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You have been asked by the board of trustees of a local church to review its accounting procedures. As part of this review you have

You have been asked by the board of trustees of a local church to review its accounting procedures. As part of this review you have prepared the following comments relating to the collections made at weekly services and record keeping for members' pledges and contributions:

(I) The church's board of trustees has delegated responsibility for financial management and the financial records to the finance committee. This group prepares the annual forecast and approves major disbursements, but is not involved in collections or record keeping. No internal or independent audit has been considered necessary in recent years because the same trusted employee has kept church records and served as financial secretary for IS years.

The offering at the weekly service is taken by a team of ushers. The head usher counts the offering in the church office following each service. He then places the offering and a notation of the amount counted in the church safe. The next morning the financial secretary opens the safe and recounts the offering. He withholds about $I 00 to meet cash expenditures during the coming week and deposits the remainder of the offering intact. In order to facilitate the deposit, members who contribute by check are asked to draw their checks to cash.

At their request, a few members are furnished renumbered, predated envelopes in which to insert their weekly contribution s. The head usher removes the cash from the envelopes to be counted with the loose cash included in the offering and discards the envelopes. No record is maintained of issuance or return of the envelopes, and the envelope system is not encouraged.

Each member is asked to prepare a contribution pledge card annually. The pledge is regarded as a moral commitment by the member to contribute a stated weekly amount. Based upon the amounts shown on the pledge cards, the financial secretary furnishes a letter requesting members to support the tax deductibility of their contributions.

Required: Describe the weaknesses and recommend improvements in procedures for:

Offerings given at weekly services.

Record keeping for members' pledges and contributions.

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