Not-for-profit organizations don’t lose as much to occupational fraud as for-profit businesses do. According to the Association of Certified Fraud Examiners’ (ACFE’s) 2018 Report to the Nations, not-for-profits lost a median amount of $75,000 during the 21-month study period, compared with $164,000 for private for-profit companies. Yet few not-for-profit budgets can afford a $75,000 shortfall or the bad publicity associated with fraud.

A photo of grey padlocks on a red metal fence to show why Not-for-Profits need protection from fraud.

Here’s how not-for-profits open the door to occupational fraud — and how your organization can shut it.


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It’s Fraud Week, everyone!

For the week of November 11 – 17, supporters around the globe are promoting anti-fraud awareness and education to minimize the impact of fraud.

There’s a lot of information and resources out there, but what is imperative to know about fraud, how to detect it and what to do if there

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back again with Danielle Supkis Cheek, a director and one of our Certified Fraud Examiners. Danielle, welcome back to the Playbook.

Danielle: Thank you, Jen.

Jen: We’ve done a whole series on fraud, and I’ve heard people say, “Cash is king.” What can companies do to protect their cash?

Danielle: It’s actually… I won’t say “easy” but pretty cost-effective measures that can be put in place. Usually you have to work with your bank and see what treasury management your bank has, but honestly, requesting meeting with your treasury management department at your bank for your commercial banker and they will be able to go through a lot of the options. The biggest one I push is something about ACH protections.

What you need to initiate in ACH… Let’s use a personal example: you go to your online electric bill provider, and they say, “Do you want to pay by e-check?” because that’s cheaper than charging you for the 1-3% they try to charge you. And so, you put in your routing number and your account number – and what’s on every single check you’ve ever issued is your routing number and your account number – and so those checks are out there.

That means your account number is out there, and your routing number is out there. So, you need to protect an ACH, because those monies come out of your account; once they’re gone, they’re gone. Business bank accounts are different than individual bank accounts; individual bank accounts, usually, there’s some consumer protection. You call up, you say, “Hey, I’ve had fraud, and Bank, please give me my money back.”

Jen: And they say, “Oh, okay. Sure!”

Danielle: Okay, sure. Commercial accounts don’t work like that; the money is gone, the money is gone. You can call the police, and they can try to investigate; it crosses international, it crosses state borders – it’s gone.

Jen: It’s gone.


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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back again with Danielle Supkis Cheek, a Director at PKF Texas and one of our Certified Fraud Examiners. Danielle, welcome back to the Playbook.

Danielle: Thanks for having me.

Jen: So, Houston’s an international city—we’ve had Frank Landreneau, one of our international tax directors on the program. There’s a lot of opportunity for fraud. What are you seeing in the international space?

Danielle: One of the concerns with the international space and fraud is actually the existence of the Foreign Corrupt Practices Act. It says you can’t bribe officials, which is a pretty obvious matter for international foreign officials.

Jen: One would think you don’t want to bribe people. So, what does the FCPA actually cover?


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Jen:  This is the PKF Texas’ Entrepreneur’s Playbook.  I’m Jen Lemanski, this week’s guest host, and I’m here today with Danielle Supkis Cheek, a director and one of our certified fraud examiners.  Danielle, welcome to the Playbook.

Danielle:  Thanks, Jen.

Jen:  I know the Association of Certified Fraud Examiners just recently released their 2018 report to the nation discussing fraud and various statistics.  What do small businesses need to know to prevent fraud or at least reduce their risk of fraud?

Danielle:  So there’s a lot of things small- and medium-sized businesses can do. 
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Many not-for-profit youth sports leagues are at risk for fraud and don’t even know it. Cash transactions are common and leagues are typically managed by volunteers with little oversight, it’s easy for crooked individuals to take advantage of the situation. Unfortunately, sports league fraud is usually committed by well known and respected board members or