Financial Predictors of Fraud in Nonprofit Organizations
Financial Predictors of Fraud in Nonprofit Organizations

Author: Dawn Marie Schwartz

Publisher:

Published: 2019

Total Pages: 191

ISBN-13:

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Nonprofit organizations are especially vulnerable to fraud. Incidents of fraud can have devastating consequences on these organizations and the nonprofit sector overall. This applied doctoral research project examined the use of financial predictors for reported fraud in U.S. nonprofit organizations. The study utilized financial data from 2017 IRS Form 990 filings of 644 U.S. nonprofit organizations with a 501(c)(3) tax exempt status. The researcher performed logistic regression analysis to determine and evaluate any associations between the financial variables and the existence of reported fraud. Three of the financial variables, cash growth rate (p=.001), asset growth rate (p=.046), and the ratio of disqualified compensation to total compensation (p=.033), were found to be statistically significant as individual predictors for reported fraud in the sample analyzed. The prediction model using seven financial variables (revenue growth rate, program expense ratio, cash growth rate, the ratio of cash to total assets, asset growth rate, the ratio of top compensation to total expenses, and the ratio of disqualified compensation to total compensation) was found to be a significant prediction model (p=.001) for reported fraud in the sample analyzed. The model explained five percent (5%) of the variance in the likelihood of fraud and correctly classified 66.7% of the cases analyzed. The findings of this research are useful to auditors, policymakers, management, board members, donors, creditors, and other stakeholders of nonprofit organizations for evaluation of fraud risk, analysis, and development of effective internal controls to protect against fraud.

Financial Statement Fraud in Nonprofit Organizations
Financial Statement Fraud in Nonprofit Organizations

Author:

Publisher:

Published: 2007

Total Pages:

ISBN-13:

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"Financial statement fraud in nonprofit organizations is perpetrated using methods that are very different than those used by commercial businesses, and is committed for very different reasons as well. Financial reporting fraud may be committed by either sham charities or by actual working organizations. And the methods used to commit these frauds may surprise you."--Website.

Fraud Risk in Governmental and Not-for-Profit Organizations
Fraud Risk in Governmental and Not-for-Profit Organizations

Author: Lynda Dennis

Publisher: John Wiley & Sons

Published: 2018-02-15

Total Pages: 218

ISBN-13: 1119509084

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This book uses a combination of explanations and examples to help you understand the frauds most common in governments and nonprofits, as well as what prevention and detection procedures are most effective in responding to these fraud risks. It also discusses how auditors might address their responsibilities with respect to fraud in a financial statement audit of governmental and not-for-profit organizations.

Frequent Frauds Found in Governments and Not-for-Profits
Frequent Frauds Found in Governments and Not-for-Profits

Author: Lynda Dennis

Publisher: John Wiley & Sons

Published: 2018-04-27

Total Pages: 194

ISBN-13: 1119514401

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Recognizing fraudulent or deceptive practices is not always easy. What common frauds occur in governments and not-for-profits and how can they be avoided? Illustrating common frauds that make headlines and damage the reputations of government and not-for-profit entities, this title allows accountants to sharpen their forensic skills and uncover and avoid fraudulent activities. It provides an informative case study approach to real world situations. This title will show accountants how to do the following: Determine how interim fraudulent reporting may affect planned reliance on internal controls and any related audit procedures. Identify how personnel policies and procedures can be circumvented and lead to possible fraud or abuse. Apply potential ways to follow up on noted indications of fraud, abuse, and weaknesses in internal control. Determine how management override of internal controls can lead to possible fraud. Analyze how bribes and kickbacks may occur. Identify how donated assets and capital assets in general might be misappropriated.

Detecting Financial Statement Fraud
Detecting Financial Statement Fraud

Author: Johan L. Perols

Publisher:

Published: 2008

Total Pages:

ISBN-13:

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ABSTRACT: The goal of this dissertation is to improve financial statement fraud detection using a cross-functional research approach. The efficacy of financial statement fraud detection depends on the classification algorithms and the fraud predictors used and how they are combined. Essay I introduces IMF, a novel combiner method classification algorithm. The results show that IMF performs well relative to existing combiner methods over a wide range of domains. This research contributes to combiner method research and, thereby, to the broader research stream of ensemble-based classification and to classification algorithm research in general. Essay II develops three novel fraud predictors: total discretionary accruals, meeting or beating analyst forecasts and unexpected employee productivity. The results show that the three variables are significant predictors of fraud. Hence Essay II provides insights into (1) conditions under which fraud is more likely to occur (total discretionary accruals is high), (2) incentives for fraud (firms desire to meet or beat analyst forecasts), and (3) how fraud is committed and can be detected (revenue fraud detection using unexpected employee productivity). This essay contributes to confirmatory fraud predictor research, which is a sub-stream of research that focuses on developing and testing financial statement fraud predictors. Essay III compares the utility of artifacts developed in the broader research streams to which the first two essays contribute, i.e., classification algorithm and fraud predictor research in detecting financial statement fraud. The results show that logistic regression and SVM perform well, and that out of 41 variables found to be good predictors in prior fraud research, only six variables are selected by three or more classifiers: auditor turnover, Big 4 auditor, accounts receivable and the three variables introduced in Essay II. Together, the results from Essay I and Essay III show that IMF performs better than existing combiner methods in a wide range of domains and better than stacking, an ensemble-based classification algorithm, in fraud detection. The results from Essay II and Essay III show that the three predictors created in Essay II are significant predictors of fraud and, when evaluated together with 38 other predictors, provide utility to classification algorithms.

Financial Management for Nonprofit Organizations
Financial Management for Nonprofit Organizations

Author: John Zietlow

Publisher: John Wiley & Sons

Published: 2018-04-06

Total Pages: 791

ISBN-13: 1119382599

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Essential tools and guidance for effective nonprofit financial management Financial Management for Nonprofit Organizations provides students, professionals, and board members with a comprehensive reference for the field. Identifying key objectives and exploring current practices, this book offers practical guidance on all major aspects of nonprofit financial management. As nonprofit organizations fall under ever-increasing scrutiny and accountability, this book provides the essential knowledge and tools professional need to maintain a strong financial management system while serving the organization’s stated mission. Financial management, cash flow, and financial sustainability are perennial issues, and this book highlights the concepts, skills, and tools that help organizations address those issues. Clear guidance on analytics, reporting, investing, risk management, and more comprise a singular reference that nonprofit finance and accounting professionals and board members should keep within arm’s reach. Updated to reflect the post-recession reality and outlook for nonprofits, this new edition includes new examples, expanded tax-exempt financing material, and recession analysis that informs strategy going forward. Articulate the proper primary financial objective, target liquidity, and how it ensures financial health and sustainability Understand nonprofit financial practices, processes, and objectives Manage your organization’s resources in the context of its mission Delve into smart investing and risk management best practices Manage liquidity, reporting, cash and operating budgets, debt and other liabilities, IP, legal risk, internal controls and more Craft appropriate financial policies Although the U.S. economy has recovered, recovery has not addressed the systemic and perpetual funding challenges nonprofits face year after year. Despite positive indicators, many organizations remain hampered by pursuit of the wrong primary financial objective, insufficient funding and a lack of investment in long-term sustainability; in this climate, financial managers must stay up-to-date with the latest tools, practices, and regulations in order to serve their organization’s interests. Financial Management for Nonprofit Organizations provides clear, in-depth reference and strategy for navigating the expanding financial management function.

Fraud Risk Assessment Guide
Fraud Risk Assessment Guide

Author: Gerard M. Zack

Publisher: Wiley

Published: 2003-06-19

Total Pages:

ISBN-13: 9780471481683

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The Fraud Risk Assessment Guide is a series of checklists that coincide with the organization-wide model of fraud deterrence explained in the book, Fraud and Abuse in Nonprofit Organizations: A Guide to Prevention and Detection. The checklists in this Guide are designed to identify many of the most important financial controls and non-financial policies and procedures that aid in the prevention, detection, and deterrence of fraud and abuse— both from within the organization and from external sources. Each of the controls, policies, and procedures identified in the Guide are explained in detail in the companion book, Fraud and Abuse in Nonprofit Organizations: A Guide to Prevention and Detection. Who should prepare the checklists in this Guide? One of the keys to making the Guide most useful is to have each checklist prepared by persons who are both: Adequately trained and educated in the subject matter Independent of the persons directly involved in the activity being evaluated These characteristics may be present within the organization— such as by having the checklists prepared by members of other departments or by involving members of the audit committee or board of directors. Another option is to utilize an outside firm that specializes in fraud prevention (this approach has the added benefit of further improving independence and objectivity in the evaluation of an organization's system of fraud deterrence). The end result of utilizing the Guide will be the identification of areas of fraud control in which organizational policies and procedures can be improved (each "no" answer on the checklist represents a possible weakness in the organization's defenses against fraud and abuse). These results should be reviewed and evaluated by senior management, the audit committee, and the board of directors, who has ultimate responsibility for safeguarding the organization's assets.

Fair Value Accounting Fraud
Fair Value Accounting Fraud

Author: Gerard M. Zack

Publisher: Wiley

Published: 2009-07-23

Total Pages: 256

ISBN-13: 0470527358

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Essential guidance on the new fair value rules for accounting managers, auditors, and fraud investigators Fair Value accounting is emerging as the next prime opportunity for financial statement fraud. Explaining the many complex applications of fair value accounting in the preparation of financial statements, Fair Value Accounting Fraud offers timely guidance on an up-and-coming issue as U.S. and international accounting rules pertaining to the use of fair value accounting continue to change. You'll find discussion of U.S. GAAP and IFRS rules on fair value accounting issues, highlighting the areas most vulnerable to fraud Explanations of 75 categories of fair value accounting fraud schemes Fraud risk checklist that you can put to immediate use Practical detection techniques useful for auditors, investigators and others who rely on financial statements Expert advice from Gerard Zack, CFE, CPA, author of Fraud and Abuse in Nonprofit Organizations: A Guide to Prevention and Detection Comparing US accounting standards to International Financial Reporting Standards-thereby making this book useful worldwide- Fair Value Accounting Fraud helps you understand the new rules and develop new auditing and investigative techniques to enable you to detect potential fraud.

Neural Network Detection of Management Fraud Using Published Financial Data
Neural Network Detection of Management Fraud Using Published Financial Data

Author: Kurt Fanning

Publisher:

Published: 2000

Total Pages:

ISBN-13:

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This paper uses Artificial Neural Networks to develop a model for detecting management fraud. Although similar to the more widely investigated area of bankruptcy prediction, research has been minimal. To increase the body of knowledge on this subject, we offer an in-depth examination of important publicly available predictors of fraudulent financial statements. We test the value of these suggested variables for detection of fraudulent financial statements within a matched pairs sample. We use a self organizing Artificial Neural Network (ANN) AutoNet in conjunction with standard statistical tools to investigate the usefulness of these publicly available predictors. Our study results in a model with a high probability of detecting fraudulent financial statements on one sample. The study reinforces the validity and efficiency of AutoNet as a research tool and provides additional empirical evidence regarding the merits of suggested red flags for fraudulent financial statements.