Cash flow, fighting fraud and audits

1Managing cash flow

An NGO can be solvent on paper and unable to pay in practice: donors pay in instalments, often after reporting. The monthly cash flow plan matches expected receipts (by donor and instalment) with disbursements (salaries, purchases, partners). It anticipates cash gaps and makes it possible to request advances or postpone purchases.

Exchange-rate risk is managed by converting as needed, recording at the rate set in each contract (spot rate, average rate or InforEuro rate, for example) and tracking exchange gains and losses. Transfers to hard-to-reach areas (banks, mobile money, hawala) require a risk analysis and suitable controls.

2Fraud: prevent, detect, respond

The fraud triangle (pressure, opportunity, rationalisation) explains why internal controls aim first at reducing opportunities: segregation of duties, approval thresholds, rotation, monthly bank reconciliations, supplier vetting, conflict-of-interest declarations.

• Red flags: split invoices, suppliers with no verifiable address, consistently high prices, an employee who never takes leave, altered documents.
• Response: anti-fraud policy, protected reporting channel, investigation by an independent person, informing donors within contractual deadlines, sanctions and recovery of funds.

3Passing an audit

A project audit checks that declared expenses are real, eligible, justified and compliant with the contract. Preparation starts on day one: documents filed by budget line, reconciliation between accounts and financial reports, complete procurement files (quotes, comparative analysis, contract, goods received note), timesheets for staff charged to the project.

After the audit, the management letter leads to an action plan followed up by management. Rejected costs are borne by the organisation: that is what compliance is for.