Fraud happens everywhere. You may not lose millions of dollars, but how many office supplies walk out the door unnoticed? Are you sure employee timesheets are accurate? Fraud can include all of these things and is generally caused when three factors are present: Pressure, Opportunity and Rationalization. The biggest step you can take to mitigate fraud is to remove the opportunity as much as possible. Proper internal controls like limited access to blank checks and credit cards, approval processes for new vendors and purchase orders and separation of duties in the finance department are key. Credit checks on your top level employees and accounting staff can show whether there is pressure to steal, but background checks may not show anything since fraud is often never reported. It happens more often than you think in nonprofits.
