Overview
BAMSI could not provide letters acknowledging receipt of all donations and misclassified some donations. We sampled 60 transactions from the audit period, totaling $53,058, to verify that acknowledgment letters had been sent. For 29 donors, the donations of which totaled $25,198, BAMSI could not provide the letters. In addition, from our test of 50 donations classified in BAMSI’s general ledger as unrestricted donations (totaling $49,361), 9 donations (totaling $1,220) were improperly classified as such: the donors had specified that they were to be used for a specific purpose, so they were restricted.
As a result, there is a higher-than-acceptable risk that restricted donations may not be used for their intended purposes.
Authoritative Guidance
BAMSI’s “Incoming Gifts and Donations Policy” states,
1. All incoming donations which have a restriction (permanent or temporary) imposed by the donor, either of use or timeline, will be recorded as a “restricted donation” according to generally accepted accounting principles (GAAP). . . .
3. The Vice President of Community Relations will acknowledge the donation (cash or equipment) by sending a letter to the donor.
Reasons for Noncompliance
BAMSI’s management stated that there was high turnover in the Philanthropy and Marketing Department, and BAMSI lacked monitoring controls to ensure that acknowledgment letters were sent and that restricted donations were accurately reflected in the accounting records.
Recommendation
BAMSI should establish monitoring controls to ensure that it sends donor acknowledgment letters for all donations received and properly records donations with restrictions.
Auditee’s Response
BAMSI has just recently hired a new Vice President of Philanthropy and increased the number of personnel in the department. BAMSI implemented a new donation tracking software (Donor Perfect) which will provide Philanthropy with better documentation for all donations and donors. Reconciliations between the data in Donor Perfect and the general ledger are performed on a monthly basis and any discrepancies are investigated in a timely manner.
Auditor’s Reply
Based on its response, BAMSI is taking measures to address our concerns in this area.
| Date published: | June 1, 2021 |
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