than not issuing corporate credits cards in fear of fraud, policies and procedures can be put in place that can reduce the likelihood of fraud occurring.


The risk is that someone misuses their corporate credit card by using it to pay personal expenses and then either claiming the invoice is work related or altering the invoice to make it appear to be business related.

Methods to Mitigate the Risk

Corporate credit cards can easily be misused in the hands of the wrong person. Potential fraud can be minimised by taking some extra steps. These include:

  • Have a written policy on the distribution and use of corporate credit cards. Employees who are provided with corporate credit cards should be required to sign the Corporate Credit Card Policy to acknowledge their understanding of what is required of them to hold the corporate credit card.

  • Determine who actually needs corporate credit cards and obtain credit cards only for those people. If people only have an infrequent need to use a corporate credit card, they could utilise their own credit card or cash and have the cost reimbursed with the appropriate documentation.
  • Set spending limits per person and not just have the same limit for everyone. By setting limits per individuals’ requirements, the organisation limits the maximum amount of fraud that can be perpetrated using the credit cards. As an example, it may be determined that the Chief Executive Officer only requires $2,000 per month, while a Purchasing Manager may require $10,000 per month. An organisation should not be afraid to set such limits.
  • Corporate credit cards should only be used for business expenditure. What constitutes inappropriate use should be clearly set out.
  • All expenses charged to corporate credit cards need to be supported with appropriate documents such as invoices.
  • Be aware of peak risk periods. Consider this example. It is ‘back to school time’. An employee usually computers for the organisation. However, at the start of the school year the employee adds a laptop that never makes it to the organisation but instead ‘falls into’ their childs school bags.
  • The cardholder should sign off on monthly credit card statements that all expenditure is for business purposes only. This can be done by the cardholder signing either a form attached to the statement or a stamp placed on the credit card statement that states words to the effect: - “All expenses charged on this statement are business related and are not personal in nature.”
  • Do not allow cash withdrawals to be made on corporate credit cards including over the counter withdrawals at the bank or at an automatic teller machine. If a person is traveling overseas and needs cash for local currency, provide them with cash separately and require them to acquit the cash provided.
  • Credit card statements should be approved for payment by an appropriate person after the cardholder has substantiated all expenses with appropriate documentation and verified that all expenditure is business related.
  • When an employee resigns, an exit checklist should include the return of a corporate credit card.

Saturday, January 17, 2009

Not-for-Profit Fraud Surveys

In 2005, I realised that there was very little data on the extent of fraud in the not-for-profit sector. For that reason, I wanted to conduct research into the sector to determine just how prevelant fraud was. The result of this was the BDO Not-for-Profit Fraud Survey 2006. The survey was done in conjunction with Not-for-Profit Network and Queensland University of Technology. In 2008, the second BDO Not-for-Profit Fraud Survey was released, in conjunction with Not-for-Profit Network, Queensland University of Queensland and a new partner in the University of Southern Queensland.
The surveys provide information on the amount of fraud occurring in not-for-profit organisations in Australia and New Zealand and how important not-for-profits consider fraud prevention to be. To enable the research to be ongoing, it is intended for this research to be conducted every two years with the aim of expanding the research beyond Australia and New Zealand.
To download the fraud surveys, please follow the links below:


Welcome to my Fraud in NFP Blog. The Blog is dedicated to the issues associated with fraud in the not-for-profit sector. From my experiences over the last 20 years, in investigating fraud in the not-for-profit sector, fraud can have a significant impact on a not-for-profit organisation – more so than if a ‘for profit’ organisation suffers a fraud. Fraud can lead to bad publicity, the loss of donations, the loss of government grants and many other issues.

My hope is that my Blog will give you useful ideas that will help you and your not-for-profit organisation prevent fraud from occurring and if it does occur, then enable you to discover it quickly to reduce the damage it causes.

Lisa Bundesen