Blog Post: Background Checks - A Smart Investment Even for Non Profit Organizations

Stories of fraud in corporate America had their share of front page and online news over the last several decades. Companies like Enron, WorldCom, Adelphia and more became symbols of fraud and greed. Analysts reviewed the situations and opportunities that allowed these fraudsters to steal. This review identified the lack of internal controls and financial oversight in these corporations as key contributing factors. As a result, Congress and the SEC introduced additional legislation and regulations to prevent future corporate fraud.

Non Profit Organizations have faced the same issues. The Arizona Baptist Foundation, American Red Cross, Goodwill and Rio Salado College (with the recently uncovered student loan fraud scheme) are just a few nonprofit organizations impacted by scandals. In the June Issue of IMA’s Strategic Finance magazine, an article outlines the need for non profits to be just as prudent in their hiring process and internal controls as for profit entities. “Fraud in the Non Profit Sector? You bet” identified two steps to minimize fraud in Non Profit Organizations (NPO): conduct employee background checks and minimize opportunities for internal threats. Don’t skip the background checks for new hires to save a few dollars. This is a worthwhile investment and part of a needed culture of good governance and sound internal controls. Non profits have been victims of many unethical employees. Not only does this type of theft prevent NPOs from fulfilling their missions, the scandals destroy the public’s trust in their organization.

Hiring managers in NPOs have a challenging task in finding the right candidates for the job. Their work also directly contributes to the overall success and health of the organization. Make sure that all staff members support good governance, financial oversight and strong internal controls. These steps are needed to protect your consumers, supporters and communities.  

The American Society of Women Accountants & American Woman’s Society of Certified Public Accountants Joint National Conference (JNC) committee recognized the need for increased education for nonprofit professionals. Several sessions at the upcoming conference will focus on financial management, governance, board of director trends and reporting requirements for nonprofit organizations. Encourage your NPO accounting and finance staff to attend the 2009 JNC in Las Vegas October 19th - 21st. Visit www.aswa.org for program and registration information.