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Over a twenty-year period, the financial secretary of a local church stole $900,000 from her congregation. When the embezzlement was announced, the members of the

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Over a twenty-year period, the financial secretary of a local church stole $900,000 from her congregation. When the embezzlement was announced, the members of the congregation sat in stunned silence. How could the leaders of the church overlook losses of this magnitude? There were years that the church had struggled to meet its financial obligations and the members of the congregation gave sacrificially to help the church pay its debts. How could a seemly faithful member of the church steal from her friends and employer? In the weeks following the announcement, the sordid tale began to unfold. The opportunity for this fraud to occur was the result of a lack of separation of duties and an intemal control structure failure. The following is a description of the church's accounting processes and the financial secretary's duties. The church's primary source of income is contributions from the Sunday offering. Each Sunday volunteers serve as attendants to pass the contribution plates, and two deacons are responsible for placing the cash and checks from the offering into a zippered bag and putting the bag into the office safe. Only the two deacons and the secretary know the combination to the safe. During her tenure, the financial secretary would teffiexe, the offering from the safe each Monday. She was responsible for counting the offering, recording the contributions in the accounting records, preparing a deposit slip, and taking the funds to the bank. In the course of counting the contributions, the financial secretary also kept track of the donations of individual members for tax reporting purposes. The financial secretary paid and recorded all of the bills of the church. The administrative assistant opened all the mail, and bills were forwarded directly to the financial secretary. Whern the financial secretary received the bills, she carefully reviewed them to determine if they were appfopriate. In addition, she maintained a list of "approved" suppliers to help ensure that purchases were made at the lowest price and that church members' businesses were patronized whenever possible. When bills were paid, she determined the accounts in which each bill would be recorded, and wrote and signed the check for the payment. According to church policy, if a bill exceeded $1,000, two signatures would be required on the check. The financial secretary was also responsible for preparing all payroll checks and recording these amounts in the accounting records. All ministerial staff receive a fixed salary, and administrative, janitorial, and kitchen staff are paid based on the number of hours worked during l the pay period. The financial secretary reviewed the weekly time reports of the employees applied the appropriate tax rates, and determined the correct amount to pay the employees. In addition, she used these amounts to prepare all of the paychecks and the required tax payments for the tax withholding amounts. According to church policy, all paychecks require two At the end of each month, the financial secretary prepared the financial statements for the church. ese monthly statements were accompanied by year-to-date totals, comparisons to the monthly budget, comparisons to the prior year for the same month, and a thorough narrative explanation of the variances. Each year the church's financial records were reviewed by an auditor. The auditing sewiccs were provided by a CPA who was also a member of the congregation. The auditor donated his services to the church, and accordingly was not paid a fee for performing the audit. As the financial secretary enjoyed a long tenure in her position, she always correctly anticipated what the CPA needed to successfully complete the audit of the church records. She always had all the documents ready for his review, which made everything neat and casy for him. Members of the church had come to rely on the competence and integrity of the financial secretary. She seemed tireless in her commitment and worked for a salary much less than they expected to pay someone with her expertise. In her own words, she "welcomed the opportunity to give back." ates) Normal SpacingHeading Required: The church was emotionally and financially devastated by the embezzlement perpetrated by the financial secretary. While the members were divided on what the appropriate level of punishment control procedures should be redesigned to minimize the likelihood that a fraud of this magnitude could happen again. should be for the secretary, there was unanimous agreement that the church's internal Evaluate the internal control structure of the church, and identify the strengths and weaknesses of the system. For each intemal control strength that you identify, explain why the procedure strengthens the internal control system of the church. For each weakness that you identify, provide a recommendation for how the weakness could be corrected. Present your answer in complete sentences and be as thorough and detailed as possible in your identification of strengths, weaknesses, and recommehdations. It is not sufficient to merely provide a list of internal control procedures, but rather you need to relate the internal control procedures specifically to the church

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