ACC562 Assignment 3 - Week 6: Assignment #3 Week 6:...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Week 6: Assignment #3 1 Week 6: Assignment #3 ─ Case 6C “United Way of America” Strayer University Week 6: Assignment #3 ─
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Week 6: Assignment #3 2 Case 6C “United Way of America” Discuss the Fundamental and Cost-effective Internal Controls that Charitable Organizations Could Implement to Reduce Their Exposure to Theft Losses. The fundamental and cost-effective internal controls that charitable organizations could implement to reduce their exposure to theft losses include the following categories: 1. Basic internal controls. 2. Controls over incoming funds. 3. Controls over expenditure. 4. Control over assets. Basic Internal Controls The basic internal controls, including: (a) segregation of duties, (b) staff’s qualification requirements and background checks, (c) budgetary controls, (d) establishing an audit committee, (e) establishing Code of Conduct, (f) establishing whistleblower policies , and (g) setting tone at the top, will be addressed as below. Segregation of duties. The concept underlying segregation of duties is that individuals should not be put in situation in which they could both perpetrate and cover up fraudulent activity by manipulating the accounting records” (Knapp, Rittenberg, Johnstone, & Gramling, 2011, p.205). Duties within a function of a charitable organization should be separated so that one person does not perform processing from the beginning to the end of a process. The principle of segregation is important with regard to both income and expenditure, and capital transactions. Organizations should ensure that no single individual is responsible for receiving, recording, securing and depositing incoming funds, or writing and signing checks (Cuomo, 2005). For example, if the person who records incoming cash is the same person who checks that cash paid
Background image of page 2
Week 6: Assignment #3 3 in is recorded on the bank statements, it would not be easy to detect any dishonesty. Mistakes are more likely to go undetected if a person checks their own work. Staff’s qualification requirements and background checks. Charitable organizations need to ensure that their staff or board members should be competent, properly trained and qualified for the tasks they have to perform (Knapp, Rittenberg, Johnstone, & Gramling, 2011). In addition, charitable organizations should consider requiring criminal background and credit checks for staff or board members in a position to divert resources from the organization (Cordray, 2010). Organization may consider insurance for employees with access to cash or other liquid assets. The organization should incorporate within its hiring process as a precaution. Too many times, organizations are victimized by a staff or board member who has engaged in theft at other organizations in the past. Background checks would have prevented fraud and embezzlement from occurring. Background checks should be vigorous and include credit reports. Education and prior employment should be verified; reputation should be established through
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 19

ACC562 Assignment 3 - Week 6: Assignment #3 Week 6:...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online