13 February 2017
February’s edition of Accountancy announced the news that yet another charity had fallen victim to fraud. The Cavalier Kings Charles Spaniel Rescue and Welfare charity was defrauded of two major legacies totalling £420,000.
The good news is that 98% of the funds were recovered. However, the bad news is that the fraud was only discovered when the executor of one of the wills in question made a complaint to the Charity Commission that the legacy was not included in the charity’s accounts.
Sadly, the Charity Commission’s investigation into the fraud led to the conclusion that the charity had fallen victim to the most common type of fraud, namely where charitable donations are misappropriated and paid into the personal bank account of someone else, often related to the charity. In this case the perpetrator was the founding trustee, one of only three trustees of the charity at the time, and the only one with involvement in the finances.
The case clearly highlights the risk of placing too much trust in any one individual, and is a reminder to trustees that although they may each have particular expertise and skills, they are all responsible for the overall management of the charity. It should also act as a wake-up call to those charities with poor or non-existent controls over opening the post and handling cash and cheque donations.
The full Charity Commission report into the fraud can be viewed here.
If you would like a review of the adequacy of your charity’s controls please contact your local UHY charity specialist. Alternatively, if you would like to read more charity focused blogs please click here.
