COMMON AUDIT ISSUES
Accountability For Receipts
Does your department have good accountability over revenue and receipts? If not, you may make the wrong kind of headlines. Early in 1999 the university discovered a major fraud in one of our departments. Contributing factors to this occurrence were inadequate internal control and oversight of this revenue producing activity.
Is your department at risk to a loss of this nature? If your department handles payments from outside companies or individuals, an independent reconciliation of those receipts to the amounts credited to your account(s) is essential for good internal control. What you should do:
Separate the functions of receiving money from verifying that it got put in the right account(s). The individual who receives the money must not have responsibility for reconciling the deposit to SFS or Foundation ledger statements.
Ensure the individual responsible for reconciling deposits to the ledgers compares the original receipt records to the ledgers, not just the deposit slips.
Monitor performance to budget and ask questions as to why your activity is not meeting or exceeding budget (or the anticipated level of receipts). This monitoring includes comparing paid participants to the dollars deposited, donor acknowledgement letters to Foundation deposits, and inventory reports on product sales to amounts deposited.
While this oversimplifies issues, these are key factors. If you implement these basic controls, you greatly reduce your risk of loss. Without them, your department could be the next to make the front page.
Business Services News - December 1999