ACCA · Question 17 · Internal control

SECTION B - CONSTRUCTED RESPONSE

Company: GlobalCare Foundation
Year-end: 31 December 2025

You are the audit senior for GlobalCare Foundation, a large Non-Governmental Organization (NGO) providing disaster relief.

During your review of the internal controls over the cash cycle and procurement, you note the following:

1. The NGO receives significant cash donations via street collectors. Collectors are given unnumbered collection buckets. At the end of the day, collectors count the cash themselves and hand it to the regional manager, who records the total in a spreadsheet.
2. To speed up disaster response, regional managers are authorized to procure relief supplies up to $50,000 without requiring a second signature or purchase order.
3. The central finance team only reconciles the regional bank accounts on a quarterly basis due to staff shortages.
4. Grant income received from governments is mixed into the general operational bank account, making it difficult to track if funds were spent according to specific grant conditions.

Required:
Identify and explain FOUR internal control deficiencies from the scenario. For each deficiency, explain the implication and provide a recommendation to address it. (20 marks)