Forensic Accounting Industries

Not For Profit

Not for Profit Organizations (NPO) have a unique business model. The NPO will typically be established to provide a service for education, health, or some other endeavor. Generally, NPOs do not earn profits for their owners. The revenue comes from small charges for services or from the generosity of the public.

Per the Association of Certified Forensic Examiners, “Nonprofit organizations can be more susceptible to fraud due to having fewer resources available to help prevent and recover from a fraud loss. This sector is particularly vulnerable because of less oversight and lack of certain internal controls.”

Fraud we commonly see in an NPO investigation are:

Employees, including executive management, falsifying expense reports
Use of the Organization’s credit card for personal benefits
Embezzlement of contributions
Grant funds diverted for personal use
Payroll fraud
Conflict of interests
Check and payment tampering

Much of the fraud is committed by those with the ability to authorize a transaction or override internal controls. Typically, these individuals are in the management and executive management positions.

At Hovland Forensic & Financial we utilize our experience to perform an embezzlement investigation. We focus on:

Internal Controls – The most crucial step is to not only identify the embezzlement, but how it happened and how to prevent in the future.
Transaction Analysis – Once the weakness has been identified, we zero in on the transactions that would be affected by the embezzlement.
Use of Technology – We utilize proven methods, such as gap detection and Benford’s Law, to accumulate the areas that have been affected.
Reporting – We compile a report of the activities, with supporting detail, for the board to utilize in any civil or criminal action.

Each of these methods allows us to identify the possible embezzlement. As part of our examination, we will:

Analyze historical operations.
Determine the damage period
Perform an analysis on the organization as a whole
Determine what mitigation steps the organization can utilized.
Provide expert testimony.

Our investigation reports are compiled using calculations that will be supported by exhibits. We believe there should be no doubt as to how a number was derived and the impact on the organization. The report is a key piece of the litigation and needs to stand on its own.

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