CHARITIES AND NON GOVERNMENTAL ORGANIZATION


Key audit areas:

1. Income: donations are hard to verify therefore good internal control is needed particularly on the opening of mail. A published list of donors can be very helpful in verification;

2. Outgoings: Should be minuted and be subject to delegated authority;

3. Investments: Many charities have investments and these are verified in the normal way of verifying in investments.

The audit report is usually qualified on grounds that it is not possible because of the nature of the society to verify whether all the income receivable in the form of donations has been fully accounted for.

Control problems in charities

(a) Door to door collections: Volunteers should be issued with numbered boxes, the boxes should be sealed, the boxes should be opened and counted regularly preferably in the presence of the volunteer and one or more trustees. All contents should be promptly entered in a register kept for that purpose and banked. The entries in the book should be initialled by those counting.

(b) Donations received by post: Two people including a trustee should open the mail. Receipts should be entered in a register kept for the purpose and the entries initialled. Banking should be immediate.

(c) Deeds of covenant: A register of donors under deed should be kept. Checks should be made regularly to see that all amounts have been received or donors followed up.

(d) Harambee and other fund raising events: The plans for the events especially expenditure should be approved in advance by the trustees. Records should be kept of all details of these events. Individuals should be politely instructed in their financial duties. All cash and cheques should go to the society's bank account. All proceeds should be counted in the presence of a trustee and banked promptly. An account should be drawn up after the event approved by the trustee and publicised to all the members.

(e) Donations of equipment and materials: A full register of such donations should be maintained. An estimate should be made of the market value of all items. Maintenance materials should be properly stored.

(f) All cash payments should be made out of cash drawn from the bank, unless any donor objects the annual report should contain a full list of donors. The annual report and the accounts should be as detailed as possible.