WaveHuggers Foundation

Cash Receipts Process

Santa Cruz WaveHuggers Chapters Cash Receipts Process:

WaveHuggers cash inflows arise from several sources: (1) membership dues, (2) donations, (3) selling merchandise and (4) intercompany funding from WaveHuggers international headquarters.

Membership duesare processed by either collecting the $25 fee directly from the new member in the form of cash or credit card information using a New Membership Application. The applications containing credit card dues are sent to headquarters for further processing while cash dues are forwarded to the treasurer and deposited in the local chapters bank account.

Donations:Donations are typically received by checks sent to the local chapter, although sometimes people donate cash through the mail. Donated checks are deposited once a month by the treasurer, who endorses the checks, fills out the deposit slip and records the journal entry in the accounting ledgers. Other cash donations are received at events and collected in a jar at the organizations table. The cash jar is returned to the chapter office and combined with the petty cash fund by whoever is in charge of that particular event. These cash donations are not counted at the event and no notification of the cash receipts is communicated to the treasurer. Another source of donations comes in the from monthly chapter general meetings that take place at a local bar or restaurant. The venue typically agrees to donate 10% of the nightly sales to the Santa Cruz WaveHuggers chapter. However, these agreements are undocumented and the chapter assumes that the amounts received from the venue are accurate.

Merchandise Sales: Chapter inventory typically includes a variety of items that contain the WaveHugger logo. These include reusable grocery bags, t-shirts, sweatshirts and hats. No scheduled physical inventory counts or reconciliations occur at the chapter level although sales of such goods are recorded in the cash receipts journal. These sales typically occur at chapter events and cash is usually collected from customers and added to the petty cash box by whoever is overseeing the event that day.

Intercompany Transfers: The chapter accounts are also affected by periodic deposits made by WaveHuggers headquarters. No notification or description of the deposits is made by headquarters to the chapter treasurer.

Required:

1. After reviewing the cash receipts cycle narrative above, identify three issues with the current process that are flawed and or non-existent.
2. Explain what the negative implication would be for general organizational (business) risk and specifically for financial statement risk, if and when applicable.
3. Propose a solution for each issue. You may need to design an alternative system that employs documents, assigns tasks to certain people, etc. when developing your solution. Feel free to make assumptions about the availability of personnel to help implement your solutions.

Extra Information:

WaveHuggers Foundation Organizational Background WaeHuggers is an international environmental nonprofit that is charged with protecting the ocean resources as well as educating the public on ways to help ensure that our local ocean waters remain as clean as possible. Our primary activities include performing water quality sampling tests at local beaches and reporting the results to surf shops and local surf report websites. We also conduct educational outreach programs at local K-12 schools and organize monthly beach clean ups. WaeHuggers joins forces with other environmental groups to lobby for eco-friendly legislative initiatives at the local, state and federal levels. WaveHurhadquarters is in San Clemente, CA and there is a local chapter in Santa Cruz that is currently following the procedures described below Background on the Santa Cruz Chapter: The chapter is led by an executive committee that includes approximately a dozen members and includes over 250 members from the region. The executive committee is charged with conducting day- to-day operations. The committee includes, among other positions, a chapter president and treasurer who have their names on the chapter's bank account. The treasurer is in charge of maintaining the chapter books, performing account reconciliations, depositing checks and cash and making payments for bills and volunteer expense reimbursements. The president is also named on the bank account and can write checks, make withdraws and deposit funds, but does not have access to the accounting records. The chapter secretary keeps minutes of our monthly executive committee meetings, checks phone messages and occasionally collects the mail when the treasurer is unable to do so. Wavebuggecsrnizational Chart John, Wavehugger President & CEO Pat, Wavehugger CFO Mary, Wavehugger c0O Sarah, Controller Jill, Accounting Manager Heather, Regional Coordinator Jeff, Chapter President Peter Beach Clean-up Supervisor #2 Rosa, Beach Clean-up Supervisor #1 Jack, Educational Outreach Coordinator Leslie Event Coordinator Matt, Treasurer Sally, Lab Coordinator Polly Secretary S Committed Volunteers (2 grumpy old retired men, 2 condescending former school teachers, and an unemployed surfer dude) WaveHuggers Foundation Organizational Background WaeHuggers is an international environmental nonprofit that is charged with protecting the ocean resources as well as educating the public on ways to help ensure that our local ocean waters remain as clean as possible. Our primary activities include performing water quality sampling tests at local beaches and reporting the results to surf shops and local surf report websites. We also conduct educational outreach programs at local K-12 schools and organize monthly beach clean ups. WaeHuggers joins forces with other environmental groups to lobby for eco-friendly legislative initiatives at the local, state and federal levels. WaveHurhadquarters is in San Clemente, CA and there is a local chapter in Santa Cruz that is currently following the procedures described below Background on the Santa Cruz Chapter: The chapter is led by an executive committee that includes approximately a dozen members and includes over 250 members from the region. The executive committee is charged with conducting day- to-day operations. The committee includes, among other positions, a chapter president and treasurer who have their names on the chapter's bank account. The treasurer is in charge of maintaining the chapter books, performing account reconciliations, depositing checks and cash and making payments for bills and volunteer expense reimbursements. The president is also named on the bank account and can write checks, make withdraws and deposit funds, but does not have access to the accounting records. The chapter secretary keeps minutes of our monthly executive committee meetings, checks phone messages and occasionally collects the mail when the treasurer is unable to do so. Wavebuggecsrnizational Chart John, Wavehugger President & CEO Pat, Wavehugger CFO Mary, Wavehugger c0O Sarah, Controller Jill, Accounting Manager Heather, Regional Coordinator Jeff, Chapter President Peter Beach Clean-up Supervisor #2 Rosa, Beach Clean-up Supervisor #1 Jack, Educational Outreach Coordinator Leslie Event Coordinator Matt, Treasurer Sally, Lab Coordinator Polly Secretary S Committed Volunteers (2 grumpy old retired men, 2 condescending former school teachers, and an unemployed surfer dude)