Introduction
Combating fraud and corruption in nonprofit organizations (hereinafter alternatively “nonprofits”) and/or non-government organizations (NGOs) is an especially challenging enterprise because of the nefarious methods that are used and the corrupt practices that extent to the highest government levels that are endemic to many of the countries served by these organizations (Menzel, 2009).
Main Points to be Addressed
1. What types of fraudulent and corrupt practices are most common in nonprofit organizations? For example, although nonprofit organizations are vulnerable to many of the same types of fraudulent and corrupt practices experienced by other public and private sector organizations, asset misappropriations are by far the primary factor. In this regard, Zack (2009) emphasizes that in nonprofit organizations, “More than 80 percent of all reported frauds involve some form of asset misappropriation. And, to no great surprise, the asset most frequently misappropriated is cash” (p. 7). Despite cash being the most frequently misappropriated asset, other fraudulent practices can involve:
• Revenue and cash receipts (collections) schemes;
• Purchasing and cash disbursement schemes;
• Payroll and employee expense reporting schemes; and,
• Noncash asset misappropriations (Zack, 2009, p. 7).
Moreover, each of the foregoing practices can be perpetrated using different...
References
Menzel, D. C. (2009, Summer). In pursuit of ethical governance: New approaches are emerging to fight corruption, including the use of measurement tools. The Public Manager, 38(2), 30-33.
Sile, A. W. (2017, January 24). These are the world’s most corrupt countries. CNBC. Retrieved from https://www.cnbc.com/2017/01/24/these-are-the-worlds-most-corrupt-countries.html.
Zack, G. M. (2009). Fraud and abuse in nonprofit organizations: A guide to prevention and detection. Hoboken, NJ: Wiley.
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