Exam (elaborations)
CAE Domain 1 with 100% correct answers | verified | latest update 2024
CAE Domain 1 with 100% correct answers | verified | latest update 2024
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CAE Domain 1Accounting: segregation of duty - ANS-No individual should control all four aspects of
any financial transaction: Initiation (check requests) Authorization (approval to pay)
Asset custody (keeping the checkbook) Recording the transaction (posting)
Audit: clean vs. unqualified - ANS-Clean audit: an opinion providing the highest level of
assurance that the Statement Financial Position fairly presents the organization's
financial position, the Statement of Activities fairly presents the results of the
organization's operations, and the Statement of Cash Flows fairly presents its cash
flows.
Unqualified audit: an opinion providing the highest level of assurance an audit can
provide. Attention is given to a particular matter and provides for disclosure of additional
financial statements provided or draws attention to an additional important matter.
Balanced scorecard, monitoring - ANS-Associations are adopting this popular for-profit
means of expressing strategy in measurable terms. Board performance is measured in
four categories that can provide a more "balanced" perspective: financial performance,
customer satisfaction, process efficiency, and at the time, innovation.
Budgeting, strategic program - ANS-A budgeting best practice, allocating salaries and
other overhead to a program budget to know the true profitability of the programs
products and services. It is achieved through conducting a systematic study relating
allocation of staff time to program categories, then applying the calculated prorated
share of overhead expense to the programs identified.
Branding - ANS-A marketing process that incorporates a singular look, feel, and
message in building a belief about your association ans its products. It creates in the
mind of the prospect the perception that there is no product on the market quite like
yours. The power of a brand is its ability to influence purchasing behavior.
Dashboard indicators, monitoring for chapters and components - ANS-The dashboard
concept identifies the critical variables that with full, safe, low, and warning determine a
chapter's success and a system for measuring levels. The first step in adopting a
dashboard approach is to define the indicator values that fit your association. Once the
relevant values are identified, set up your dashboard. There are five basic steps: 1.
Revisit the mission and vision of the national organization and the chapter/component.
2. Define the gauges as they relate to the mission. 3. Establish methods to measure
, success. 4. Conduct a chapter assessment to establish initial dashboard readings. 5.
Assign a staff member to regularly monitor the gauges.
Financial controls: annual audit - ANS-Financial Management is responsible for the
organization's financial controls: reports and the information contained within; the
auditor's annual audit role is to verify the amounts included in the reports. In its fiduciary
capacity, the board hires the external auditor and receives the report. It is a conflict of
interest for the CSE or CFO to hire the auditor. Financial records must agree with the
financial report certified by the auditor. Any changes the auditor deems necessary are
subject to acceptance by management. The Sarbanes-Oxley Act has created regulatory
requirements corporations related to the audit function.
Financial controls essential factors - ANS-Four factors essential to good internal
financial controls 1. Clear lines of authority 3. Authority commensurate with
responsibility 2. Clear definition and acceptance of responsibility 4. Proper training
Financial controls: Sarbanes-Oxley - ANS-Only two provisions of the Sarbanes-Oxley
directly impact nonprofits: the whistle-blower protection provision, which prohibits
interference with a person who reports a potential infraction to a federal law
enforcement agency, and the prohibition of document destruction upon the
commencement of a federal investigation. However, many nonprofits are moving toward
creating a separate Audit Committee, drafting conflicts of interest and fraud policies,
and being much more transparent.
Audit committees establish procedures for processing whistle-blower complaints by
employees:
• A code of ethics for financial officers
• Increased penalties for document destruction or alteration
• Certifications by the CEO and CFO regarding the financial condition of the company
and internal controls
Nonprofit recommendations include
• A code of ethics for the Board of Directors
• A whistle-blower policy
• Regular board training
• Regular board self-evaluations
• Audit committee members who are financially literate.
Financial controls: segregation of duty - ANS-At the heart of any internal control system
is having no single individual able to control all essential aspects of any transaction:
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