The Nonprofit Tale of Fraud, Prevention, and the Examiner’s Perspective

Once upon a time, in a land far away, there was a prosperous kingdom that served many people.  Skilled workers managed the kingdom and had responsibility over its great wealth.  Alas, one day, it was discovered that much of the kingdom’s riches had mysteriously disappeared, and great sadness spread throughout the land.

Unfortunately, that fairy tale opening can, all too often, be a reality for nonprofits, delivering a disheartening blow to the organization and stakeholders alike. John Kubichek – CPA, Certified Fraud Examiner, and Tate & Tryon Senior Audit Manager – has conducted numerous investigations for both criminal and civil fraud cases. Typically, examiners are only brought in AFTER a fraud has been perpetrated. But as someone who comes across fraud more often than he’d like, John encourages nonprofits to be proactive in protecting their assets and mission.

Fraud Prevention

Solid internal controls, policies and procedures, and segregation of duties are foundational to safeguarding assets. Data analytics also plays an important role with regular analyses of financial and non-financial information. But you can’t stop there – making sure those safeguards are functioning properly is key.

John recollects the words of a nonprofit CFO whose organization had just lost several hundred thousand dollars to fraud – ‘We probably need to talk about internal audit.’

“Unfortunately, at that point, the damage had been done,” John elaborated. “It’s most beneficial for an organization to have a little spend today to prevent a BIG loss tomorrow. Bringing in outside perspectives and expertise can be very valuable to any organization – to not only mitigate the risk of financial fraud but also mitigate personnel-related lawsuits and noncompliance with federal awards.”

John explains, “While there are some large nonprofits who should have a fully staffed internal audit department, mid- to small-size nonprofits can hire an internal auditor on an outsourced basis for periodic examinations to highlight risks, test what’s being done to mitigate those risks, and then provide recommendations on ways to change.”

The Examiner’s Perspective

Meticulous and dedicated to all that’s right, John goes on to share, “I got into fraud examination after being hired as an expert in a huge litigation case. There was no roadmap, nothing to go off of – it was investigative digging, looking, and figuring it out. It’s a bittersweet victory, though, if someone goes to jail. And while I enjoy investigative research, I much prefer providing insights to prevent loss.”

fraud prevention internal auditJohn’s perspective continues outside work where he guest speaks about how to prevent personal financial difficulty. He mentions, “I enjoy helping people understand how to budget, how to be good savers, and how to not go into debt.”

And beyond the financial world, John continues helping people by volunteering regularly with cognitively disabled adults. John reflects, “As we spend time together and they are super-duper happy and loving life, it brings added perspective to the challenges we all face in life.”


If you’d like assistance in protecting your nonprofit organization from fraud, personnel-related lawsuits, and compliance failures, Contact Us to develop a solution that’s affordable and right for you.

…And they all lived happily ever after.


Tips on Improving Your Nonprofit’s Charity Watchdog Ratings

Posted on , updated on


Nonprofit Accounting-Tax-Technology10/02/2019


In this podcast, we discuss how charity watchdog organizations such as Charity Navigator, BBB Wise Giving Alliance, and GuideStar typically monitor and rate charitable organizations and what nonprofit leaders should be thinking about with respect to their organization’s ratings.

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