The Charity Fraud Report 2024, published by BDO in collaboration with the Fraud Advisory Panel, offers a comprehensive analysis of fraud within the UK charity sector. The survey, which gathered responses from 139 charity leaders, reveals several interesting insights:
Prevalence of Fraud:
- Internal Perpetrators: 50% of detected fraud cases were committed by individuals within the charity, including staff, volunteers, and trustees.
- External Fraudsters: 29% of fraud cases were carried out by external parties.
Common Types of Fraud:
- Misappropriation of Cash or Assets: 40% of charities reported this type of fraud.
- Authorised Push Payment (APP) Fraud: 33% of charities experienced payment diversion fraud, where fraudsters impersonate legitimate entities to divert funds.
- Expenses and Subsistence Fraud: 29% of charities encountered fraud related to staff expenses.
Financial Impact:
- Financial Losses: 84% of charities that experienced fraud suffered financial losses.
- Non-Financial Impact: 78% of charities reported non-financial consequences following fraud incidents.
Future Outlook:
- Anticipated Increase in Fraud Risk: 50% of charities expect the risk of fraud to rise in 2025.
- Impact of Cost-of-Living Crisis: 60% of respondents believe the ongoing cost-of-living crisis has heightened fraud risk.
- Economic Crime and Corporate Transparency Act: 45% of respondents anticipate that the Act will apply to them, with 88% having already taken or committed to taking action in response.
The report underscores the persistent threat of fraud within the charity sector, highlighting the need for robust internal controls and a proactive approach to fraud prevention. It also emphasises the importance of staying informed about legislative changes to effectively mitigate fraud risks. A free copy of the report is available here.
Guidance, template documentation and training on a wide range of specific risk topics is available via RMworks, which is available to all Griffiths & Armour clients.
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