The Spring Valley Church is a small congregation with about 50 members. The church is financed by member donations. Most of these donations are collected during the Sunday morning service. Many of the donations are in cash. Other donations are by checks made payable to the church. Harvey Plump has served as treasurer for the church since becoming a member a few years ago. The church accepted Harvey’s offer to serve as treasurer as an indication of his interest in being active in the church. Harvey listed several previous experiences with financial matters on his resume as qualifying him for the position.
Once donations are collected each week, Harvey takes the money to the church office where he counts it. He makes out a deposit slip and deposits the money in the church’s account at a local bank. He records the deposit in the church’s check register. He writes checks to pay the church’s expenses. In some cases, he writes small checks to himself as reimbursement for incidental expenses he pays for the church. He opens bank statements received by the church each month and reconciles them with the church’s check register. Harvey prepares a monthly statement of cash received and disbursed that is distributed to members of the congregation.
The church always seems to be lacking sufficient financial resources. A recent meeting was held to discuss expansion of the church’s building, but current finances seem to make expansion impossible. Some members don’t understand why the church’s financial condition appears to be so bleak, since they believe they are making large donations.
The church has asked you to help them evaluate their financial situation.

Required
Evaluate the internal control problems of the Spring Valley Church. What explanation can be provided for the church’s financial problems?