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

Authors: Saffet Aras Uygur; Christopher J. Napier

Addresses: School of Business and Management, Royal Holloway University of London, Egham, Surrey, TW20 0EX, UK ' School of Business and Management, Royal Holloway University of London, Egham, Surrey, TW20 0EX, UK

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.

Keywords: fraud; fraud in the not-for-profit sector; board size; logistic regression; England.

DOI: 10.1504/IJBGE.2023.133118

International Journal of Business Governance and Ethics, 2023 Vol.17 No.5, pp.495 - 524

Received: 18 Aug 2021
Accepted: 14 Jan 2022
Published online: 01 Sep 2023 *

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