How to prevent fraud and malpractices within your organisation
Think Young Women and the Sexual and Reproductive Rights Network received a Strengthening grant of 64,000 Euros from AmplifyChange in November 2020, to implement a project on sexual and reproductive health and rights (SRHR), with a focus on abortion.
Prior to our encounter with AmplifyChange on this grant, Think Young Women did not have any policies to prevent fraud other than our financial policy and administrative policy, which contained a clause or two about preventing fraud. As part of the due diligence process, Think Young Women had to develop policies on whistleblowing, anti-fraud, bribery, and corruption, as well as enhance our existing financial policy. We received comments from the AmplifyChange Financial Team on the drafts submitted and are glad that we now have standard and robust policies aimed at preventing fraud.
To begin with, in our anti-fraud, bribery and corruption policy, we have included clear definitions and stated the scope of the policy, as well as the responsibilities of each party (from senior management to volunteers and external partners).
We have also included mechanisms and procedures in our whistleblowing policy that will facilitate the reporting of any cases of fraud and malpractice. We have also clearly described the investigation and follow-up processes of potential cases by the relevant persons.
We also created an environment in which employees could report cases of fraud without fear. This “open-door” policy creates room for transparency.
With these policies in place, we trained our staff and partners on the policies, which enabled them to recognise fraudulent practices and immediately report such incidences.
We have strengthened our financial procedures by reinforcing the segregation of duties in our daily processes.
As an example, the Finance Officer now initiates payments through a Purchase Request form (PRF), which must be authorised by the budget holder or the Program Manager. The Finance Manager then confirms if it is budgeted and if it is within the budget limits of the authorised budgets of the donor or approved expenses. Upon confirmation, the Finance Manager then recommends it to the National Coordinator for approval. Upon the approval of the National Coordinator, payment is made through bank transfers or cheques. This has helped us to prevent fraud.
Having these policies in place, all thanks to AmplifyChange, has made the diligence processes with subsequent funders much easier. Think Young Women have applied for more funding and have been able to use these policies to get approval.
If you are unable to draft your own policies, draw inspiration from best practices and tailor those to your own organisation.
When it comes to financial decisions and payments:
- Always divide duties i.e., the requester should be separate from the reviewer and the approver
- Have at least two signatories to the bank accounts
- Have limits on petty cash or the physical cash the organisation can hold at any given time.
- Make payments through cheques especially to businesses.
We have learnt the importance of having proper mechanisms in place to prevent fraud. We have also learnt that donors take you more seriously when they know that the risk of fraud over project funding is at a low-risk rate and when they realise that the organisation has proper procedures in place.
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