Your student club recently volunteered to go door-to-door collecting cash donations on behalf of a local charity. The charity's accountant went berserk when you said you wrote receipts only for donors who asked for one.

Your student club recently volunteered to go door-to-door collecting cash donations on behalf of a local charity. The charity's accountant went berserk when you said you wrote receipts only for donors who asked for one.

 

Required:

Identify the control principle that you violated.

 

Restrict access

Segregate duties

Independently verify

Document procedures

Establish responsibility

Answer
Document procedures

By failing to issue receipts for all donation transactions, the principle of documenting procedures has been violated in two ways: (a) you didn’t ensure that adequate records (of donations) were maintained, and (b) the failure to issue receipts makes it difficult to know whether you used the company’s (donated) assets in an authorized manner. Donations given without issuing receipts could be pocketed without anyone knowing it. In the future, it would be advisable to require volunteers to issue receipts to all donors and, as a check on this, to require that volunteers work in pairs. Even these principles aren’t foolproof, as two volunteers could agree with each other (“collude”) to take donations without issuing receipts.