Frequent Frauds Found in Governments and Not-for-Profits

Chapter 10 CASE 10: DONATED ASSETS

LEARNING OBJECTIVES

After you have completed this chapter, you should be able to do the following:

•     Identify how donated assets and capital assets in a fictitious not-for-profit (NFP) entity might be misappropriated.

•     Identify fraud risks relating to opportunity in a fictitious NFP that might result in donated assets being misappropriated.

BEFORE WE START

A number of NFPs have few, if any, controls over the receipt and disposition of donated assets. Often an NFP may not believe controls over donated assets are cost effective because they believe they do not receive assets of significant value. It is possible an NFP may in fact receive donated assets of significant value that are quickly and easily misappropriated due to the lack of controls.

Generally the types of property, plant, and equipment subject to misappropriation include physical assets that are

•     small in size.

•     high in value.

•     high in consumer demand.

•     easily convertible to cash.

•     lacking in ownership identification.

•     subject to personal or non-program use.

•     susceptible to personal use or redirection.

THE CASE

Central Clinic, Inc. is a 501(c)(3) whose mission is to provide low cost health care to qualified individuals. Ostensibly, qualified individuals are those not eligible for Medicare or Medicaid and have a modified adjusted gross income (MAGI) less than 200 percent of the MAGI required by the Affordable Care Act. In reality, ...