Charity Fraud Prevention Week – Taking Action

Charity Fraud Awareness Week 2021TAKING ACTION

If you suspect that your charity has fallen victim to insider fraud you should act promptly.

  • Refer to your response plan which should explain how, when and by whom the suspected fraud will be investigated, reported and resolved. It might include engaging external professional support.
  • Report the incident to your relevant national law enforcement agency. In the UK this is Action Fraud (England, Wales and Northern Ireland) or Police Scotland (Scotland only).
  • Report matters promptly to your charity regulator. For reports to the Charity Commission for England and Wales treat it as a serious incident. Use the online form to make your report, stating what happened and how you’re dealing with it.

BUILDING YOUR CHARITY’S DEFENCES

Checklist – Ask yourself:

  • Do we have a workplace culture in which fraud is never acceptable and everyone knows it? (An essential part of preventing fraud is to have the right ‘tone at the top’.)
  • Do we talk openly about fraud and is it clearly explained in our anti-fraud, bribery and corruption policy?
  • Is a whistleblowing policy promoted and supported widely within the organisation?
  • Are we developing standard operating procedures that reduce risk and encourage honesty? Are we making sure they are being followed?
  • Do we perform pre-employment screening of new recruits and in-service checks for established employees? Do we expect our partners to do the same?
  • Are we sharing our knowledge with other organisations so that known fraudsters cannot simply job-hop?
  • Do we offer support to employees in difficulty? (Desperation and dissatisfaction are common causes of fraud.)
  • Do we keep registers of gifts, hospitality and conflicts of interest? Are they transparent and reviewed regularly?
  • Do we provide mandatory anti- fraud and corruption training?
  • Is there a response plan for when an insider fraud does happen?

Charity Fraud Awareness Week 18-22 October 2021 – Insider Fraud

Charity Fraud Awareness Week brings together the charity and not-for-profit sectors from around the world to raise awareness and share good practice in tackling fraud and cybercrime.

Fraud HelpsheetGetting to know your staff

Performing proper due diligence in all staff and recruitment matters is an essential part of getting to know the people who work for you. It can greatly reduce the risk of insider fraud.
 

What is Insider Fraud?

This is when someone exploits their role or occupation for personal gain by deliberately misusing the organisation’s assets and resources. It often includes the abuse of trust.

Fraud can be committed by anyone, whether:

  • a trustee;
  • an employee (temporary or permanent); or
  • a volunteer.

This person may act alone or in collusion with someone else. Sometimes criminal gangs will deliberately seek out people ‘on the inside’ to help them commit fraud, for example by asking for information on how to bypass controls.

Warning Signs

Certain kinds of individual behaviour can be red flags for insider fraud. For example:

  • an aggressive or bullying manner that makes colleagues unwilling to challenge their behaviour;
  • a tendency to be over-protective of their work or to take on additional tasks beyond their job description;
  • asking to use someone else’s log-in details because they have forgotten their password;
  • an unwillingness to take holidays or be away from the office for more than a day or two at a time;

A very useful helpsheet, kindly prepared by Cifas and the Fraud Advisory Panel, can be downloaded here

Case studies of inside fraud in charities can be found here

Trustee Expenses and Payments

Trustee ExpensesThe concept of unpaid trusteeship has been one of the defining characteristics of the charitable sector, contributing greatly to public confidence in charities. This does not mean that a trustee can never receive any payment or benefit from his or her charity; there are sometimes good reasons why it can be in a charity’s interests to make a payment to a trustee. Trustee boards need, though, to minimise the risks to their charity’s reputation and operation.

Expenses are normally refunds by the charity of costs a trustee has had to meet personally (or which have been met on his or her behalf) in order to carry out trustee duties. In some cases, these expenses may be paid in advance. A refund of properly incurred expenses is not a trustee payment, nor does it count as any kind of personal benefit.

Some types of payment are often confused with expenses, when they are actually trustee benefits which HMRC will consider can be taxed as income. They can only properly be paid out of charity funds if there is suitable authority for doing so.

A charity can pay a trustee for the supply of any services over and above normal trustee duties. The decision to do this must be made by those trustees who will not benefit. They must decide that the service is required by the charity and agree it is in the charity’s best interests to make the payment and must comply with certain other conditions

More detailed information and guidance can be found in this document

Does Your Charity Need an AGM?

AGM imageNot all charities have members or need to have an AGM. The governing document should be checked to see if an AGM is required. A charitable company is only required to hold an AGM where stipulated in its articles of association. If the governing document does not require an AGM, the charity trustees may wish to call one (perhaps calling it a users’ meeting to avoid any confusion with a formal AGM).

Whether the charity is required to have an AGM or simply organise a users’ meeting, the charity trustees are only bound to act on decisions taken by the members where the governing document directs that those matters have to be decided at such a meeting. It is important that charity trustees are clear about the status and purpose of the AGM and that this is clearly communicated to those attending.

Unless the governing document states otherwise, the notice of the AGM will need to be sent to all the members of a charity and to any other people entitled to receive them. Some charities may be required to have an AGM or users’ meeting but not have a membership (for example, a village hall charity). In these cases, the instructions in the governing document about advertising the meeting must be followed. The governing document may state the number of days notice that must be given for calling an AGM. If it does not, reasonable notice should be given.

The commission recommend that copies of the charity’s annual report and accounts are either sent to each member, or made available at the venue prior to the start of the meeting (a company must send copies to all of its members). Anyone can by law request a copy of the accounts from the charity at any time. The charity is entitled to charge a reasonable fee for this.

The governing document may specify the information to be contained in the notice calling an AGM and company law imposes certain requirements in this respect. In all cases the commission recommend, as a minimum, that the notice calling the AGM sets out:

  • the date and time of the meeting
  • the venue
  • the details of the business to be considered (which will probably be mandatory items at this stage as members resolutions may not have been received)
  • an invitation to propose resolutions, and
  • if appropriate, requests for nominations (or the names of proposed nominees) for officers to be elected

More information and guidance can be found here

Job Description For A Charity Treasurer

treasurerClear role descriptions for trustees and specific officers on the trustee board will help your trustees understand their duties.

The Treasurer of a small community group or voluntary organisation may perform all duties concerned with dealing with money. So the treasurer may also, in effect, be the bookkeeper and finance manager. This job description will therefore need to be adapted according to the circumstances of your organisation.

Treasurer

Overall

  • Oversee the financial affairs of the organisation and ensure they are legal, constitutional and within accepted accounting practice.
  • Ensure proper records are kept and that effective financial procedures are in place.
  • Monitor and report on the financial health of the organisation.
  • Oversee the production of necessary financial reports/returns, accounts and audits.

Specifically

  • Liaise with relevant staff, committee members and/or volunteers to ensure the financial viability of the organisation.
  • Make fellow committee members aware of their financial obligations and take a lead in interpreting financial data to them.
  • Regularly report the financial position at committee meetings (balance sheet, cash flow, fundraising performance etc).
  • Oversee the production of an annual budget and propose its adoption at the last meeting of the previous financial year.
  • Ensure proper records are kept and that effective financial procedures and controls are in place, ie:
    • Cheque signatories
    • Purchasing limits
    • Purchasing systems
    • Petty cash/ float
    • Salary payments
    • Pensions
    • PAYE and NI payments
    • Others as appropriate
  • Appraising the financial viability of plans, proposals and feasibility studies.
  • Lead on appointing and liaising with auditors/an independent examiner.

If the Treasurer is expected to undertake all finance duties consider adding:

  • Undertake bookkeeping duties and/or oversee the finance volunteer ensuring posting and bookkeeping is kept up-to-date.
  • Maintain the petty cash system and regularly process petty cash claims.
  • Regularly carry out reconciliations/ oversee regular reconciliations by the finance volunteer.
  • Arrange payments to creditors as appropriate and arrange appropriate signatures on payments.
  • Make the necessary arrangements to collect payments from debtors and bank payments promptly.

Qualities

  • Knowledge and experience of current and fundraising finance practice relevant to voluntary and community organisations.
  • Knowledge of bookkeeping and financial management (as necessary).
  • Good financial analysis skills.
  • Ability to communicate clearly

As trustees, you share responsibility for governing your charity regardless of whether individual trustees have specific roles. For example, your charity may have a treasurer, but all the trustees are responsible for its assets and finances.

National Insurance

NI Card PictureYou pay mandatory National Insurance if you’re 16 or over and are either:

  • an employee earning above £184 a week
  • self-employed and making a profit of £6,515 or more a year

The amount of National Insurance you pay depends on your employment status and how much you earn.

If you’re employed

You pay Class 1 National Insurance contributions. The rates for most people for the 2021 to 2022 tax year are:

Your pay Class 1 National Insurance rate
£184 to £967 a week (£797 to £4,189 a month) 12%
Over £967 a week (£4,189 a month) 2%

National Insurance increase from April 2022

From 6 April 2022 to 5 April 2023 National Insurance contributions will increase by 1.25%. This will be spent on the NHS and social care in the UK.

The increase will apply to:

  • Class 1 (paid by employees)
  • Class 4 (paid by self-employed)
  • secondary Class 1, 1A and 1B (paid by employers)

The increase will not apply if you are over the State Pension age.

You can find more details here

Annual Leave

annual leaveThe DCAS office will be closed for annual leave from Monday 6th September, and will reopen on Monday 13th September

Many thanks to all the groups who have used our service, some for over 25 years, and continue to do so!!

Mr Claw CoverWe still have copies of ‘The Adventures of Mr Claw in the World of Charity Accounting’ available, just give us a ring 01332 364784,  or send us an email message if you would like a copy.
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Managing redundancy for pregnant employees or those on maternity leave

pram-jpegThe beginning of pregnancy to the end of maternity leave is a ‘protected period’ during which a woman is entitled to special consideration if this is necessary to make good any disadvantage she may otherwise experience

The law makes it clear that: 

  • During the protected period, unfavourable treatment of a woman because she is pregnant or on maternity leave is unlawful. This means a woman doesn’t have to compare her treatment with anyone else to show direct pregnancy and maternity discrimination
  • A woman on maternity leave has the right to return to the same job before she left; an interim employee cannot be given her job even if you think the person is a better employee.
  • Selecting a woman for redundancy because of her pregnancy, maternity leave or a related reason is automatically unfair dismissal as well as being unlawful discrimination.
  • Failure to consult a woman on maternity leave about possible redundancy is likely to be unlawful discrimination.
  • A woman made redundant while on maternity leave must be offered any suitable alternative vacancy if you have one. She doesn’t need to apply for it.
  • Special provision for a woman in connection with pregnancy or childbirth is not sex discrimination against a man provided that the action you take does not go beyond what is necessary to rectify her disadvantage.

If you are reorganising and/or need to make employees redundant and this includes someone who is pregnant or on maternity leave, you need to:
· Check the redundancy is genuine and necessary
· Ensure you consult and keep in touch
· Establish non-discriminatory selection criteria
· Consider alternative work.

The full guidance from ACAS can be found here

Watch out for CEO/BEC fraud

 CEOfraudWhat is CHIEF EXECUTIVE OFFICER (CEO) Fraud? 

CEO fraud, also known as Business Email Compromise (BEC), is a type of fraud that is enabled via social engineering. Social engineering is the manipulation of situations and people that results in the targeted individuals divulging confidential information.

CEO fraud involves the impersonation of a senior figure (usually the Chief Executive Officer) with subsequent requests for transfers of funds.

How does CEO fraud happen? 

CEO fraud is a request, often made via email, purporting to come from a senior person in the company, normally to the finance officer, requesting an urgent payment. 

The request may outline that the transaction is confidential and sensitive in order to discourage further verification. The fraudster may pick occasions when the real CEO is out of the office, or on holiday, preventing the financial officer from checking the validity of the request.

How can I help to prevent CEO fraud? A checklist: 

  • Any payment requests with new or amended bank details received by email, letter or phone should be independently verified. This includes internal emails from senior management that contain payment requests. Fraudsters can spoof email addresses to make them appear to be from a genuine contact, including someone from your own organisation.
  • Don’t be pressured by urgent requests, even if they appear to originate from someone senior – remember this is a common tactic adopted by fraudsters.
  • Be cautious of how much information you reveal about your company and key officials via social media platforms and out-of-office automatic replies.
  • Consider removing information such as testimonials from your own or your suppliers’ websites or social media channels that could lead fraudsters to knowing who your suppliers are.
  • Regularly conduct audits on your accounts
  • Make all staff aware of this type of fraud, particularly those that make payments.  
  • Ensure warning messages are understood and that appropriate checks, actions and processes are followed to ensure requests are genuine.
  • Sensitive information you post publicly, or dispose of incorrectly, can be used by fraudsters to perpetrate fraud against you. The more information they have about you, the more convincingly they can purport to be one of your legitimate suppliers or employees. Always shred confidential documents before throwing them away
 What to do if you suspect you’ve fallen victim to impersonation fraud 
  • If you believe you’ve fallen victim to a CEO fraud attack, contact your bank immediately. They will try to recover the money from the fraudster’s bank account. The quicker you alert your bank, the greater the chance of recovering the funds. 
  • Report it to ActionFraud – the police’s national fraud and cyber crime reporting centre. Even if you’ve not suffered any financial loss, this will allow the police to analyse trends and help them to prevent fraudsters exploiting other companies. You can file a report via their website at www.actionfraud.police.uk
  • Charities affected by fraud should also report it to the Charity Commission as a serious incident.
  • Where appropriate, the Charity Commission can also provide timely advice and guidance.

Fit Note

The fit note – the basics

Fit NoteGeneral rules of the fit note

People can only be given a fit note if their doctor considers their fitness for work is impaired.  If someone is fit for work, they will not be given a fit note.

Doctors cannot issue fit notes during the first 7 calendar days of sickness absence. Employees can self-certify for this time, visit Employee’s statement of sickness to claim Statutory Sick Pay for a template form.  If your organisation requires medical evidence for the first 7 days of sickness absence, it is your responsibility to arrange and pay for this.

Fit notes can be handwritten or printed, but must always be signed by a doctor. If they are printed, you can scan the barcode using a 2D matrix scanner so that you can add it to your sickness records.  It also confirms that the fit note is genuine.

If a GP has issued a fit note, it should include the address of the practice.  If a hospital doctor has issued the fit note, you may also receive a yellow Med 10 form stating the time your employee has spent as a hospital inpatient.

5 things to do if you’re given a fit note BY AN EMPLOYEE

  1. Check whether your employee’s doctor has assessed that they are not fit for work, or may be fit for work.
  2. Check how long your employee’s fit note applies for, and whether they are expected to be fit for work when their fit note expires.
  3. If your employee may be fit for work, discuss their fit note with them and see if you can agree any changes to help them come back to work while it lasts.
  4. If your employee is not fit for work, or if they may be fit for work but you can’t agree any changes, use the fit note as evidence for your sick pay procedures.
  5. Consider taking a copy of the fit note for your records (your employee should keep the original).

More details of Fit Notes can be found here