1. The church’s board of trustees has delegated responsibility for 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 considered necessary in recent years because the same trusted employee has kept church records and served as financial secretary for 15 years.
2. The collection at the weekly service is taken by a team of ushers. The head usher counts the collection in the church following each service. He then places the collection and a notation of the amount counted in the church safe. Next morning the financial secretary opens the safe and counts the collection again. She withholds about $100 to meet cash expenditures during the coming week and deposits the remainder of the collection intact. To facilitate the deposit, members who contribute by check are asked to draw their checks to “cash.”
Describe the weaknesses and recommend improvements in procedures for collections made at weekly services. Organize your answer using the following format:
This is a revenue recognition issue that affects gross receipts and all round trip transactions not to mention fund manipulation. Every area of the Auditing Cycle is compromised and carries tremendous inherent risk. The control processes of documents and records along with function and controls activities are jeopardized. All transaction objectives, balance objectives and disclosure objectives need to be re-evaluated. There is not one system that is affected under this scenario. Revenue recognition,...