The following text was sent out on November 1st, 2024.

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Fraud Prevention and Financial Accountability

Charitable Gaming Information Bulletin, Fall 2024
Gaming Policy and Enforcement Branch

The Compliance Division of the Gaming Policy and Enforcement Branch (GPEB) has put together this information bulletin to provide best practices and controls to help charitable organizations minimize the risk of fraud and enhance their financial accountability.

Best Practices for Fraud Prevention

• Regular Financial Reviews
  • Board members should regularly review financial documentation, including statements, budgets, bank statements, and cleared cheques.
  • Ensure disbursements are reviewed so that payees do not also approve their own expenses.

• Board Review and Oversight
  • Present financial information to the board regularly, such as during monthly meetings. Address any questions or significant discrepancies promptly to maintain financial integrity.
  • Have bank statements and cancelled cheques sent to the President, or an equivalent officer, for review, provided they are not also the Treasurer.
  • Foster an environment of transparency where all board members can comfortably ask questions about financial matters.

• Security of Assets
  • Keep funds and records locked up and limit access to those on a need-to-know basis.
  • Use sign-in/out sheets for records taken off-site.

• Segregation of Duties – Involves dividing financial responsibilities among different individuals to reduce the risk of misuse. Key areas include:
  • Authorization – Separate individuals should be responsible for authorizing transactions and executing them. For example, the person who approves payments should not be the same person who processes them.

• Record-Keeping – Ensure those responsible for maintaining financial records are different from those who handle transactions. For example, the person who writes cheques should not also be responsible for reconciling bank statements.
• Reconciliation – The reconciliation of bank statements should be conducted by someone other than the person who manages the cash or cheques.

• Training
  • Provide training on financial controls, fraud prevention, and ethical practices. Informed board members and staff are better equipped to recognize and report suspicious activities.

• Human Resource Practices
  • Consider conducting background checks, including criminal record checks and reference checks, on new board members and staff with financial responsibilities. This help ensure that individuals in key financial roles are trustworthy and suitable for their positions.
  • Develop a conflict-of-interest policy.

• Reporting Fraud
  • Establish a plan detailing the actions to take if fraud is suspected, ensuring that all relevant parties are notified promptly.
  • Notify both the GPEB and Community Gaming Grants Branch, without delay, about any conduct, activity or incident that may be considered contrary to the Criminal Code of Canada, the Gaming Control Act or Gaming Control Regulations, or that may affect the integrity of gaming.

Gaming Account Financial Accountability

• Maintain a separate Gaming Account, specified in the organization’s full name, for the exclusive purpose of receiving, holding and disbursing gaming funds.

• Cheques issued from the Gaming Account:
  • Must be signed by two unrelated individuals, one of whom must be a board member of the organization.
  • Must not be pre-signed.

• EFTs from the Gaming Account must be authorized in writing by two current, unrelated board members. Authorization documents must:
  • Identify the specific purpose of the transaction. General terms such as ‘wages’ are insufficient.
  • Specify the maximum dollar amount permitted.

• Ensure that the purpose and amount of each Gaming Account transaction can be explained and is supported by documentation.
  • Retain disbursement records including cancelled cheques, bank statements, bank transaction receipts, and invoices.
  • Retain sales receipts for a period of five years from the end of the fiscal year in which the revenue was disbursed.

• Retain documentation if an error is made:
  • Spoiled cheques should be marked “VOID” and retained in the cheque book.
  • Errors on deposit slips should be marked as “CANCELLED” and retained in the deposit book.

• Records can be stored physically or digitally; appropriate safeguards should be in place to ensure that they are kept confidential, readily available and secure from tampering.

Online Resources

Information about gaming event classes, types, and the Licensed Charitable Gaming Rules are available here: Licensed Charitable Gaming

Additional information, news and updates can be found on the Gaming Policy and Enforcement Branch website at: Gambling and fundraising – Province of British Columbia (gov.bc.ca)

This bulletin is for informational purposes only and is intended to enhance charitable compliance efforts.

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