Controls over Cash Receipts

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14-28 (Controls over cash receipts processing at a church) You have been asked by the board of trustees of a local church to review its accounting procedures. As a part of this review, you have prepared the following comments relating to the collections made at weekly services and recordkeeping for members’ contributions:

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
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The head usher has sole access to cash during the period of the count. One person should not be left alone with the cash until the amount has been recorded or control has been established to guard against fraud.
The collection is vulnerable to robbery while it is being counted and transported to the bank.
The head usher’s count lacks usefulness from a control standpoint if this person is not accompanied by a second counter under dual control and if the usher surrenders the deposit receipt forgery could occur.
Contributions are not deposited properly because there is no assurance that what is collected actually gets deposited.
Members should never be asked to make checks out to “cash”. This is dangerous and anybody could then sign the checks for deposit.
Cash sales may not be registered.
Check receipts may be lost or misappropriated after receipt in the collections.
The cash and checks received for deposit is not verified and this may not agree with what is actually deposited. Some cash or checks may never get recorded.
Errors can be made in every step of the accounting and journalizing process which can severely impact the institution.
Receipts of checks could be posted to the wrong customers account along with errors to the recording of the checks. The secretary could easily document less receipts of revenue.
Every area is in danger of fraudulent activity and misstatements of earnings.

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