Insider Fraud – Getting to Know Your Staff and Volunteers

Do you really know the person working for your Charity?

We all like to think we are good judges of character or that someone won’t be dishonest with us, however the human element is often what allows fraud to happen within a Charity.   Having antifraud processes and systems in place can help protect your charity from falling victim to a fraudster.


Who could exploit your Charity?

There are different ways for fraud to occur and a significant amount of fraud withing any organisation is from the “inside”. The risk of such a fraud is much higher where the controls are inappropriate or ineffective, where there is a reliance on trust and where the culture does not tend towards challenge and oversight.

Insider fraud, where someone uses their position for personal gain and deliberately misuses an organisations assets or resources. Insider fraud within a Charity could be carried out by:

  • A trustee
  • An employee
  • A volunteer


What could a fraud look like?

Common forms of charity fraud include:

  • Steeling cash;
  • Falsifying expense claims;
  • Misusing assets or resources;
  • Falsifying records;
  • Employee fraud, where someone falsifies information to get a job.
  • Failing to disclose past convictions, CCJ’s, bankruptcy or previous dismissals.


What can you do?

Implementing systems and processes can help reduce the risk of fraud.  Think about all aspects of your Charity and the people who will be employed.  Consider:

  • Pre employment checks
  • Checking references and employment history
  • Verifying identity and addresses with original documentation
  • Confirm eligibility to work and run background checks
  • Verify qualifications with original documents or issuing regulators
  • Make it a known policy within the Charity that checks are routinely carried out on new and existing employees.
  • Understand your staff and their personal circumstances. This will help you spot any changes in behaviour and unusual activity e.g. how do they pay for those school fees or that fourth nice holiday of the year.
  • Put checks in place and reduce single working environments, individual responsibilities and ensure segregation of duties.
  • Create an environment of accountability where staff believe in the processes in place and ensure policies are followed to prevent fraud


What can you look out for?

  • Unmanaged conflicts of interest, where relationships are deliberately concealed. can enable fraud. Transparency is key to manage them appropriately, ensure you have a conflict of interest policy so that these relationships can be managed.
  • Individuals behaviour
  • Is it bullying or aggressive?
  • Are they unwilling to change or be challenged?
  • Lack of taking holidays or being on leave?
  • Using other peoples or multiple log on details?
  • Protective over their work?


Not all behaviours instantly mean someone is planning or committing a fraud but remaining vigilant will help protect your Charity.


If you suspect someone of committing a fraud

First you need to establish the facts and gain evidence of your suspicions.  Don’t take matters into your own hands, report it to the appropriate senior management within your organisation and remain professional.  Creating a gossip environment or hearsay can have a detrimental impact on the Charity and any investigation needed, outside of your reporting line keep your suspicions to yourself.


Once identified

If a potential fraud has been identified act quickly, obtain advise from an expert and report your concerns to the appropriate agencies, the Action Fraud (England, Wales and Northern Island), Police Scotland and the Charity regulator.


Our guide to managing your insider fraud risk

  1. Get the “tone at the top” right – create a culture where everyone understands what behaviours are acceptable and empower volunteers, staff and Trustees to speak out and challenge.
  2. Ensure everyone is familiar with your anti-bribery and corruption policy, ensure it includes reference to such fraud matters, and talk about it openly. Staff should be trained on the policy and have frequent refresher training.
  3. Have a whistleblowing policy and support and promote it throughout the organisation.
  4. Ensure there are adequate and robust operating policies and procedures and ensure that they are followed, ensure that circumvention of process is followed up and that individuals are taken to task
  5. As well and pre employment checks also perform in service checks for current staff to ensure that their personal situation hasn’t changed.
  6. Offer a supportive environment to staff having a difficult time, job dissatisfaction and desperation are key drivers to people committing fraud.
  7. Ensure that your organisation keeps a register of interests and of gifts and hospitality so that potential conflicts can be identified and managed, the registers should be reviewed at least annually and include a declaration by the individual.

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