Dateline Sunday November 2, 2013 Washington Post
Congress promises multiple investigations of possible wrongdoing at charities
In an ironic twist lawmakers and attorney generals expressed surprise and shock that non profit entities fail to report and follow up on fraudulent activity. When reading the article I had a mental picture of ostriches with their heads stuck in the ground.
The Association of Certified Fraud Examiners issues a biannual Report to the Nations on Occupational Fraud and Abuse. The report includes not-for-profits and clearly shows that fraud exists in these organizations. Perhaps what is more shocking is that while non profits must report misconduct or wrongdoing there is no equivalent reporting requirement on the part of for profit organizations. Shouldn't shareholders and the public have the right to know when companies they invest in or do business with experience frauds? One of the reasons why organizations whether for profit or not for profit are reluctant to report fraud is that it casts a shadow over management and it's ability to establish the proper controls. There are laws on the books protecting whistle blowers but the truth of the matter is that most frauds go undetected and not reported due to management concern about adverse publicity.
Perhaps corporate tax returns should include a similar disclosure requirement that applies to non profits. Frauds have a potential adverse impact on business continuity in for profit organizations. The cost of fraud in for profit businesses is viewed as a cost of doing business and is passed on the consumer. Frauds reduce the amount of money that non profits can use to provide services and drive the cost of products and services up in for profit organizations.
It is time that taxpayers, shareholders, regulators, politicians, and philanthropic donors paid attention to fraud in organizations that we have a stake in. Perhaps we need a campaign for fraud similar to that for terrorism: If you see something - say something! Report Fraud, Waste and Abuse and make fraudsters pay!
We welcome your feedback and comments and suggestions on how we can raise a debate on the issue of occupational fraud!