Could This Embezzlement Have Been Prevented
A former employee of a nonprofit substance abuse rehabilitation center embezzled over $600,000 from the organization by stealing checks made payable to the organization from the desks of other employees and depositing them in a bank account she set up in her own name on behalf of the nonprofit. The former employee pled guilty and was sentenced to three years and four months in state prison and was ordered to pay the nonprofit over $600,000 in restitution.
This incident could have been prevented. Proper internal controls are essential for safeguarding the organizations assets and mitigating the risk of fraudulent activity. The following internal controls, implemented and followed by the organization, protect against fraudulent activity such as embezzlement:
- Physical protection of assets
- Separation of duties
- Review and reconciliation of bank account activity
- Supervisory review and approval
- Proper check signing authority
Could Your Nonprofit Be At Risk?
Your nonprofit organization may not yet have been the victim of embezzlement; however, without effective internal controls in place the organization is at risk.
Steps Your Nonprofit Should Take
Review and update your Accounting Policies and Procedures Manual.
Enforce these policies and procedures by reviewing them with staff.
Identify other areas in your organization that might be at risk for fraudulent activity.
Give me a call to discuss how I can help your organization avoid these types of risks.
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