TT02 Warning signs of fraud

Guide to Financial Management

Top Tips 2

Warning Signs of Fraud

Remember: Prevention is better than cure!

The following ideas may be an early indication of fraud or abuse. Use with care!

From the accounting records

  • Lots of corrections to the manual cashbook – this may include extensive use of white-out or blocked out figures
  • Pristine records – .ie. a manual cashbook that look as if they have all been written on the same day in the same hand. Could be an indication of rewritten/duplicate books
  • Delayed banking of cash received – shown up by bank reconciliation.
  • Records not kept up to date – i.e. deliberately delayed so managers cannot detect false accounting going on.
  • Missing supporting documents – e.g. certain bank statements destroyed to cover someone’s tracks, or a project officer who regularly claims to have ‘lost’ receipts.
  • Debtors rising unexpectedly – e.g. if debtors have paid but the cash is being pocketed.  If there are poor controls in issuing receipt books, someone could take an unused book and issue valid receipts without them being entered into the accounting records.
  • Hand written supporting documents with errors and corrections on them. Indicates possible changes made after the goods or services were purchased.
  • Cash counts not reconciling to the accounts but reconciling at the next cash count – possible borrowing of funds by the safe key holder.

From the reports

  • Budget monitoring reports showing inconsistent behaviour between line items - eg project-related expenditure is under-spent due to delays – except for fuel which his over-spent. This could indicate abuse of the vehicle.
  • Vehicle log books not maintained in an appropriate level of detail. This could indicate abuse of the vehicle.
  • Budget monitoring reports delayed – to cover up something?

From non-financial areas

  • Working very long hours – first in last out of the office? Could mean that they are having to do extra work to cover their tracks?
  • Never taking holidays – can’t afford for someone else to see what they are doing!
  • Change of lifestyle – spending patterns don’t match their income (e.g. personal building projects, social habits, expensive car..)
  • Creating ‘smoke screens’ – where someone is making a false accusation about another team member to give them time to cover their tracks or make a getaway!


And some Ideas on fraud prevention…

  • Make sure you have robust internal control systems in place
  • Visit projects, and see if the activities carried out roughly match the expenditure.
  • Share financial reports with beneficiaries, and ask if they think they have had value for money
  • Hold regular meetings with other staff at all levels (e.g. project and administrative staff, board members, etc) to discuss financial reports, making budgets and reports openly available.
  • Help non-finance staff and managers improve their financial skills, for instance by reading Mango's Guide to Financial Management for NGOs.
  • If you are concerned about fraud, then our Recruitment Team can provide sensitive, expert staff to investigate what has happened.

Want to learn more?

Mango’s Training Course Getting the basics right covers a variety of internal controls needed to help prevent and detect fraud.

View our calendar of courses around the world here:

See Mango’s Guide to Financial Management for NGOs for free advice and tools, including a section on fraud

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