The board of trustees of a local church is concerned abount the internal accounting controls pertaining to the offering collections made at weekly services. They ask you to serve on a three person audit team with the internal auditor of a local university and a CPA who has just joined the church. At a meeting of the audit team and the board of trustees, you learned the following: The church’s board of trustees has delegated reasponsibility for the financial management and audit of the financial records to the finance committee. This group prepares the annual budget and approves major disbursements but is not involved in collections or recordkeeping. No audit has been made in recent years because the same trusted employee has kept church records and serves as financial secretary for 15 years. The church does not carry any fidelity insurance. The collection at the weekly service is taken by a team of ushers who volunteer to serve for 1 month. The ushers take the collection plates to a basement office at the rear of the church. They hand thier plates to the head ushers and return to the church service. After all plates have been turned in, the head usher count the cash received. The head usher them places the cash in the church safe along with a notation of the amount counted. The head usher voluteers to serve for 3 months. The next morning, the financial secretaty opens the safe and recounts the collection. The secretary withholds P150-200 in cash, depending on the cash expenditures expected for the week, and deposits the reminder of the collections in the bank. To facilitate the deposit, church members who conribute by check are asked to make thier checks payable to “Cash”. Each month, the financial secretary reconciles the bank statement and submits a copy of the reconciliation to the Board of Trustees. The reconciliation have rarely contained any bank errors and have never showm any errors per books. Instructions Indicate the weaknesses in internal accounting controll in the handling of collections. List the improvements in internal control procedures that you plan to make at the next meeting of the audit team for (1) Ushers, (2) the Head Usher, (3) the financial secretary, and (4) finance committee.

The board of trustees of a local church is concerned abount the internal accounting controls pertaining to the offering collections made at weekly services. They ask you to serve on a three person audit team with the internal auditor of a local university and a CPA who has just joined the church. At a meeting of the audit team and the board of trustees, you learned the following: The church’s board of trustees has delegated reasponsibility for the financial management and audit of the financial records to the finance committee. This group prepares the annual budget and approves major disbursements but is not involved in collections or recordkeeping. No audit has been made in recent years because the same trusted employee has kept church records and serves as financial secretary for 15 years. The church does not carry any fidelity insurance. The collection at the weekly service is taken by a team of ushers who volunteer to serve for 1 month. The ushers take the collection plates to a basement office at the rear of the church. They hand thier plates to the head ushers and return to the church service. After all plates have been turned in, the head usher count the cash received. The head usher them places the cash in the church safe along with a notation of the amount counted. The head usher voluteers to serve for 3 months. The next morning, the financial secretaty opens the safe and recounts the collection. The secretary withholds P150-200 in cash, depending on the cash expenditures expected for the week, and deposits the reminder of the collections in the bank. To facilitate the deposit, church members who conribute by check are asked to make thier checks payable to “Cash”. Each month, the financial secretary reconciles the bank statement and submits a copy of the reconciliation to the Board of Trustees. The reconciliation have rarely contained any bank errors and have never showm any errors per books. Instructions Indicate the weaknesses in internal accounting controll in the handling of collections. List the improvements in internal control procedures that you plan to make at the next meeting of the audit team for (1) Ushers, (2) the Head Usher, (3) the financial secretary, and (4) finance committee.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The church’s board of trustees has delegated reasponsibility for the financial management and audit of the financial records to the finance committee. This group prepares the annual budget and approves major disbursements but is not involved in collections or recordkeeping. No audit has been made in recent years because the same trusted employee has kept church records and serves as financial secretary for 15 years. The church does not carry any fidelity insurance.

The collection at the weekly service is taken by a team of ushers who volunteer to serve for 1 month. The ushers take the collection plates to a basement office at the rear of the church. They hand thier plates to the head ushers and return to the church service. After all plates have been turned in, the head usher count the cash received. The head usher them places the cash in the church safe along with a notation of the amount counted. The head usher voluteers to serve for 3 months.

The next morning, the financial secretaty opens the safe and recounts the collection. The secretary withholds P150-200 in cash, depending on the cash expenditures expected for the week, and deposits the reminder of the collections in the bank. To facilitate the deposit, church members who conribute by check are asked to make thier checks payable to “Cash”.

Each month, the financial secretary reconciles the bank statement and submits a copy of the reconciliation to the Board of Trustees. The reconciliation have rarely contained any bank errors and have never showm any errors per books.

Instructions

Indicate the weaknesses in internal accounting controll in the handling of collections.

List the improvements in internal control procedures that you plan to make at the next meeting of the audit team for (1) Ushers, (2) the Head Usher, (3) the financial secretary, and (4) finance committee.

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