Question

You are the new Director of Development in Goodworks non-profit. You are currently reviewing the internal controls over donations that are sent directly to Goodworks in the form of checks. Your review reveals that the checks are promptly endorsed "For Deposit Only,"but no list of the checks is prepared by the person opening the mail. The mail is opened either by the mailroom employee or by the employee who maintains the accounts receivable records. Mail receipts are deposited in the bank weekly by the manager of Accounts Receivable. Discuss the weaknesses in internal control and your recommendations for improving the system. Remember to provide additional information to the discussion that would be informative; elaborate and expand on previous information

Answer 1

w eakness in internal contescole: 1) chrecks Donations Good works through which is a good prevent frauds at are accepted by a checks & procedure to initial stage 2) List of checks is not prepared by peason opening the mail. By not preparing the list, the tracking of chearues received, deposited endorsed, encathed would not be possible at the closure of Books at year end 3) a person who is responsible for maintaining accounts receivables is given authority to open the mails relating to donations by check which provides an opportunity to commit fraud at employee level 4) maul receipts are deposited on weekly basis which an acceptable procedure

5) mail in bank receipts are deposited by accounts relevabile sogenics of a weekness in inteanal controls. weakness Recommendation to adress in internal controls: 1) The person who is given authority to open mail receipts should also prepare the list of mail receipts I with serial number, check number, amount received, date of receipt, lame of donee etc. 1 2) The main in internal Good wooks 'segregation important draw back controls in is lack of of duties". 3) The person who is responsible h for maintaining accounts receivables should not be given access to mail of receipts. Another person employee who is un related Ito accounts department should be

given authority to acces mail. 4) providing access to mail to two employees at the same point of time results in many errors e it is very difficult to maintain track of mail receipts ir such coone case : 5) mail checks are deposited on weekly basis by manager of accounts receivable . This practice results in fraud at management - Level which is a soud us issue, peason (managess who is responsible for maintains accounts recavable should not be given simultaneous authority to maintain, disburse, receive cash/ checks.

6) Good works should focus primarly on segregation of duties. 7) Receipt of mail check, opening mail, preparing list of checks, depositing checks in bache bank should be are the important tasks i n the cursent transaction. These tasles should be assigned seperately to diffesent individuals so that it acts as a mechanism to prevent fraud at early stage TI