allAfrica.com: Liberia: Corruption And Exploitation in Not-for-Profit Organizations (Page 1 of 1)

Not-for-profit Organizations lying about Program Service Accomplishments may result to liability to the organizations. This act of falsifying Program Service Accomplishments is carried out by, for and through the Organization. Interested Parties and users of the Financial Statements and Operations of Not-for-profit organizations - Private Donors, Grantors, Government, Potential Donors, and the General Public are most often misled about some aspects of the Organization's activities.

Lying or falsifying Program Service Accomplishments by a Not-for-profit Organization generally entail assertions of wrongdoing by or for the not-for-profit organization. Officers and Directors are usually in the habit of providing false statements of Program Accomplishments to benefit their Organizations, which in turn may or may not benefit them personally. By lying about Program Service Accomplishments, Officers and Directors abuse their positions and authorities to carry out fraud or some other illegal acts against third parties.

Private Donors, Grantors, Government, Sub-recipients and many other interested parties are likely to become involved with not-for-profit organizations that provide valuable services and are effective and efficient in their use of donated resources. Fraudulent financial reporting and overstating of non-financial statistics regarding Program Service Accomplishments are methods used by some not-for-profit organizations to mislead people into believing that an organization is doing more than it is really doing.

Private Donors, Grantors and Government's decisions as to whether to make future donations to a not-for-profit organization that has previously received donations or grants from them, will in most instances be based to some extent on the organization's Statement of Program Service Accomplishments. These accomplishments are reported in the not-for-profit organizations Annual Reports, Newsletters and or Fundraising Materials.

It is also a requirement by the Government of Liberia that Program Service Accomplishments by certain not-for-profit organizations operating in Liberia must be filed with the Government - Ministry of Planning, Ministry of Health and other relevant agencies of Government. Deriving personal benefits on the part of Officials and Directors may also be the reason behind Program Service Reporting fraud.

Not-for-profit organizations employees that are responsible for gathering and reporting statistics relating to Program Service Accomplishments may inflate those numbers purely so that the organization looks better to Donors and the Public. Exaggerating on Program Service Accomplishments may also be done to serve a personal purpose. Personal purposes may be - for promotion or excellent performance evaluation, bonus or salary increment, and maintaining the continuous flow of Donor funding for a program service which may result in an Official and or Director keeping his or her job.

Fraudulent reporting of Program Service Accomplishments represents a potentially significant risk in many organizations.

Most programs funded by Private Donors, Grantors and or Government are subject to financial audits. Program Service Accomplishments are sometimes not subjected to donor requested audits. Program Services Accomplishments not subject to audits give Employees, Official and Directors an open opportunity to falsify and exaggerate Statements of Program Service Accomplishments.

Reporting of Program Service Accomplishments either for internal performance evaluation or for external reporting purposes should be subject to controls just like the reporting of financial results.

Some methods used in preventing or detecting program reporting fraud are as follows:

Segregation of incompatible functions - the duties associated with establishing and documenting the provision of service should be segregated from duties associated with gathering, summarizing, and reporting data on Program Service Accomplishments. This system will limit the capability of one person to falsify program reports and create fraudulent supporting documents to substantiate the fake service level.

It is imperative wherever possible to use documents that require signatures of Program Participants as a means of acknowledging and or substantiating that a service has been rendered.

Another method is to require an independent review of Program Service Accomplishment Reports. This review should ensure that Program Service levels are supported by listings of specific individuals served and cross-checking a sample of individuals on that listing with underlying files and supporting documentation to ensure that the service was actually provided.

Focusing on Internal Audit efforts on the preceding testing of program reporting is another method of preventing and or detecting program reporting fraud.

Another method of preventing or detecting program reporting fraud is by performing ratios and other financial analyses of program service levels and monitoring the ratios for trend over time. For instance, tracking reported service levels in relations to numbers of employees or certain expense accounts for unusual fluctuations, which would indicate unrealistic levels of effort being reported. Analytical procedures like ratio analyses are one of the most effective tools for identifying fraud in an organization. It can also provide critical insights into the operations and trends before a crises point is reached.

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