Answer :

a.

Strengths
1.

All revenue is only recorded when cash or other goods are received. This ensures there is no unrecorded revenues, and all revenues are recorded in the period received.

 

2.

The initial data entry is performed by Ling, who is not responsible for physically depositing the cheques (Andrea). This ensures fictitious revenues are not recorded.

 

b)

Bank reconciliations are performed by the accounting department and this is reviewed by the Executive Director. This ensures only actual donations are recorded and there are no unrecorded deposits. It also ensures recorded amounts are accurate.

 

c)

Grant revenue received is deferred and amortized over an appropriate period. Such entries and amortization are tracked and reviewed by the executive director throughout the year. This ensures the revenue is recognized when earned and ensures revenues are recorded at the correct amounts.

 

3.

Deposits are matched to the journal entry - ensures all deposits are recorded.

 

4.

Volunteer canvassers use a pre numbered sequential receipt book — this helps to ensure all cash receipts are recorded. Duplicate receipts are provided to the donors.

 

b.

Weaknesses

Weakness: Deposits are only done once a week

Implication: The longer cash is on hand the greater the risk it may go missing.

Recommendation: Deposits should be done daily

 

Weakness: Bank reconciliations are only performed when time allows

Implication: Bank reconciliations are a key control. If they are not done regularly, unrecorded deposits or missing deposits may go undetected.

Recommendation: Bank reconciliations should be done on a timely basis

 

Weakness: There is no matching of the pre-list to the cheques deposited.

 

Implication: The receptionist could alter and cash the cheques, and this would be undetected.

 

Recommendation: The pre-list should be matched with the amount actually deposited to ensure nothing goes mailing.

 

Weakness: When the door to door canvassers drop off the cash, they only drop off the receipt book and a summary page and then the receptionist counts the cash.

 

Implication: The receptionist could steal the cash and alter the summary page.

 

Recommendation: The cash and receipt book should be dropped off in a sealed envelope and passed to Andrea for deposit.

 

Weakness: When Andrea prepares deposit, she does not compare the amount remitted by the volunteer canvasser to the amount collected and submitted by the receptionist.

 

Implication: The receptionist could alter the receipt book and keep the cash or simply not pass on the cash for deposit.

 

Recommendation: Before the deposit is prepared, Andrea should compare the amount remitted by the volunteer canvasser and the amount given to her by the receptionist.

 

Weakness: No check on the numerical sequence of receipts

 

Implication: Canvassers could void receipts and no one would notice

 

Recommendation: There should be a check on the numerical sequence.

 

Weakness: Andrea prepares the bank deposit and records the journal entry to record the cash collected in the books.

 

Implication: Lack of segregation of duties, as Andrea has both custody of the cash and she records it. She could take cash ad not record it.

 

Recommendation: Someone else should record the journal entry in the books.

 

This should be compared to the amount deposited.

 

Weakness: Deposits are done more frequently so large amounts of cash are not kept on hand.

 

Implication: Cash could go missing

 

Recommendation: Make bank deposits daily .