Asomdwe Support Centre is a small non-for profit charitable organization located in the northern part of Ghana. Due to its small size, the company can boast of only four full-time employees: two staff, an accountant, and an office manager. The majority of its funding comes from two main sources, domestic and international. Donors make pledges over the telephone. Some donors pay their pledge by credit card during the telephone campaign, but many prefer to pay in monthly installments by check. In such cases, the donor pledges are recorded during the telephone campaign, and the donors are then mailed pledge cards. Donors mail their contributions directly to the charity. Most donors send a check, but occasionally some send cash. Most donors return their pledge card with their check or cash donation, but occasionally the Family Support Center receives anonymous cash donations. Currently, the procedures employed to process donations are as follows: Akosua, a staff member who has worked for Asomdwe Support Centre for close to 10 years, opens all mail. She sorts the donations from the other mail and prepares a list of all donations, indicating the name of the donor (or anonymous), amount of the donation, and the pledge number (if the donor returned the pledge card). Akosua then sends the list, cash, and checks to the accountant. The accountant enters the information from the list into the computer to update the Asomdwe Support Centre’s files. The accountant then prepares a deposit slip (in duplicate) and deposits all cash and checks into the company’s bank account at the end of each day. No funds are left on the premises overnight. The validated deposit slip is then filed by date. The accountant also mails an acknowledgment letter thanking each donor. Monthly, the accountant retrieves all deposit slips and uses them to reconcile the Asomdwe Support Centre’s bank statement. At this time, the accountant also reviews the pledge files and sends a follow-up letter to those people who have not yet fulfilled their pledges. Each employee has a computer that is connected to the internal network. Employees are permitted to surf the Web during lunch hours. Each employee has full access to the company’s accounting system, so that anyone can fill in for someone else who is out sick or on vacation. Each Friday, the accountant makes a backup copy of all computer files. The backup copy is stored in the office manager’s office. Required: a. Identify and describe three major control weaknesses in the Asomdwe Support Centre’s cash receipts procedures. b. For each weakness you identified in (a) suggest a method to correct that weakness. The solution provided must be specific. For instance, you need to identify which specific employees should do what in order to correct the weakness. c. Describe the IT control procedures that should exist in order to protect Asomdwe Support Centre from loss, alteration, or unauthorized disclosure of data.
Asomdwe Support Centre is a small non-for profit charitable organization located in the northern part of Ghana. Due to its small size, the company can boast of only four full-time employees: two staff, an accountant, and an office manager. The majority of its funding comes from two main sources, domestic and international. Donors make pledges over the telephone. Some donors pay their pledge by credit card during the telephone campaign, but many prefer to pay in monthly installments by check. In such cases, the donor pledges are recorded during the telephone campaign, and the donors are then mailed pledge cards. Donors mail their contributions directly to the charity. Most donors send a check, but occasionally some send cash. Most donors return their pledge card with their check or cash donation, but occasionally the Family Support Center receives anonymous cash donations. Currently, the procedures employed to process donations are as follows:
Akosua, a staff member who has worked for Asomdwe Support Centre for close to 10 years, opens all mail. She sorts the donations from the other mail and prepares a list of all donations, indicating the name of the donor (or anonymous), amount of the donation, and the pledge number (if the donor returned the pledge card). Akosua then sends the list, cash, and checks to the accountant. The accountant enters the information from the list into the computer to update the Asomdwe Support Centre’s files. The accountant then prepares a deposit slip (in duplicate) and deposits all cash and checks into the company’s bank account at the end of each day. No funds are left on the premises overnight. The validated deposit slip is then filed by date. The accountant also mails an acknowledgment letter thanking each donor. Monthly, the accountant retrieves all deposit slips and uses them to reconcile the Asomdwe Support Centre’s bank statement. At this time, the accountant also reviews the pledge files and sends a follow-up letter to those people who have not yet fulfilled their pledges. Each employee has a computer that is connected to the internal network. Employees are permitted to surf the Web during lunch hours. Each employee has full access to the company’s accounting system, so that anyone can fill in for someone else who is out sick or on vacation. Each Friday, the accountant makes a backup copy of all computer files. The backup copy is stored in the office manager’s office.
Required:
a. Identify and describe three major control weaknesses in the Asomdwe Support Centre’s cash receipts procedures.
b. For each weakness you identified in (a) suggest a method to correct that weakness. The solution provided must be specific. For instance, you need to identify which specific employees should do what in order to correct the weakness.
c. Describe the IT control procedures that should exist in order to protect Asomdwe Support Centre from loss, alteration, or unauthorized disclosure of data.
d. Draw a simple flowchart to depict Asomdwe Support Centre’s revenue cycle
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