Non-For-Profit Fraud

Authors’ Note

This paper was prepared for Advanced Accounting, Summer 2013.

OUTLINE

1. Introduction 2. The Reasons of Fraud in Nonprofits. 3. Types of Nonprofit Fraud. 4. Recent Fraud Cases: A. $1,000,000 Charity Scam by John Cody. B. ASPCA International and $27,000,000 Fraud. C. Fraud Committed by Anita Collins, Church Bookkeeper. D. Fraud Committed by Hugh Blackburn. 5. Fraud Prevention in Nonprofit Organizations. 6. Conclusion.

Introduction.

Most of us are familiar with the organization ASPCA (American Society for Prevention of Cruelty to Animals) and some of us even donate or consider donating money or time. But not many of us know that only 5 cents of every dollar collected by ASPCA goes actually towards the organization’s primary goal, which is helping animals. Just a few months ago a disaster hit NYC and the areas around. It is hard to believe but it gave great opportunity for fraud. Consider the case of the couple John Sandberg and Christina Terrassino, who launched a charity website, The Hurricane Sandy Relief Foundation. According to DCA (Division of Consumer Affairs), they have solicited more than $600,000 from about 2,000 donors. However, less than 1 percent of the money was given to the victims of the hurricane (Rose, 2013). Beside, consider the case of Anita Collins, a 67-year old church bookkeeper. She is known for stealing approximately $1,000,000 from the church she worked in (Huffington Post, 2012).

These are all examples of fraud. And they happen at places where they were least expected – in non-for-profit organizations. The whole idea of a non-profit is exactly what it sounds: people work not for a profit. People get together for an idea, a common mission to improve something in the society, to make the world a better place. Nevertheless, the losses in non-for-profits every year due to fraud far exceed fraud losses in commercial businesses. According to Independent Sector, an organization that performs research and publishes nonprofits trends and data, an estimate of 40-50 billion per year is lost to fraud in nonprofit organizations. Fraud in nonprofits is roughly 7 percent of the company’s yearly revenue. While an average percentage of fraud in for profit businesses is 5 percent (Larossa, Zikmund, 2010).

The Reasons of Fraud in Nonprofits

Why do nonprofits face a larger percentage of fraud? There are few reasons for that.

1). The Atmosphere of Trust. A not-for-profit organization is more “mission driven” than “profit driven”. Even though majority of employees do get compensation for their services, money is not the main reason for the services they perform. The organization’s mission, the common goal is something that keeps members together and employs a high level of trust.

2). Lack of Financial Expertise. Very often board members as well as management of a nonprofit have no financial background. Board of directors is self-selected and absolutely anybody from a high school kid to a retired artist can be on the board.

3). Lack of Segregation of Duties. It mostly happens to small not-for-profit organizations that don’t have enough employees with necessary training for the proper segregation of duties. But it can also be happening because of the high activity level of nonprofit employees. People have numerous ideas and want to be involved in all the spheres in the life of the organization that often goes beyond the scope of their responsibilities.

4). Weak Internal Controls. Since nonprofits are more mission driven they often overlook the importance of internal control. Controls are expensive and nonprofits tend not to invest their scarce resources in internal controls.

5). Reliance of Volunteer Board of Directors. The board in nonprofit consists 100 percent of volunteers. They do not get any kind of compensation. Managers (CFO, CEO and the likes) do get paid but not the board members. It is against the policy of nonprofits and will be a conflict of interests. As a rule, if somebody volunteering they are usually not held as much responsible and they don’t feel as responsible as a director should be.

6). Lack of Hiring Due Diligence. Nonprofits very seldom perform background checks.

7). Difficulty in Verifying Revenue Streams. Nonprofits frequently have nonreciprocal transactions, such as charitable contributions that are easier to steal than those sources of revenue with consideration transferred. Besides, consider people donating cash anonymously. It is not easy to establish effective controls over such streams of revenue.

8). Numerous Volunteers working in nonprofit organizations. They become privy to confidential information of both: donors and organization itself.

9). Dependence of Nonprofits on Publicity. Not-for-profit organizations more than anybody else are susceptible to the destructive effects of negative publicity. As a result it is very unlikely that they will report or even discuss fraud when it happens (Larossa, Zikmund, 2010).

Types of Fraud in Nonprofit Organizations.

There are two main types of fraud that occur in nonprofit organizations: fraud committed by a nonprofit (management fraud) and fraud committed against a nonprofit (employee fraud). Each of them has a few subtypes.

Fraud Committed by a Nonprofit:

* Tax Evasion. It happens when a regular profit oriented business claims to be a nonprofit and gets a tax-exempt status. * Misrepresentation of Fair Market Value of Donated Assets. For example, a relative of a non-for-profit member brings in a donation, which goes on the organization’s balance sheet with much higher value that it actually has. The donor then has a high tax write off.

* Failing to Comply with Restriction on Gifts Imposed by Donors. An outside donor has a right to set a restriction on how the donated gift should be used. The restriction can be temporary (ends after a certain period of time or after the condition is met). Or it can be permanent, like for example, endowment.
Endowment cannot be spent for as long as the organization exists. The interest that it earns can be spent, but not the endowment itself. When a nonprofit spends the donations irrespective of the restriction, it constitutes a fraud.

* Fraudulent financial reporting. It can be misclassification of restricted donations to mislead the Charity Watchdogs and other readers of the financial statements. Fraudulent reporting of fundraising and administrative expenses to mislead the donors regarding amount of funds used for the program.

Fraud Committed against a Nonprofit:

* Skimming. Just like in a regular commercial business cash can be stolen in nonprofit before it gets into accounting records of the organization. Operating in full atmosphere of trust very seldom nonprofits establish double counts of the donated funds, surveillance cameras in the areas where revenue gets collected or any other strong form of internal control. As a consequence, skimming becomes very easy type of fraud in nonprofits.

* Conflicts of Interest Issues. Management or Board members might have hidden interests in the vendors or customers of the organizations. As a result, private interests rather than the mission and goals of a nonprofit are being followed.

* Credit Card Abuse. As in any other kind of business employees of nonprofit happen to use organization-issued credit cards for personal use. Besides, engaging large number of volunteers and not giving enough attention to security issues, it becomes quite easy for perpetrators to get hold of donor’s credit card numbers and use it for their personal expenses.

* Fictitious Vendors Fraud. Perpetrator can easily set up a fake company and send fictitious invoices for payment. Because of weak internal controls and “mission driven” policies, nonprofits most likely won’t verify the legitimacy of the vendors or invoices before payments.

* Lack of proper documentation. Lots of transactions happen in nonprofits through cash. For example, during a fundraising event a catering company, delivering refreshments for guests and volunteers, gets paid by cash. In all hustle-bustle and high mood of the event, retaining the receipt does not seem important. That gives room for fraud by overstatement of the expense.

* Payroll Fraud. Continuous payments to terminated employees or overstatement of hours worked by existing employees. Besides, employees can submit fictitious or inflated expenditure for reimbursement (Fraud Magazine, 2009).

No matter which kind of fraud happens in the nonprofit or what caused it, each dollar lost to fraud means one dollar less towards an organization’s mission. It also means bad publicity and low employee morale. Besides, there is cost of litigation and investigation, which a nonprofit cannot always afford because of its limited recourses.

Recent Fraud Cases

We have mentioned above several cases related to non-for-profit fraud. Now we would like to look at four of them closer. Such case studying will help us to understand why fraudulent activities happen in non-for-profit organizations and what should be done in order to prevent them.
The first example that we would like to look at is John Donald Cody`s case. According to CBS article, John Donald Cody who had multiple identities founded a charitable organization called the United States Navy Veterans Association. The organization was a fictitious fund that took in $100 million in donations within an eight-year period. The donated money never served the purpose of helping those in need.
Why was such significant amount of money entrusted to the fraudster? In order to answer the question we would like to look at the prehistory of the case.
According to the FBI authorities John Cody was a rather educated individual who graduated from Harvard Law School in 1972 and had been practicing law until 1984. Since then John Cody had been engaging in multiple illegal activities unrelated to the charitable fund fraud. Upon establishing the organization that had a rather noble mission of helping veterans all around the United States and thus gaining rapidly growing success, John Cody was able to obtain access to one of the most powerful and influential members and leaders of the Republican Party including House Speaker John Boehner, former presidential candidates John McCain and Rudy Giuliani, and even former President George W. Bush (CBS News, 2012). It is very hard indeed not to trust the organization, the founder of which associated himself with such respectable people. John Cody had been wanted by the FBI since 1984 and made it very hard for the authorities to be discovered by using multiple names. As a reporter for CBS News announced the fraudster “was being pursued by authorities in a nine-state, cross-country manhunt as the alleged mastermind” behind the fake charitable organization and was proclaimed responsible for the largest charity scam in U.S. history (CBS News, 2012).
The case of John Cody is still pending and there is no definite sentence assigned to the fraudster yet. However, the FBI authorities ensured those who suffered from the illegal activities of John Cody that the fraudster would carry full responsibility for the wrongdoings.
The second case that we would like to focus on is about SPCA International, a non-for-profit organization that raises funds in order to help animals worldwide. According to the authorities that conducted the investigation of the case, the organization raised close to $27 million during 2010 and spent almost all of that money on fund-raising expenses paid to a direct-mail company called Quadriga Art.
There is no question that a charitable organization needs to spend money in order to raise some funds. Such fund raising requires sufficient monetary supply for promoting the organization and its mission through a well-organized campaign. SPCA International, as any other non-for-profit organization, performed its program and supporting services. Such fund raising that was described before would be considered as supporting services. According to FASB regulations for non-for-profit organizations “supporting services consist of administrative costs (management and general costs) and fund-raising activities” (Hoyle, 2013, p. 810). These activities are not directly related to the organizations stated mission. “Analysts frequently use the ratio of program services to total expenses as one way to evaluate the efficiency of non-for-profits” (Hoyle, 2013, p. 810). The Better Business Bureau has suggested that ratio values of less than 65 percent are not desirable. That means that only up to 35 percent of all the funds raised should be spent on supporting services like fund-raising. Unfortunately, according the SPCA International tax records, there was an enormous amount of money going into fund-raising. $27 million, almost 100 percent of all the donations raised in 2010, was spent for those purposes.
As any non-for-profit, SPCA International had its program services. One of its major programs called “Baghdad Pups” had a mission of “helping U.S. troops safely transport home the companion animals they befriend in the war zone” (CNN U.S., 2012). According to the tax records for 2010, SPCA International was able to raise $14 million that was supposed to be directed on the “Baghdad Pups” Program. In the course of the investigation it was found out that the organization spent less than 0.5 percent, about $60,000, out of $14 million on small cash grants to animal shelters across the United States of America. Another $450,000, about 3 percent of the total amount of money raised in 2010, was spent to bring back animals from Iraq and Afghanistan as part of its “Baghdad Pups” Program (CNN U.S., 2012). In total, of all the money raised in 2010 only 3.5 percent, as opposed to 65 percent threshold imposed by the Better Business Bureau, was spent on program services and 96.5 percent was again directed on supporting services.
When donating money to a non-for-profit organization, contributors have a primary concern of the extent to which a charity is using the resources provided to fulfill its organizational mission. Is the money donated spent to help homeless people or starving animals or is it wasted on costly fund-raising campaigns or executive salaries? SPCA International failed its mission of helping animals worldwide and lied to its donors about how their contributions were spent.
There is no final verdict imposed on the charitable organization due to ongoing investigation but it is certain that SPCA International will never win back the trust of its contributors.
The third case that we would like to study is the case of Anita Collins who stole more than $1 million from the Archdiocese of New York.
Anita Collins was a 67-year-old bookkeeper that had been working in an accounting department of New York Archdiocese, a non-for-profit organization, for almost nine years. Due to the lack of proper regulations and absence of segregation of duties in the organization, Anita who was responsible for record keeping and cash handling, managed to embezzle the money by writing duplicate checks in small amounts and cashing them using fake names. According to Prosecutors “Anita Collins used the stolen funds to buy lavish items from the likes of Bloomingdale`s and Brooks Brothers” (Huffington Post, 2012).
For the very first time the bookkeeper was confronted at work when $10,000 went missing. Anita admitted to stealing the money but continued denying of taking the other $1,063,000.
Along the course of the investigation it was found out that Anita Collins was not new to such type of crime as embezzlement. She also pleaded guilty twice to larceny cases before getting hired by the New York Archdiocese and had served probation. Unfortunately, the Archdiocese did not do background checks which saved Collins from being discovered. Anita continues to not plea guilty and is currently being held on a $750,000 bail (Huffington Post, 2012). The last, but not least case, that we would like to look at, is the case of Hugh Blackburn, a former deputy director of The Head Start program who embezzled federal funds intended for low-income children and families in New York City. The Head Start was a program run by the United States Department of Health and Human Services. The stated mission of the Head Start was “to provide comprehensive education, health, nutrition, and parent involvement services to low-income children and their families” (Scribner, 2008). La Peninsula Community Organization, Inc. was a charitable organization that operated major programs of the Head Start in the Bronx and Queens. Hugh Blackburn was employed as the Deputy Director of La Peninsula from 1989 to 1996. One of the many responsibilities of Blackburn was supervising the fiscal operations of the organization, reviewing invoices and payments to various vendors, authorizing payments of expenses. He was also responsible for supervising of the proper expenditure of the federal funds appropriated for the Head Start Program. Such broad spectrum of responsibilities and lack of segregation of duties gave Hugh Blackburn the opportunity to use the funds for his personal needs. Along the course of his employment at the Head Start, Blackburn created two fictitious vendors - “DACO Sales & Service” and “DSA Enterprises”, which he was constantly ordering goods and services from. Those goods and services were needed by the Head Start in order to perform daily business activities. In reality, DACO was owned by the mother of two of Blackburn’s children. The woman was acting at Blackburn’s directions. She withdrew money from the DACO bank account in order to pay personal expenses of Hugh Blackburn. Another vendor company, DSA, was registered under Blackburn’s name. Both vendors, DACO and DSA, billed La Peninsula for various goods and services such as computers, computer training, carpets, monitors, office supplies, paintings for classrooms, and digital cameras. Unfortunately, those goods and services never reached the children and families in need or were provided at very high prices. In total, La Peninsula paid its vendors almost $1,450,000 which was mainly spent on his personal expenses by Hugh Blackburn.
According to the authorities that were conducting the case, the fraudster was charged with “embezzlement of federal funds, mail fraud and money laundering. He faces a maximum sentence of 20 years in prison if convicted on the money laundering count, 20 years in prison on the mail fraud count, and 10 years in prison on the embezzlement count; a fine on each count of the greater of $500,000 or twice the gross gain or loss from the offense” (Scribner, 2008). “The defendant stole resources intended for low-income families, placing his greed above his responsibility to the children served by the Head Start Program,” said the prosecutor, Michael J. Garcia. “As a result of the investigation by DOI, the defendant’s schemes were uncovered and he will be prosecuted” (Scribner, 2008).

Non-for-profit fraud prevention

Such deep breakdown of these examples can help us understand that non-for-profit organizations, ether private or public, have been targeted for fraud opportunities. One question should be asked now. Are these organizations doing something to stop or reduce such an alarming problem that has been increasing over decades? There is no doubt that many non-for-profit organizations have gained our trust because of their goal of pursuing of social public welfare activities, rather than to maximize profits. Yet the examples stated before clearly show that our contributions have not been wisely used to accomplish the main goals of these organizations, instead they ended up in the pockets of some employees, supervisors or executives.
Referring to the stated above question, many big non-for-profit organization have been doing something to stop such upsetting outrage. The COSO report of 1992 along with the Sarbanes-Oxley Act of 2002 stated many procedures and regulations about internal controls that companies must follow to minimize fraud, maximize trust worthiness and fair financial statements disclosure, procedures that has been followed since then and adopted by many well-known non-for-profit organizations.
According to Turner, internal controls are “set of procedures and policies within the organization to safeguard its assets, check the accuracy and reliability of its data, promote operational efficiency and encourage adherence to prescribed managerial practices” (p. 4). For example in a non-for-profit organization the internal control systems have to promote compliance and procedures for handling funds received and expended by the organization. Also focusing on preparing appropriate and timely financial reporting.
In our examples, if internal controls had been used, we would have avoided most of the fraud cases. We could have stopped asset misappropriation, fake vendors, and inappropriate accounting procedures. To see the complete picture and effects of internal controls in a non-for-profit organization, it’s important to drill down the four internal control components and relate them to our given examples.

1. Control Environments:

This is the foundation for all the other components of the internal controls and provides the discipline and structure of all other components. It is this first step that sets the tone of the organization and influences the control consciousness of its employees. Biegelman and Bartow suggest that “honesty can best be reinforced when a proper example is set (the tone at the top). The management of an entity cannot act on one way and expect others in the entity to behave differently” (p. 108). There is no doubt that this very first component of internal controls can avoid so many fraud cases in non-for-profit organizations. It is true that when we see a supervisor or any type of executive that shows and exceeds good ethical behavior we tend to follow them. On the other hand, if we see company directors that don’t care about ethics and good conduct within the company, we are more stimulated to commit fraud.

2. Risk Assessment:

This second component of internal controls is so crucial when it comes to detecting and preventing frauds. It is the component that could save a non-for-profit organization from disaster. Fraud is a catastrophic risk that could put the organization out of business almost overnight. Even if the company survives a major fraud, it can damage the reputation so badly resulting on direct effects on the contributions that company receives. For this reason Biegelman and Barton emphasize that the “organization should be proactive in reducing fraud opportunities by identifying and measuring the fraud risk, taking steps to mitigate identified risk, and implementing and monitoring appropriate preventive and detective internal controls and other deterrent measures” (p. 189).
One of the most important risk assessments a non-for-profit should consider is background checks on prospective employees or volunteers. According to McMillan background checks should be emphasized on criminal background checks, credit check, reference checks, verification of prior employment and higher education (MacMillan, Ch. 3). A process that could have been implemented in our example of Anita Collins, the bookkeeper, an employee that had been involved in embezzlement crime on prior employment. It is important that proper pre-employment screening takes place to limit theft and embezzlement in the workplace and protect against liability and other legal damages that could result in a devastating reputation decline of the company.

3. Control Activities:

This third component on internal control is divided in four main parts.
1. Authorization.
2. Segregation of Duties.
3. Adequate Records and documents.
4. Checks and Reconciliations:
Authorization of Transaction: It is important that supervisors try to ensure that volunteers and/or employees engage in authorized transactions. Authorization is an approval, or endorsement by the top person of the department in the organization that has been sanctioned by top management (Turner, 96).
Segregation of Duties: a company has to make sure that the authorization, record keeping and custody of the assets have to be separated. We don’t want to give employees and/or volunteers a chance to misappropriate contributions, gifts or any other type of assets and later cover those actions with manipulation of accounting records and reports without any supervision along the process (Turner, 96).
Security of Assets and Documents: no doubt that all the records and documents of any company have to be protected. Non-for-profit organizations have to limit the physical access to assets by limiting the number of authorized people to those assets. It is also recommended that a company should focus on protection of information by implementing system controls that regulate the access and manipulation of such information (Turner, p. 98).
Checks and Reconciliations: both managers and employees/volunteers have to be encouraged to make reconciliations and checks of all the documents, transaction and processes throughout their workday. Employees/volunteers have to make sure that all transactions and documents prepared are free of errors. However, managers should never be so confident about transactions performed and documents/reports received by employees/volunteers. There is always a chance for mistakes and we can’t ever know when they will come. For this reason managers should always recheck and reconcile everything before authorizing. (Turner, pp. 98, 99)

4. Monitoring:

There are a lot of companies that, after creating or implementing a internal control system, forget about this final step which could lead to an unstable system, improper and inefficient results. Ionesco advises “internal control systems should be monitored to assess the quality of the system’s performance over time, [evaluate] the effectiveness of the internal control system and ensure that internal control achieves the desired results based on predefined methods and procedures” (p. 804). Companies can put up many layers of protection against fraud but if all of them are not working properly we can’t expect good results about fraud prevention and detection. If a company never revises internal controls to identify its deficiencies and later determines proper actions, internal controls will never fulfill its purpose. Companies should never stop revising internal controls and making changes of the components that yield unwelcome results.
All these four components together form a big barrier against fraud opportunities in non-for-profit organization and it is up to the highest level of authority, Board of Directors, along with the assistance of the Audit committee to make sure that this system is working properly and efficiently. Yet, internal control system was developed mainly to stop employee fraud. Frauds committed by a manager are rarely stopped by internal controls. This doesn’t mean, however, that a company can’t stop management fraud. The Sarbanes-Oxley Act of 2002 states that companies should establish different tactics to minimize management fraud, like creating a very strong board of director an developing an audit committee.
The Foundation Center Web site states that many responsibilities lay in hands of the board of directors such as discussing and voting on the highest priority issues, setting organization polices and establishing fund raising plans, evaluating key staff, and the most important preventing and detecting fraud within the organization.
Prevention and detection of fraud is important for the board of directors and failure to accomplish this goal is something that has to be corrected. In our example of Hugh Blackburn, a director of non-for-profit organizations, created fake vendors charging a lot of services and goods that were never provided or shipped to the company. By doing this he was able to misappropriate a lot of contributions of the company’s activities that must have been detected by the board of directors. But the board of directors of this company failed its mission since this activity was performed for some time and never detected. An explanation that we can give to his case is that not all board of directors are strong and experienced and it is impossible for them to detect all schemes. “Nonprofit organizations are particularly vulnerable because of the way they operate. Nonprofit organizations tend to have unpaid boards of directors who may or may not have financial expertise. Without financial expertise at the board level and little, or limited, supervisory capabilities at the operational level, a steady flow of cash donations becomes a magnet for fraud” (Greenlee, p. 690). That’s when the Audit committee has to step in to enforce and regulate its main responsibilities. The Audit Committee is an independent subdivision of the board of directors that monitors and enforces internal controls. Based on, AICPA Not-for-Profit Audit Committee Toolkit, the audit committee must have “a minimum of three members with at least one of the members being a board member or one member having financial expertise, or both” (p. 19). It is this expertise of at least one member that makes them responsible for the enforcement of the internal controls. If the board of directors, for some reason, could not detect fraudulent actions done either by managers or employees, it is the obligation of the audit committee with its team of auditors to detect this flaw.

Conclusion

Our main focus has been to raise awareness that non-for-profit organizations’ frauds are a reality and they have been picking up the pace for the last few years, a problem that affects everyone that has been touched by the feeling that we have some sort of responsibility with our community and society. Many people in their lives have made contributions to a non-for-profit organization to help it accomplish its goal or vision. Unfortunately, some of these people have found out that their contributions never went to accomplish the goal of the company. Some people have been at a worst situation when they realized that the company they contributed to never existed.
We gave you few examples that support this bizarre reality. These examples were explained in detail and analyzed to see what the companies can do to minimized or luckily eliminate this problem. Non-for-profit companies have many ways to deal with these problems but as our examples show, not all of them have the resources to create layers of protection against fraud. Most of the big non-for-profit organizations have been following internal controls rules to minimize this problem. However, it is the small non-for-profit organizations that have difficulties when it comes to prevention and detection of fraud. Many of them face the fact that they can’t afford such an expensive system and distribute most of their resources to their programs without realizing that they are creating opportunities for fraud. A problem that hurts the reputation of a company and creates a direct effect on the contributions received that later lead to the dissolution of the company itself.
We can’t forget that these alarming cases are also happening with the use of new technologies. Now that people have access to the Internet, it is so easy for anyone to create a website, come up with a name, goal/purpose and convince people to contribute. People sometimes believe this without realizing that there is no such company, and there is just one person behind playing with them to increase personal wealth, a clear reflection of our example of John Donald Cody`s case.
That being said, now we know that opportunities for fraud are anywhere, in small companies where they can’t afford to create layers of protection, or companies that have internal controls but due to the lack of experience of the board of directors or the inefficiency of the audit committee can never prevent and detect fraud. We know that if we donate something to these non-for-profit organizations, there is a chance that these resources vanish somehow and never reach its destination. So we have to think twice when we contribute to a non-for profit organization, we have to make sure first that this company is legitimate. We have to be sure that the company has the ability to protect our contributions, has a strong board of directors and an audit committee that can assure that all the contributions are going to accomplish the goal of the company and don’t die out somehow in the employees, manager or executives hands.

References
AICPA. “Audit Committee Roles and Responsibilities.” Not-for-Profit Audit Committee Toolkit, 20 Jul. 2013. <http://www.aicpa.org/interestareas/businessindustryandgovernment/resources/notforprofitresourcecenter/pages/aicpanot-for-profitauditcommitteetoolkitdownloads.aspx>

Biegelman, Martin and Joel Bartow. “Internal Control and Antifraud Program”. Executive Roadmap to Fraud Prevention and Internal Control: Creating a Culture of Compliance. Hoboken: Wiley, 2012. Web. 15 Jul. 2013 <http://site.ebrary.com/lib/baruch/docDetail.action?docID=10542511>

Foundation Center. 20 Jul. 2013. <http://foundationcenter.org/getstarted/tutorials/establish/check.html>.

Ionescu, Luminita. "Monitoring s a Component of Internal Control Systems." Economics, Management and Financial Markets 6.2 (2011): 800-4. ProQuest. Web. 20 Jul. 2013. <http://remote.baruch.cuny.edu/login?url=http://search.proquest.com.remote.baruch.cuny.edu/docview/884338944?accountid=8500>.

Janet Greenlee, Mary Fischer, Teresa Gordon and Elizabeth Keating. “An Investigation of Fraud in Nonprofit Organizations: Occurrences and Deterrents.” Nonprofit and Voluntary Sector Quarterly. 2007: 676-694. Sage Journals. Web. 20 Jul. 2013. <http://nvs.sagepub.com.remote.baruch.cuny.edu/content/36/4/676.full.pdf+html>.

McMillia, E. “Essential Internal Control and Administrative Procedures to Avoid Embezzlement”. Preventing Fraud in Nonprofit Organizations. Hoboken: Wiley, 2006. Books 24x7. Web. 15 Jul. 2013. <http://library.books24x7.com.remote.baruch.cuny.edu/toc.aspx?bookid=16919>.

Turner, Leslie. Accounting Information System: Controls and Procedures. Hoboken: Wiley, 2009.

CBS News. (2012). Retrieved on July 25, 2013, from http://www.cbsnews.com/8301-505263_162-57524979/authorities-john-donald-cody-mastermind-behind-$100m-charity-scam/

Huffington Post. (2012). Retrieved on July 25, 2013, from http://www.huffingtonpost.com/2012/01/30/anita-collins-stole-archdiocese-of-ny_n_1242836.html

CNN U.S. (2012). Retrieved on July 25, 2013, from http://www.cnn.com/2012/06/14/us/animal-charity-investigation

Hoyle, J.B., Schaefer, T.F., and Doupnik, T. S. (2013). Advanced Accounting. New York, NY: McGraw-Hill/Irwin.

Scribner, Y., Carmichael, R., Oh, J. (2008). Former Deputy Director of Head Start Programs Indicted for Embezzling Funds Intended for Low-Income Children and Families in New York City. In Justice. Retrieved on July 25, 2013, from http://www.justice.gov/usao/nys/pressreleases/November08/blackburnhughindictmentpr.pdf

Fraud Magazine. (2009). Fraud in Nonprofit Organizations. Emulating SOX’s Best Practices. Retrieved on July 25, 2013 from, www.fraud-magazine.com

Larossa, L., Zikmund, P. (2010). Nonprofits Not Immune to Fraud. Retrieved on July 25, 2013, from http://www.eisneramper.com/non-profits-fraud-0410.aspx.

Bush, C. Life Planning – Beware of Fraud in Non-Profit Organizations. Retrieved on July 28, 2013, from http://www.cbwealthadvisory.com/nonprofits.php.

Rose, L. (2013). Founders of Hurricane Sandy. Retrieved on July 30, 2013, from http://www.nj.com/news/index.ssf/2013/02/founders_of_hurricane_sandy_ch.html