Reference no: EM132977537

Question - WBB is a charity which operates a motorcycle courier service for hospitals. Starting with just one city in 2011, it now covers the whole country. The charity has 500 volunteer members who either ride the motorcycles, raise funds or act as 'controllers' directing the riders to locations for pick-up and delivery. The main source of income is voluntary donations; the current year is the first time that income is high enough to require an audit. The charity is managed by a committee of ten trustees, not all of whom take their duties seriously, for example, two of them missed a training session explaining the legal duties and liabilities of being a trustee.

In preparation for a bid for the audit work of WBB, you make initial investigations and find the following:

For operational purposes the country is divided into 8 areas. Each area has a regional manager and its own small fleet of motorcycles.

Each regional manager is issued with a laptop, an electronic pad and a card reader so that donations can be made by bank card. Sometimes one or more of these items goes missing. Often the missing equipment is found but only after the charity has paid for a replacement. You have not been able to ascertain how many of the items the charity currently has.

Collection boxes have been left in shops and restaurants to enable customers to make cash donations. The area manager will occasionally visit these locations, empty the boxes and bank the money when convenient. Again, no one can say how many boxes exist.

It was suggested that the charity should have T-shirts printed with the charity's logo. Sale proceeds of the T-shirts would add another income stream. The committee delegated merchandising to a single member five years ago and took no further interest in the matter. Over the years, new lines of merchandise were added but sales have never matched the member's predictions. No inventory count has ever been conducted.

The treasurer has sole control of the bank account. She produces a monthly spreadsheet to show the committee the transactions going through the bank account. The committee authorises large purchases such as new motorcycles. All other payments are made on the authority of the treasurer who pays the bills on receipt of an invoice from a supplier.

The motorcycles have a number of accessories such as a satnav, a 2-way radio or mobile phone. Occasionally, such items go missing and are replaced immediately as they are essential for operations.

Under the motor insurance policy, the motorcycles must be kept in a locked garage when not in use. Not all riders comply and there have been cases when a motorcycle has been damaged when left on the street. Since the damage is not covered by insurance, the charity has to pay for repairs.

Required -

a) Identify and explain your main concerns about the control environment of the charity?

b) Make suggestions for improving the operational and financial management of the charity.