Case 3.3 United Way of America Essay

1958 WordsJul 9, 20128 Pages
Case 3.3 1. Identify and briefly describe fundamental and cost-effective internal controls that charitable organizations could implement to reduce their exposure to theft losses. Fraud has been on the rise over the past decades, and America’s charitable communities have not been immune to these acts. With the tremendous expanding, charity organizations have controlled a lot of financial and nonfinancial resources. While it is common that many small and medium-size volunteer organizations have lack of continuity of volunteers, short of supervision of volunteers, poor of segregation of duties, absence of internal auditors. Even though the Sarbanes-Oxley Act of 2002 does not mandate an internal audit for nonprofits, Non-profit…show more content…
Defend your answer. Audits are an important legal accountability tool used by resource providers (donors, grantors, and others) to assure that resources are spent by nonprofit organizations in accordance with the resource provider’s intentions. However, there is a lack of audit pricing literature for this important group of organizations. Size, complexity, non-audit fees, and nature of the charity were found to have a significant effect on audit fees. Many small and medium-size charitable organizations do not have the internal control accounting expertise to prepare the reliable financial reports. CPAs should performance a variety services, involve in the client’s internal control over financial statements in order to improve the quality and reliability of the financial information. As a result, CPAs should prevent or detect and correct misstatements in the financial statements or management’s financial information. Most big charity organizations conduct their auditing activities through special audit committees and internal control systems that are supervised by the board of directors. Usually 8% was the fee estimate used for quoting new client audit fees for profit entities. However, for small (under $300,000 of Support and revenues excluding in-kind) NPOs which are not subject to OMB A133 rules the audit fee may be as high as 5% of total support and revenues. The audit fees seem to increase as a percentage as the audit requirements increase (ie,
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