Forensics Journal - Stevenson University 2014 | Page 66

FORENSICS JOURNAL

major reason – the inherent environment of trust that is so easily and
frequently presumed within and relative to these types of organizations. Excessive trust and control is placed in the founder, an executive director, or a substantial contributor or sponsor. Only limited
resources are available to be allocated to accounting operations, internal controls, and financial oversight; for example, only one person
completes all the steps in the payroll process. Members of the Board
of Directors are usually volunteers, whose financial oversight experience is minimal. In daily operations, many volunteers have access to
assets and confidential information. Charitable contributions are also
at greater risk of theft compared to other more traditional exchangetype transactions. Because non-profit organizations are also more
vulnerable to the impact of negative publicity, they are less likely to
report occurrences of fraud (“Nonprofits Not Immune to Fraud”).
As these risk factors should be considered individually and collectively, it is also “beneficial for the auditor to tailor the risk factors…
so that [they] particularly are applicable to [non-profit organizations]”
(Grice). This type of fraud risk assessment is not restricted to audit
procedures – the non-profit organization should perform a similar
evaluation in the form of a fraud risk self-assessment.

ment (founders or executive directors), lack of board members with
expertise in financial oversight, and limited resources for financial
management (Holtfreter 46). The