A Peek Inside a Fraud Risk Assessment

Monday May 10, 2021 comments Tags: nonprofit, accounting, fraud, fraud risk, assessment, fraud triangle

Any accounting business and tax advice contained in this podcast is not intended as a thorough in depth analysis of specific issues. Nor is it a substitute for format information. Nor is it sufficient to avoid tax related penalties. If you have specific questions that you need advice for, be sure to schedule a strategy session and not solely rely on information in this podcast. All right, back to the episode. If your organization is wanting the link to the fraud risk assessment questions, check out the show notes. We will have a link for them there.

Hey, everyone, this is Chyla Graham, you're listening to another episode of The Nonprofit Ace Podcast, this next couple of episodes, we're actually going to talk through a fraud risk assessment. So in the show notes, you'll find a link, you can download this yourself. But I am going to walk through each of the sections of the assessment questions you should ask yourself possible responses. And yeah, I'm excited.

First part is your organization in theory. So here's some questions to ask yourself, Is there a document at your organization that contains your policies and procedures? And the reason I ask this is because what happens is, in organizations, as you're thinking about how to prevent fraud, you want to know what fraud looks like, you know what an error looks like. It's going to be a deviation from your standard procedures. But if you don't have procedures, is it fraud? Is it wrong? Like what does it look like if you don't have it documented? And so while it might be something like, Oh, we know how you do it? Do you? Can you show me where you wrote it? No. Is it real? What do you have to dispute this is the way you do it. 

So look at that document, think about when's the last time you updated it, who is required to read it. Think about the employee handbook. One of the questions, as a former auditor that we used to ask is how do you let your employees know about appropriate practices? How do you let them know about what you think about your ethics, how they're expected to behave? All of those things are typically in your employee handbook. So if you don't have a handbook, hi, you should get one. If you do have one, make sure it's updated. 

Think about the duty of the board. So is there a description of what you're expecting from your board? Or the people who are there to say, Hi, if all goes to hell, or it goes to pot, we are the ones holding the bag? And so does the board know this? Do they have a good description of their roles? Does the board recognize that they are the boss of the executive director, that's the other way around. So the founder could be the executive director, but the board is not their employees.

The executive director is the employee of the board. So they are the ones who need to say, Hi, these are the expectations we have of you. We are holding you accountable to get these things done. And then the other thing is, Can you define internal controls? If you haven't go back a couple episodes, I do an episode on internal controls. But really think about can we define it? What does that mean for us? And these are the questions about in theory, we will get to what practice looks like but you want to think about do we have this documented? Do we have policies and procedures in place? If you don't, and you know, hey, we do. You can always Google that is a thing.

If you want to set up a time with me, we are currently very deep into like client 990s and audit preparation. So we're not doing any strategy sessions now. But you can definitely check out our online course. So CNRG Impact Basics, you can check that out. Schedule a time with me, we'll put in a promo code for those of you who are listening to the podcast and are interested in our online course. 

But think about how are you going to get this information? How are you going to bet this information about how you should work in theory, so that you can eventually put it into practice? So those are your first questions to ask yourself as you read your assessment. Join me next week to see what the questions are about you in action. So not just theory, but practical application about the way you do things. All right, then this has been another episode of The Nonprofit Ace Podcast. Bye. Thanks for listening to another episode of The Nonprofit Ace Podcast.


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Download your FREE Fraud Risk Assessment here: http://cnrgaccountingadvisory.com/fraud