The High Court has ruled that retrospective changes to the LGPS exit credits regime were lawful – and gave some helpful guidance around the new discretion to pay an exit credit.
Charities operate in an environment of trust and this trust can easily be exploited at the expense of charity assets if trustees do not ensure that they take adequate fraud prevention measures.
What is fraud?
At its simplest, fraud is wrongful or criminal deception intended to result in financial or personal gain.
There are many different types of fraud, including:
- Tax fraud;
- Fraud by false representation;
- Fraud by abuse of position.
According to a recent report by the Centre for Counter Fraud Studies and BDO, fraud is costing the UK charity sector £1.65 billion a year. Unfortunately, fraud in the charity sector is never far from the headlines and can have a devastating effect on both the charity’s financial situation and its reputation.
Fraud in the charity sector
Charities should be aware that online fraud, in particular, is becoming more prevalent as fraudsters make use of new technologies and find ways to access charities’ valuable information. Charities should ensure that all information is adequately secured and password protected. All electronic devices should be protected with up to date anti-virus software and if the charity sells products or services from its website, all payments should be secure.
Fraud committed by staff accounts for approximately half of all frauds against organisations in any sector and charities are a prime target. When recruiting new members of staff, trustees and managers should take care to ensure that ID is verified, background checks are conducted and references requested. Look out for any unusual behaviour by staff members, which may be indicative of fraudulent activity.
Other examples include fundraising fraud, misuse of legacies, bribery, grants fraud and impersonation of charity workers, all of which trustees and managers should be aware of and have procedures in place to prevent.
Prevention is key
Prevention is far easier than responding to fraud after the event. Having robust policies and procedures in place to guard against fraud, including putting in place organisational controls, internal audit procedures, authorisations and checks, supervision, accounting checks and considering segregation of duties, can help to reduce the risk of fraud to your charity.
The Charity Commission has published comprehensive guidance on this issue, which provides useful advice on how charities prevent, detect and respond to fraud. It is important to remember that trustees have a legal duty to protect charity assets so they must take active steps to prevent against fraud – and, where possible, to take steps to recover funds lost to fraud.
In the event that your charity does suffer an actual or suspected incident of fraud, this should be reported to the police in the first instance and a Serious Incident Report should be made to the Charity Commission as soon as possible.
We will be holding a training session on 14th October in our offices, which will deal with fraud in more detail.
For more information
If you are interested in signing up to the training session in October, please contact a member of the Charities Team on 0121 212 7450 or firstname.lastname@example.org.
This article was co-authored by Will Allen, a Trainee Solicitor in the Governance and Commercial Team.
The Government has brought forward draft laws to allow independent schools to close the Teacher’s Pension Scheme to new joiners but to allow existing members to continue.
The Government has started consultation on the regulations providing the detailed framework for collective money purchase pension schemes.
In June we took on the challenge to become a Sepsis Savvy organisation - I'm really pleased to announce we've done it!
In 2020 the court rules were changed to require that all residential tenants must be given 14 days’ notice of an eviction. What happens though if the eviction is cancelled on the day?
We are delighted to announce that our private wealth law department has continued to maintain its Band 2 position in the latest edition of Chambers and Partners High Net Worth.
The new CHF is set to launch and open for applications with £4 million set to be allocated to community-led housing groups to support an increase the supply of affordable housing in England.
Charities, like other organisations, may be subject to or choose to voluntarily comply with the reporting requirements under the Modern Slavery Act 2015.
The draft regulations making it mandatory for anyone entering a registered care home in England to have been double vaccinated unless they are clinically exempt were made on 22 July 2021.
Doug Mullen and Michelle Knight discuss the recent judicial review of regulations changing the regime governing exit credits in the local government pension scheme.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.