According to a 2014 nonprofit fraud study, a person committing fraudulent activities is typically “someone you know and trust”. Failing to notice fraud, especially when it’s happening internally, can have a number of negative effects on your organization, including loss of support and adverse publicity.

One of the best ways to prevent and detect fraud is to educate employees.

Training to Make Ethical Decisions

Tips for Teaching Ethical Decision Making Skills

Try using the following tips to give your employees the skills needed to make ethical decisions regarding fraud in your organization.

Provide Ongoing Training & Resources –

Offer routine training sessions to enforce ethical behavior. In-person training can have employees play out real life scenarios, followed by a discussion to point out how the situation could have been avoided. Online materials like, webinars, whitepapers, online journal articles, etc., can also be distributed in between training sessions.

Additional resources can include:

  • Setting up a hotline for people to call and give fraudulent tips anonymously (Can also be used for outside vendors as well)
  • Including ethical behavior as part of the evaluation process

Teach the Red Flags

Most fraudsters exhibit certain behaviors that, if noticed early, can prevent extensive extortion. Teaching employees the red flags of fraud can make them more aware of their surroundings, and give you another set of eyes when you’re not around. Coach your team to look for these behaviors:

  • Living beyond their means
  • Experiencing financial difficulty
  • Unusually close association with vendors
  • Excessive control issues

Identify Stakeholders –

Stakeholders are the people/outside companies that have a vested interest in the success of your organizations. Identifying those people and why they depend on your progress reinforces the reason for your organizations existence. It helps put things in perspective, which can deter potential fraudsters from going down the wrong path.

Give your team feedback on the success of your mission, letting them know that their hard work is paying off. This not only promotes ethical behavior, but also motivates employees to continue their positive efforts.

Educating your team is the best way to promoting a healthy working environment, free of fraudsters and fraudulent activity. Read How Nonprofit Accounting Software Can Help Prevent Fraud to learn more nonprofit fraud prevention tips.

Learn how fund accounting software, like Abila MIP Fund Accounting Software and SerraFund for NetSuite, can help prevent fraud. Call Bob Schilling at 877-889-0629, email, or fill out this form.