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CS Professional · Internal and Forensic Audit · Special Points relating to Internal Audit in various Entities

Internal auditors of a public charitable trust find that the trust's cash donations are collected by one volunteer who also issues receipts, deposits cash and posts the donation register. The trust has no other staff for the function. Which recommendation best strengthens control while respecting resource limits?

The best recommendation is pre-numbered receipts with a second trustee independently reconciling collections to the register and bank deposits. Where full segregation of duties is impractical, such compensating independent review reduces the risk of misappropriation of donations.

  1. AIntroduce pre-numbered receipts with a second trustee reconciling collections to bank deposits and register periodicallyCorrect
  2. BAllow the same volunteer to also approve the bank reconciliation
  3. CStop issuing receipts to reduce paperwork
  4. DDeposit cash only at year end to save bank visits

Explanation

Segregation is not fully possible, so compensating controls are used: pre-numbered receipts and independent review by another trustee reconciling receipts, register and deposits. Giving the volunteer reconciliation duty worsens the weakness, and dropping receipts or delaying deposits increases risk.

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