Small Organizations Need Internal Controls, Part One

Sylvia enjoyed being in control. As administrator of a small city’s court, she completely controlled the cash receipting function. Her supervisors thought she was doing a fine job. But that was until they discovered that she had misappropriated accounts receivable funds from civil fines and penalties for more than 6 ½ years. She stole $285,100 from 254 collection agency check payments to the court and $5,127 from 49 manual cash receipt payments from citizens. She wrote off these cash receipt transactions by entering false information into the court’s accounting system. This small city hadn’t properly monitored Sylvia’s work to ensure that all accounts receivable revenue was properly accounted for and deposited in the bank.

WHAT ARE THE KEY INTERNAL CONTROL ISSUES?