Forensics Journal - Stevenson University 2013 | Page 41

STEVENSON UNIVERSITY

checks should be mailed immediately to avoid loss or tampering such
as altering the check payees.

Petty cash is utilized to reduce the administrative burden associated
with minor purchases. Purchases using petty cash do not require
requisitions, approvals, purchase orders, or the steps to make check
payments. Typically, petty cash is used to make purchases of stamps,
cover meeting expenses, business meals, or other minor expenses.
While petty cash is a convenient method to make small purchases,
petty cash also poses a greater theft risk. Thus, controls need to be
designed to reduce these risks. First, petty cash kept available should
be limited to reduce its exposure to loss. Petty cash funds of no
more than $200 should be adequate for unexpected purchases. The
funds should be kept in a locked box and controlled by one person.
When purchases are made from petty cash, the receipts are to be kept
with petty cash until the funds are reimbursed and the amounts are
recorded by the bookkeeper. Thus, the funds should be maintained
on an imprest basis (i.e. petty cash funds are equal to the cash on
hand and receipts) and the funds should be audited to ensure cash is
not missing. This is as simple as counting the cash on hand and the
receipts to ensure they add up properly. The funds should be reimbursed on a monthly basis. Lastly, the policy for petty cash should
prohibit loans and check cashing for staff members or volunteers.

Churches should consider zero-based accounts (ZBA) for vendor
payments. A ZBA is a method to control disbursements. Money
from the master accounts is transferred into the ZBA to cover the
monthly checks. Thus, once all the checks are cashed by the vendors
the account has a zero balance. Should a negative balance appear, it is
possible an unauthorized check was issued and cashed.
• Controls to deter billing schemes
The primary control to eliminate billing schemes is a well-coordinated
purchasing process. The basic step is to create a required specification
for vendor performances, a verification of vendors, and a performance
audit. Using cleaning services as an example, the Board should decide
the level of services to be performed by the cleaning organization.
Based on the specifications, a minimum of three vendors should be
solicited to submit quotes. Visits should be made to each vendor’s
office to ensure that the businesses actually exist and/or to the local
library to research a database of local businesses to review the potential vendors’ histories. Once a vendor is chosen, a standing purchase
order with terms and conditions should