Internal Control and Sunshine Center
Task 3: Internal control
1. What do you think is the primary problem at the Sunshine Center?
There where no financial reports or summaries of the cash flows. Probably, Barb wasn’t fare about the payments. Because there was no financial report it was not clear where all the money went to.
2. Why is accountability important to the Sunshine Center Committee? The director? Cli
ents of the Sunshine Center? Church members? It is so important to the committee so they can check if the cash balance is still okay. The director can check if everybody does his work well and if there are no financial problems. The clients need to know if Sunshine is fair and the church members are maybe willing to serve the committee if they know it is
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The Sunshine Center Committee? Rev. Andrew? The church’s administrative board? Barb: she 6. What constraints are encountered in designing internal control procedures for an organization such as the Sunshine Center? It is complex to set up an internal control procedure. When two or more people work together they can beat the internal control. They can conspire with each other and split the take. Also the stricter the internal control system, the more it will cost. 7. What are the weaknesses in the Center’s internal control? Make recommendations for changing the accounting and reporting system. Additionally, what constitutes a minimum set of records for a small organization like the Center? Weaknesses are that they don’t have an overview of the financial reports. Nothing is reported and there is no summary. There is also not a good control of monitoring. I would recommend them to use operating budgets and cash budgets. They can also use accounting records, these provide the details of business transactions. All major groups of transactions should be supported by either hard copy documents or electronic records. No transaction should be processed without management’s general or specific approval. They can keep important documents in fireproof vaults. 8. Identify the elements of the fraud triangle. Which elements of the fraud triangle do you see in this case? The fraud triangle consists of motive, opportunity, and