Governance and the prevention of fraud in charities in England and Wales

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Abstract

Despite increasing public attention and media coverage of fraud, no solution to this problem has been designed specifically for the not-for-profit sector. This study focuses on charities in England and Wales and examines variables derived from a content analysis of 42 fraud and 42 no-fraud charities’ annual reports and financial statements. We use logistic regression to explain and predict fraud in the charity sector. We examine whether a range of governance-type variables are significantly related to the likelihood of fraud in charities. We find that smaller boards, which imply a small cosy environment for governance, are associated with a greater likelihood of fraud, suggesting that larger boards enhance monitoring in the not-for-profit sector. Also, a low or zero-level of grant funding is associated with a greater likelihood of fraud, implying that monitoring by long-term donors is also important in curbing fraud.
Original languageEnglish
Pages (from-to)495-524
Number of pages30
JournalInternational Journal of Business Governance and Ethics
Volume17
Issue number5
Early online date2 Aug 2023
DOIs
Publication statusE-pub ahead of print - 2 Aug 2023

Keywords

  • Fraud
  • Fraud in the not-for-profit sector
  • Board size
  • Logistic regression

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