Jen: This is the PKF Texas Entrepreneurs Playbook. I’m Jen Lemanski, and I’m back again with Nicole Riley, an Audit Senior Manager and one of the faces of PKF Texas’ Not-for-Profit team. Nicole, welcome back to The Playbook.
Nicole: Thanks, glad to be here.
Jen: Now as a CFE I know you talk about fraud – Certified Fraud Examiner. What is occupational fraud, and can it happen in a not-for-profit organization?
Nicole: So occupational fraud really is a fancy word for employees stealing. And yes, unfortunately it does happen in the not-for-profits. The 2018 Report to the Nation by the Association of Certified Fraud Examiners found the median loss at a not-for-profit was $75,000 per instance.
Nicole: Yeah. It is actually better than the for-profit loss; the median loss there was $164,000, but not many nonprofits that I know can handle a $75,000 loss in their budget, and that doesn’t even consider the indirect impact on their reputation or the loss of donor trust.
Jen: Right. So, how does fraud happen in a not-for-profit organization? It seems like there’s so few people you’d be able to catch it quick.