Fraud Alert

We’ve all received an email from a down-on-his-luck prince living in a far-off land with a large sum of money he can’t access unless a Good Samaritan like yourself lets him funnel it into your bank account – for which you will be rewarded handsomely.

Of course, we laugh it off when an obvious scam like this arrives in our inbox from a stranger. But what if the same scheme was

We’ve all received an email from a down-on-his-luck prince living in a far-off land with a large sum of money he can’t access unless a Good Samaritan like yourself lets him funnel it into your bank account – for which you will be rewarded handsomely.

Of course, we laugh it off when an obvious scam like this arrives in our inbox from a stranger. But what if the same scheme was disguised as a routine message from a trusted colleague?

One area of concern all non-profits should be aware of are frauds. In this post, we are updating the public about the $3.1 billion business email scam that has caught the attention of the FBI.

For this scam, an ordinary-looking email that appears to originate from someone within your organization will include a request to send a wire or ACH to pay a vendor. Often included in the email – which typically will come from the executive director or manager – is an invoice and instructions on where to send the payment. Since the email appears to be for a legitimate business expense and is from someone authorized to send a payment, a non-profit could comply with the request without thinking twice.

But, wait! That email isn’t really from your executive director, and that invoice is not a legitimate business expense. Rather, the correspondence is from someone who hacked into your email system, and the payment instructions give the criminals access to their bank account.

There are many ways to avoid becoming a victim of this scheme:

  • Call the person who sent the email to confirm that a payment should be sent. In this case, the executive director would know they didn’t authorize a payment.
  • Use a secure code when sending email requests for payments.
  • Talk through approval processes and be skeptical of any wire or ACH being requested.
  • Use a list of approved vendors for sending wire or ACH payments.
  • Use Outlook rather than a web-based email service such as Gmail because it is more difficult to hack.

Anick & Associates helps manage banking relationships for its clients and adds a layer of security. We also leverage information from many banks and clients to help ensure our clients are protected from fraud. For more information, please contact Stacey Anick at 414-837-3224.

Pillars of Internal Control

No non-profit is immune to fraud.

Oftentimes, your “most trusted” employee will commit fraud, so it is important to always trust and verify that controls are in place to keep you working on your mission.

Here are some simple guidelines to follow to protect you and your target community:

No non-profit is immune to fraud.

Oftentimes, your “most trusted” employee will commit fraud, so it is important to always trust and verify that controls are in place to keep you working on your mission.

Here are some simple guidelines to follow to protect you and your target community:

  • Good internal controls protect not only the organization, but they shield you from any false acquisitions or the appearance of misappropriation.
  • The key to good internal controls is to have segregation of duties in place. Specifically, the three elements that should be separated are:
    • Custody of an asset;
    • Authority/authorization over asset; and
    • Recording asset.
  • If you are not able to properly segregate duties, you should have a compensating control in place, which generally involves more detailed reviews or oversight by yourself and the board.
  • Controls can be preventative, which is preferred because they do not let a fraud/error occur. They also can be detective, which allows you to catch the fraud/error after it occurs.

If you are unsure your controls are adequate, Anick & Associates can provide an internal control review. Anick & Associates’ clients benefit by having a third party involved in the control process, which uses best practices to segregate duties and to enhance oversight. For more information, please contact Jack Anick at 414-774-0300.

New Accounting Standards

For the first time in 20 years, the Financial Accounting Standards Board has updated guidelines specific to non-profits. This is what you need to know:

Net-asset classifications:

Old – unrestricted (including board-designated), temporarily restricted and permanently restricted.

For the first time in 20 years, the Financial Accounting Standards Board has updated guidelines specific to non-profits. This is what you need to know:

  • Net-asset classifications:
    • Old – unrestricted (including board-designated), temporarily restricted and permanently restricted.
    • New – net assets with donor restrictions, net assets without donor restrictions.

>> The focus is on determining what net assets of an organization are not subject to donor restrictions and to inform people what funds are available for operations.

  • Disclosures about the liquidity of an organization and how an organization manages liquid assets.

>> The focus is to determine how much cash or assets, which can convert to cash in the next year, can be used for operations.

  • Enhanced information about investment returns and expenses.
  • Changes to the presentation of the statement of cash flows.

These changes will be in effect for annual financial statements beginning after Dec. 15, 2017. (For instance, a Dec. 31 year-end will be reported first under the new rules for the 2018 annual statements.)

The changes are intended to reduce the complexity of non-profit accounting, increase transparency over management of liquid funds and investments, and to simplify the statement of cash flows.

For more information on the new accounting standards, please contact Kevin O’Leary at 414-892-3215. Anick & Associates already is preparing for the changes and will help ensure you are compliant.