Case Scenario

The first case study talked about an instance of outright fraud and the two building blocks of Financial Control whose absence made fraud possible: Financial Monitoring and Internal Control. The second case study focuses on a different type of problem in Financial Management. The events described in this case study happen despite the best of intentions.

In Case Study $2,$ we visit a different country office of the same international NGO we met in Case Study $1.$ This office receives a grant directly from a donor agency in the amount of $15$ million US dollars. The project team starts work based upon an approved workplan and budget. They quickly find that there are activities they did not plan into the workplan and budget, but which clearly enhance the project. The Ministry of Health also requests that these additional activities be added. The project manager agrees and soon additional unplanned activities are also incorporated into the workplan$$but the original project budget is not adjusted. In the meantime, the team feels that they are doing excellent work, above and beyond what was expected of them.

In the third quarter, however, after invoices have come back to the organization for the various costs of activities $($both planned and unplanned$),$ the organization discovers that it is overspent by one million US dollars, or approximately $7\%$ of their original budget. Based on the information in this case study, which building blocks of Financial Control is lacking in this example? Select the correct answer

Question $3$Answer

a$.$

Accounting Recordings

b$.$

Financial Planning

c$.$

Financial Monitoring

d$.$

Internal Controls