The following fraudulent acts/problems may occur in a not-for-profit organization. As anauditor, how would you detect these? And what recommendations would you give to the boardand management of NPO?

a.Fictitious vendor schemes - A dishonest employee of NPO sets up a fake company (biller)that bills for good or services the organization does not receive and fraudulently submitsinvoices to obtain payments for his/her personal use.

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b. Kickbacks from unscrupulous vendors- Goods or services may be delivered but are markedup excessively, with the proceeds diverted to the employee

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c. Pay-and-return schemes - The NPO pay for the delivered products, then return these thatcause overpayments to legitimate vendors. When an overpayment is returned, it isembezzled by the employee.

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d. Ordering personal merchandise that is inappropriately charged to the organization.

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e. Skimming - an employee accepts money from a donor but does not record the donationsand instead pockets the money.

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f. Non-existent monitoring control due to high employee turnover and NPOs heavy reliant onvolunteers and other community members.

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g. Misappropriation of funds -abuse or misappropriation of funds to be distributed asfinancial aid to recipients.

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h. Fictitious Recipient - The NPO gives grants/donations to a nonexistent-recipient whichwascreated by one of the officers, and money was pocketed by him/her (officer).

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i. Juggling of Funds - Revenue restricted for NPOs one program was used for otherorganization's projects.

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j. Single source of donations - NPO has only one donor.

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