United Way of America

Good Essays
A charity organization need internal control to ensure that all the resources are properly utilized to achieve organization goals and varies projects. In order to reduce financial risk such as theft, internal control plays an important role. According to the case, the business process of nonprofit organizations is usually not well regulated. In my opinion, a nonprofit organization can implement the following controls to ensure transparency and accountability in its operations.
1. Segregation of duties. From what I learned from the case, the staffs that took money out of the United Way of America were served in a position for both authorization and recording. In general, they wrote checks to themselves and then adjust the financial
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Charities hire volunteers as staffs. It is common to find that one individual works for several positions within the organization. Another problem is often volunteers do not get paid. They lack motivation and interest in the charities. This can pose serious risks for the organizations because the workers do not care too much. According to the cases, these two risk factors are very common.
Auditors must remain independent in their work at all times. Any activities with the client that may breach the principle of independence must be avoided. Audit firms should try as hard as possible to remain focused on their main duty, which is audit, and avoid taking other responsibilities requested by the client. Auditors have to understand the charity organizations well in order to develop a clear vision and knowledge on the business procedures and areas of risk. As presented in the case, most of the risks that charity organizations face are financial related, especially theft and fraud. Auditors should focus on measures to prevent these cases in the charities. When making recommendations to the charities, auditors should always advice the organizations to implement internal control system, such as bank reconciliation for cash accounts, and proper separation of duties within the
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