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Internal Accounting Controls Church - Essay Example

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Summary
The paper "Internal Accounting Controls Church" tells us about implementing effective internal controls is therefore a must for churches to thrive and fulfil their mission. The control environment sets the tone of an organization, influencing the control consciousness of its people…
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Internal Accounting Controls Church
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Extract of sample "Internal Accounting Controls Church"

Introduction

The assignment at hand relates to a review of the internal accounting controls for the collections made at weekly services at a Church. I have been asked to serve on a three-person audit team- the other members comprising the internal auditor and a CPA who has just joined. I have to indicate the weaknesses in internal accounting controls in the handling of collections.

Discussion

The first thing I would recommend is that an audit of the Church’s financial records be undertaken. It is preposterous that no audit has been made in recent years because the same trusted employee has kept both the Church records as well as served as Financial Secretary for the last 15 years.  The accounting function should be given to an individual who does not have custody of the collections (Meigs & Meigs, 1993). There is a possibility of the head usher and the record keeper working together to under-report the collections made, with a sharing of the pocketed amounts. They can work together to undermine the system. If the head ushers were to count the collection in front of the other ushers, it could serve as a counter-verification of the collections. But here again, there is a possibility of the head usher working together with the other ushers to pocket some money. In fact, the Rector of the Church should be present when the ushers gather together, give their separate collections to the head usher, and then the total money is put together and counted. The installation of a surveillance camera in the basement room in secret and another on the way down at a strategic point should be accomplished without anyone’s knowledge except for the Rector of the Church.

Another loophole is available because the Church asks all check contributors to make their checks payable to Cash. This amounts to giving a chance to anyone who pockets a check to cash the money without being detected. If the financial secretary explained that he needed the money for the weekly expenses of the Church, the bank would hardly doubt it, especially if it had no knowledge of the Church’s internal control. The better practice is to make out checks in the name of the Church. All checks should be crossed so that they can only go into the designated account.

The Church should definitely consider getting Fidelity Insurance against all temporary employees. This would help in providing against losses resulting from employee dishonesty and embezzlement. Both money and security coverage and employee dishonesty coverage should be included.

Conclusion

By taking the above steps, it is hoped that the present system of internal control would be bettered and the Church would be adequately protected from losses in its collections.

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