what internal control activities could the fraternity have implemented in order to p 615563
Evan Charter agreed to help his fraternity obtain sponsors for its annual charitable event to be held during Homecoming week. He accepted this responsibility at the recommendation of last year”s fund-raiser, who told Evan that the task would require approximately ten hours of time and would likely result in total sponsorships of $1000.
After spending approximately ten hours calling on previous sponsors, Evan felt that he had hit a brick wall. For many reasons, most of last year”s sponsors were unwilling to continue their involvement with this annual fund-raiser. Evan needed to look for additional sources of funding. He spent several hours researching potential new contributors and finally located a database containing a list of businesses within the local zip code. Since the list included e-mail addresses, Evan developed a letter of request and e-mailed it to all these businesses.
The response was overwhelming. Evan collected over $3000 from this new pool of business contacts. While compiling the checks received to turn over to the fraternity treasurer, Evan noticed that one business had made its $200 check payable to Evan personally.
Rationalizing that the additional time he had spent on the project and the success he was able to achieve were worthy of compensation, Evan decided to keep this one check. He wrote a letter of acknowledgment to the donor and deposited the $200 in his personal account.
- Do you think Evan”s actions were justified? What would you have advised him to do in this situation?
- What internal control activities could the fraternity have implemented in order to prevent Evan”s actions?
- Can you think of a detective control that could uncover the omission of the $200 check?