Fraud

"Fraud is generally defined in the law as an intentional misrepresentation of material existing fact. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading." (http://definitions.uslegal.com/f/fraud/).  In the nonprofit sector, fraud can be both financial and programmatic, for example when reports misrepresent spending information or falsely indicate projects have met expected results.

Organizations can prevent fraud by enforcing institutional policies that ensure compliance.  These policies should include a Code of Conduct Policy and Whistleblower Policy that encourages staff who speak up about instances of fraud and protects them from any repercussions.

Organizations need to ensure that staff are properly trained and knowledgeable about their institutional policies and relevant donor regulations.

Key Resources:

• Guide to Grant Oversight & Best Practices for Combating Grant Fraud - A guide from the National Procurement Fraud Task Force (NPFTF) on grant oversight and ways to combat grant fraud.
• USAID Fraud Reporting Guidance - Guidance from USAID on contractors and implementing partners obligation to report allegations of fraud related to USAID projects. This document contains reporting requirements, reporting for grants and cooperative agreements, and notification and review procedures
• USAID OIG Warning Signs of Fraud
• Fraud and Your Nonprofit - a Calibre CPA Group presentation

Sample Documents:

• Sample Board AntiFraud Policy
• Sample Organization AntiFraud Policy

Industry Partner Resources:

• Fraud Control and Prevention: Mastering the Basics - submitted by GRF CPAs & Advisors
• Fraud Control and Prevention: Proactive Measures- submitted by GRF CPAs & Advisors