The word abuse is never used in a positive connotation. When it is associated with the not-for-profit community, it is particularly disturbing. Abuse is distinct from illegal acts or fraud. It is defined as “conduct that falls far short of societal expectations for prudent behavior”.
Paragraph 4.12 of the 2007 Yellow Book notes that abuse involves behavior that is deficient or improper when compared with the behavior a prudent person would consider reasonable and necessary business practice given the facts and circumstances. Abuse also includes misuse of authority or position for personal financial interests or those of an immediate or close family member or business associate.
Everyone who has a role in the management or governance of a not-for-profit should avoid any connotation of abuse and be sure that decisions are made at “arms-length”. Recently, the following situations were brought to our attention as auditors through our inquiry and interview process:

  • Hiring of family members at hourly rates higher than others in the same position
  • Family members included on organization trips
  • Family members and friends included in organizational meetings and meals
  • Use of personal credit cards for organizational expenses to receive credit card incentives
  • Personal use of organization’s computers for internet access
  • Personal use of copy machines, faxes and postage machines
  • ATM cash advances

Often I am asked if something is improper or could be considered improper. My answer is always – If you have to ask me, don’t do it.
I hope you will continue to visit our blog and we will be providing you with information that you can use to help you navigate through the not-for-profit community.

-Kathy Hostetler, CPA