Comprehensive Question 14-28

Comprehensive Question 14-28

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 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.”

Required

Describe the weaknesses and recommend improvements in procedures for collections made at weekly services. Organize your answer using the following format:

Weakness Recommended Improvement (s)

Financial secretary practices would have too much power over collections. Financial secretaries should be limited to powers of record keeping.

Finance committee is not embracing there responsibility of collection. Finance committee should be put into a higher position of power.

Finance committee has the responsibility to manage auditing function and control the cash function. The finance committee does not need to participate in auditing functions. Audit committee has the responsibility to exercise periodic...