WILLOW CREEK COMMUNITY CHURCH INC

2022-001. The Church does not maintain dual control over certain funds and the duties of certain employees are incompatible. Repeat Finding: This finding was a component of number 2021-001 in the prior year Schedule of Findings and Questions Costs ? Federal Programs. Condition: 1) The storage of funds in the safes located in the accounts receivable office at the South Barrington campus are not under dual control (we noted that multiple individuals have individual access to the safes). These safes hold unprocessed funds received in the mail and other funds received during the week. 2) The accounts receivable manager, accounts receivable specialist, and the donations coordinator at the South Barrington campus are responsible for handling incoming cash receipts, can individually access funds stored in the safes in the accounts receivable office, and are responsible for modifying donor records. Criteria: 1) A sound system of internal control requires that incoming funds be processed and maintained under dual control at all times until the funds are fully processed and an independent record is made to document the amount and nature of the funds received. 2) A sound system of internal control requires that persons who have custody or control of assets ? particularly financial assets ? should not also have accounting or reporting responsibilities with respect to those assets. Cause: 1) The safes located in the accounts receivable office at the South Barrington campus are not dual control devices. 2) The duties of the accounts receivable manager, accounts receivable specialist, and the donations coordinator at the South Barrington campus include both cash custody and accounting responsibilities. Effect: 1) A lack of dual control in circumstances where it is warranted creates an environment in which there is a greater risk that misappropriation, embezzlement, or fraud could occur and not be detected in a timely manner. 2) An internal control environment in which a person has both custody/control and accounting/reporting duties with respect to financial assets is conducive to the possibility that misappropriation (including theft or embezzlement) could occur and not be detected in a timely manner. Recommendation: 1) We recommend that the Church take additional steps to implement appropriate dual control procedures, such as by modifying the safes located in the accounts receivable office at the South Barrington campus to require two individuals to access their contents. It is our understanding that subsequent to December 31, 2022, the Church began utilizing a dual control safe to hold mail and other funds received during the week at the South Barrington campus. 2) We recommend the Church take steps to address the incompatibility of the duties assigned to the accounts receivable manager, the accounts receivable specialist, and the donations coordinator at the South Barrington campus in order to reduce the risk of undetected misappropriation. Views of Responsible Officials and Planned Corrective Action: Installation of the safe is complete and is fully functional. It is our understanding that the accompanying processes have been found to be acceptable but will be further reviewed during the 2023 audit.

2022-001. The Church does not maintain dual control over certain funds and the duties of certain employees are incompatible. Repeat Finding: This finding was a component of number 2021-001 in the prior year Schedule of Findings and Questions Costs ? Federal Programs. Condition: 1) The storage of funds in the safes located in the accounts receivable office at the South Barrington campus are not under dual control (we noted that multiple individuals have individual access to the safes). These safes hold unprocessed funds received in the mail and other funds received during the week. 2) The accounts receivable manager, accounts receivable specialist, and the donations coordinator at the South Barrington campus are responsible for handling incoming cash receipts, can individually access funds stored in the safes in the accounts receivable office, and are responsible for modifying donor records. Recommendation: 1) We recommend that the Church take additional steps to implement appropriate dual control procedures, such as by modifying the safes located in the accounts receivable office at the South Barrington campus to require two individuals to access their contents. It is our understanding that subsequent to December 31, 2022, the Church began utilizing a dual control safe to hold mail and other funds received during the week at the South Barrington campus. 2) We recommend the Church take steps to address the incompatibility of the duties assigned to the accounts receivable manager, the accounts receivable specialist, and the donations coordinator at the South Barrington campus in order to reduce the risk of undetected misappropriation. Views of Responsible Officials and Planned Corrective Action: 1) A dual control drop safe requiring two separate keys was installed to accept mail deliveries (to safeguard mail that may contain checks) and other funds received during the week at the South Barrington campus. 2) Church processes around the handling of donations and cash require two people at all times and include several mitigating controls. The count room is also closely monitored by several security cameras. The installation of a dual control safe (per above) adds an additional level of security and resolves concerns about misappropriations going undetected. Installation of the safe is complete and is fully functional. It is our understanding that the accompanying processes have been found to be acceptable but will be further reviewed during the 2023 audit.

2021-001

2021-001. The Church does not maintain dual control over certain funds and the duties of certain employees are incompatible. Condition: 1) The storage of funds in the safes located in the accounts receivable office at the South Barrington campus are not under dual control (we noted that multiple individuals have individual access to the safes). These safes hold the offerings collected after worship services, as well as funds received through the mail and other funds received during the week. 2) The collection of funds received through the offering process at the South Barrington campus are not under dual control (during our observation of the offering and count process on March 27th, 2022, we noted one usher was alone with certain funds while transporting the funds from the mezzanine to the ground floor). 3) The accounts receivable manager, accounts receivable specialist, and the donations coordinator at the South Barrington campus are responsible for handling incoming cash receipts, can individually access funds stored in the safes in the accounts receivable office, and are responsible for modifying donor records. Criteria: 1 & 2) A sound system of internal control requires that incoming funds be processed and maintained under dual control at all times until the funds are fully processed and an independent record is made to document the amount and nature of the funds received. 3) A sound system of internal control requires that persons who have custody or control of assets ? particularly financial assets ? should not also have accounting or reporting responsibilities with respect to those assets. Cause: 1) The safes located in the accounts receivable office at the South Barrington campus are not dual control devices. 2) The usher did not follow the Church?s protocol which requires that all funds be transported by at last two unrelated individuals. Management considered this to be an isolated incident. 3) The duties of the accounts receivable manager, accounts receivable specialist, and the donations coordinator at the South Barrington campus include both cash custody and accounting responsibilities. Effect: 1 & 2) A lack of dual control in circumstances where it is warranted creates an environment in which there is a greater risk that misappropriation, embezzlement, or fraud could occur and not be detected in a timely manner. 3) An internal control environment in which a person has both custody/control and accounting/reporting duties with respect to financial assets is conducive to the possibility that misappropriation (including theft or embezzlement) could occur and not be detected in a timely manner. Recommendation: 1) We recommend that the Church take additional steps to implement appropriate dual control procedures, such as by modifying the safes located in the accounts receivable office at the South Barrington campus to require two individuals to access their contents. 2) We recommend the Church review with its staff and volunteers its policies regarding the transportation of funds throughout the offering collection process to ensure dual control is maintained. 3) We recommend the Church take steps to address the incompatibility of the duties assigned to the accounts receivable manager, the accounts receivable specialist, and the donations coordinator at the South Barrington campus in order to reduce the risk of undetected misappropriation. Views of Responsible Officials and Planned Corrective Action: Volunteers are responsible for the counting of weekend cash offerings and the cash tally sheet, or Weekly Cash Report (WCR). The WCR is signed by everyone present, at least two of whom are unrelated, and the original form is scanned and sent immediately to the CFO. Cash deposits are reviewed weekly and reconciled to the bank statements monthly by the Senior Accountant. Also, the count room is equipped with multiple security cameras. Should any irregularities be detected during the review and reconciliation processes, tapes of the recordings are retained for a minimum of 60 days and can be reviewed to determine the cause. Although not preventative, these controls allow for the timely detection of irregularities so immediate action can be taken, as required. Management has begun crafting a revised process regarding the receiving and immediate processing by two individuals of checks received in the mail, including exploring and evaluating the need for safes requiring dual access. In addition, going forward the WCR will also be sent to the Senior Accountant. Regarding the observation concerning the usher, the Controller contacted the individual?s supervisor and talked through the process and the importance of following it. The usher involved has been re-trained on the process so this does not happen again.

2021-001. The Church does not maintain dual control over certain funds and the duties of certain employees are incompatible. Condition: 1) The storage of funds in the safes located in the accounts receivable office at the South Barrington campus are not under dual control (we noted that multiple individuals have individual access to the safes). These safes hold the offerings collected after worship services, as well as funds received through the mail and other funds received during the week. 2) The collection of funds received through the offering process at the South Barrington campus are not under dual control (during our observation of the offering and count process on March 27th, 2022, we noted one usher was alone with certain funds while transporting the funds from the mezzanine to the ground floor). 3) The accounts receivable manager, accounts receivable specialist, and the donations coordinator at the South Barrington campus are responsible for handling incoming cash receipts, can individually access funds stored in the safes in the accounts receivable office, and are responsible for modifying donor records. Criteria: 1 & 2) A sound system of internal control requires that incoming funds be processed and maintained under dual control at all times until the funds are fully processed and an independent record is made to document the amount and nature of the funds received. 3) A sound system of internal control requires that persons who have custody or control of assets ? particularly financial assets ? should not also have accounting or reporting responsibilities with respect to those assets. Cause: 1) The safes located in the accounts receivable office at the South Barrington campus are not dual control devices. 2) The usher did not follow the Church?s protocol which requires that all funds be transported by at last two unrelated individuals. Management considered this to be an isolated incident. 3) The duties of the accounts receivable manager, accounts receivable specialist, and the donations coordinator at the South Barrington campus include both cash custody and accounting responsibilities. Effect: 1 & 2) A lack of dual control in circumstances where it is warranted creates an environment in which there is a greater risk that misappropriation, embezzlement, or fraud could occur and not be detected in a timely manner. 3) An internal control environment in which a person has both custody/control and accounting/reporting duties with respect to financial assets is conducive to the possibility that misappropriation (including theft or embezzlement) could occur and not be detected in a timely manner. Recommendation: 1) We recommend that the Church take additional steps to implement appropriate dual control procedures, such as by modifying the safes located in the accounts receivable office at the South Barrington campus to require two individuals to access their contents. 2) We recommend the Church review with its staff and volunteers its policies regarding the transportation of funds throughout the offering collection process to ensure dual control is maintained. 3) We recommend the Church take steps to address the incompatibility of the duties assigned to the accounts receivable manager, the accounts receivable specialist, and the donations coordinator at the South Barrington campus in order to reduce the risk of undetected misappropriation. Views of Responsible Officials and Planned Corrective Action: Volunteers are responsible for the counting of weekend cash offerings and the cash tally sheet, or Weekly Cash Report (WCR). The WCR is signed by everyone present, at least two of whom are unrelated, and the original form is scanned and sent immediately to the CFO. Cash deposits are reviewed weekly and reconciled to the bank statements monthly by the Senior Accountant. Also, the count room is equipped with multiple security cameras. Should any irregularities be detected during the review and reconciliation processes, tapes of the recordings are retained for a minimum of 60 days and can be reviewed to determine the cause. Although not preventative, these controls allow for the timely detection of irregularities so immediate action can be taken, as required. Management has begun crafting a revised process regarding the receiving and immediate processing by two individuals of checks received in the mail, including exploring and evaluating the need for safes requiring dual access. In addition, going forward the WCR will also be sent to the Senior Accountant. Regarding the observation concerning the usher, the Controller contacted the individual?s supervisor and talked through the process and the importance of following it. The usher involved has been re-trained on the process so this does not happen again.