03David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, forensic accounting, and marital dissolution services in Philadelphia and the Delaware Valley.

This blog completes a series of narratives by forensic accounting expert David Anderson that analyzes the Association of Certified Fraud Examiners’ (ACFE) “2020 Report to the Nations – 2020 Global Study on Occupational Fraud and Abuse.”  In this final installment, Anderson – from David Anderson & Associates, a Certified Fraud Examiner in Philadelphia – focuses on how non-profits were affected by fraud over the past two years:

• Non-profit organizations can be more susceptible to fraud due to having fewer resources available to prevent and recover from a loss.
• Non-profit organizations are particularly vulnerable because of less oversight and lack of certain internal controls.
• The 2020 Report showed that the median loss was $75,000, while the average loss was $639,000 (meaning that several non-profit organizations had very large losses due to fraud).
• The most prevalent fraud schemes faced by non-profit organizations were:
  • Corruption – 41 percent (see Anderson’s previous blog on corruption schemes)
  • Billing fraud – 30 percent (typically involving diversion of membership dues and contributions)
  • Expense reimbursement fraud – 23 percent
  • Theft of cash on hand – 17 percent
  • Theft of other assets – 16 percent
• In 39 percent of the cases, an executive perpetrated the fraud, resulting in a median loss of $250,000.
• In 35 percent of the cases, a manager or supervisor perpetrated the fraud, resulting in a median loss of $95,000.
• In 23 percent of the cases, a non-management employee perpetrated the fraud, resulting in a median loss of $21,000.
• The top three control weaknesses at non-profits which enabled the fraud were:
  • Lack of internal controls – 35 percent
  • Lack of management review – 19 percent
  • Override of existing internal controls – 14 percent
• The top four anti-fraud controls used by non-profits were:
  • Internal audit department – 57 percent (generally practical only for larger non-profits)
  • Management review – 44 percent
  • Formal fraud risk assessments – 24 percent (generally performed by an outside expert such as a CFE)
  • Surprise audits (21 percent)
• The top four ways that these frauds against non-profits were detected were:
  • Tip – 40 percent
  • Internal audit – 17 percent
  • Management review – 13 percent
  • By accident – 7 percent

Do you need the services of a Certified Fraud Examiner? If so, you should speak with one from an experienced firm that provides forensic accounting services in Philadelphia and the Delaware Valley. You can do this by contacting the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at david@davidandersonassociates.com.

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley.  The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, fraud deterrence, litigation support, economic damage analysis, business consulting and outsourced CFO services.  Company principal David Anderson is a forensic accounting expert who has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Fraud Examiner, and a Certified Valuation Analyst.