SYMPOSIUM NOTES: AVOIDING BERNIE MADOFF

The Fundraising in This Economic Crisis: Unearth Potential symposium was fortunate to have fantastic presenters and the generous support of the Unitarian Church of Evanston. This week we will share some of what we learned.

Michael Pierce addressed our questions regarding avoiding the next Bernie Madoff. Michael is a CPA and Certified Fraud Examiner. He is a partner in the CPA firm of McGladrey & Pullen. He is Vice Chair of the Illinois CPA Society. AND, he serves on the board of an organization that was ripped off by Bernie Madoff. He shared his valuable insight into “fraudsters.”

The reason Bernie Madoff’s Ponzi scheme came to light was because the economy has compelled people and organizations to withdraw money from their investments. According to Michael, “When times are tough we find just how many times we’ve been taken.” ....

It is difficult to find fraud until you know it exists. Often suspicion arises when a staff person goes on vacation and a back-up person steps in and questions what they see. It is very difficult to protect against fraud: different organizations have different challenges....

Non-profits should have sophisticated accounting systems to track where the funds go and have standards in place to protect themselves. Michael said the best protection is having a system that would require multiple people to group together in order to perpetrate the fraud. The fraudsters are very focused. There’s more of a chance that the wrong person will be approached and will blow the whistle. Michael described the three elements almost always present in organizational fraud, and much more.

If you would like a copy of the 46-page "Audit Committee Guide for Not-for-Profit Organizations" that attendees received, contact Michael Pierce at McGladrey & Pullen, 570 Lake Cook Rd., Deerfield, IL 60015 or 847-940-1300 x3600 or Michael.Pierce@rsmi.com.

A full copy of Symposium minutes is available by emailing kamblake@aol.com.