The prevalence of fraud today, whether it is financial reporting or misappropriation of assets, appears to be on the rise. Reports of individual and corporate fraud are becoming common and more brazen on a daily basis. The effects of fraud are far reaching for an organization and include reputational as well as financial risk. Management and those charged with governance are responsible for the prevention and detection of fraud. Accordingly, management must have strong policies and procedures in place that are supported by a culture of honest and ethical behavior. Those charged with governance should provide the oversight of these policies and consider possible override by management of internal controls. Nonprofit fraud management - OConnor Davies - New York CPA Firm

1. Non-Profit Notes Newsletter
Fraud Prevention and Detection:
Understanding Management’s Responsibility
By Jerry O’Neil, Partner
The prevalence of fraud today, whether it is financial reporting or misappropriation
of assets, appears to be on the rise. Reports of individual and corporate fraud are
becoming common and more brazen on a daily basis. The effects of fraud are far
reaching for an organization and include reputational as well as financial risk.
Management and those charged with governance are responsible for the prevention
and detection of fraud. Accordingly, management must have strong policies and
procedures in place that are supported by a culture of honest and ethical behavior.
Those charged with governance should provide the oversight of these policies and
consider possible override by management of internal controls.
While there are many different types of fraud, the signs that organizations need to
be aware of continue to be the same: incentive or pressure to commit fraud, a
perceived opportunity to commit fraud, and some rationalization for committing an
illegal act. Some key items to be aware of when considering the possibility of fraud
include:
• Undue pressure to achieve an expected target or financial outcome
• Employees living beyond their means
• Internal controls that can be overridden or are perceived to be weak
• An attitude, character or set of ethical values that allow employees
knowingly and intentionally to commit a dishonest act
• An opposition to change and improvement of internal controls
• A history of tolerance toward unethical behavior
The above items are not an all-inclusive list of signs of potential fraudulent behavior;
however, identification of these factors may be useful reminders for management
and those charged with governance in identifying and preventing possible unethical
acts. For more information or questions on the above items, please contact Jerry
O’Neil at joneil@odpkf.com
About Our Practice:
O'Connor Davies, LLP is a full service Certified Public Accounting and consulting firm that has a long
history of serving clients both domestically and internationally and providing specialized professional
services of the highest quality. With roots tracing to 1891, seven offices located in New York, New
Jersey and Connecticut, and approximately 400 professionals including 70 partners, the Firm provides a
Jerry O’Neil
Partner
joneil@opdkf.com
212.286.2600

2. complete range of accounting, auditing, tax and management advisory services. O’Connor Davies is
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within the 20 largest accounting firms in the New York Metropolitan area according to Crain's New York
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serving the not-for-profit sector and serves more than 1,400 not-for-profit clients.
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