Charities hit by fraud lose trust and money

Fraud and deception cost charities a lot more money than was reported, a presentation in Dunedin revealed yesterday.

The Charities Commission held two workshops at the Dunedin Public Art Gallery yesterday, after a survey by BDO accountants in March showed few organisations had proper prevention systems, despite concerns about fraud in the sector.

The survey showed reported fraud at 12%, although the real figure was believed to be much higher, as 57% of respondents did not report fraud to police, BDO national audit director Mark Bewley said.

"While 86% of respondents considered fraud to be a problem for the sector, only 8% considered fraud to be a problem for their individual organisations [and] only 28% have implemented a fraud control policy," Mr Bewley said.

"This apparent disconnect between accepting fraud and taking action is a real concern and indicates that fraud, deception and a lack of transparency may be costing charities all over New Zealand a lot more money than is being reported."

The workshops were organised to help charities recognise and prevent fraud and be seen as open and transparent to the public.

A growing area of concern was online fraud. "Significant increases" in amounts were being stolen through the internet, BDO senior associate Mark Peterson said.

"Fraud is an issue that affects every organisation, whether corporate, government or not-for-profit," Mr Peterson said.

"For a not-for-profit organisation, in particular, even a 'small' fraud of less than $10,000 would have a major impact.

"Fraud can also have a significant impact on the public's trust and confidence in a charity and its ability to fundraise and carry out its work. So, it is crucial that appropriate internal controls are in place to minimise the risk of fraud."

There are 908 charities registered in Dunedin, worth more than $901 million to the local economy.


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