Case study 1: AMY (Suggested Time: 65 Minutes)

You are a newly qualified Chartered Accountant, working in a small practice. Your firm has
a reputation for providing a certain amount of voluntary work annually and you have been
asked to take part in one of these projects.

AMY is a charity, established four years ago, to help families throughout the world affected
by natural disasters. Its objectives are to:

• provide funds to people affected by natural disasters to help rebuild their lives,
• provide volunteers to assist in the re-building process and
• provide a rapid response team to assist in the initial aftermath of disasters.

The charity relies principally on donations from the public, organised fundraising events and
its charity shop.

You contact the voluntary Chairperson of AMY, Peter Scott, a local Doctor. Peter is
delighted to accept your help as he badly needs some financial advice after the charity’s
recent fraud case, which has been all over the newspapers (APPENDIX 1). He recognises the
importance of appropriate controls within the charity and would gladly welcome your advice
in this regard. He is also considering two alternative providers of information systems and
has asked for your evaluation and recommendation as to which system would be more
appropriate. He has provided you with the information he has gathered to date (APPENDIX
2).

In light of the charity’s specific objectives, you have also been asked to identify suitable Key
Performance Indicators (KPIs) that can be presented to the Board at its next meeting.

APPENDIX 1

NATIONAL NEWSPAPER ARTICLE

Charity Shop Manager stole nearly €/£ 250,000 over three years
Keith Price stole nearly €/£ 250,000 from the charity, AMY, that employed him to run its
shop. The shop was set up three years ago to help raise additional funds for the charity’s
relief work in areas affected by natural disasters.

Price siphoned off up to €/£ 2,000 per week over a three year period, by using blank cheques
signed by colleagues that he then paid into his personal bank account.

Price had matrimonial problems, which had led to an increase in living expenses, and he
subsequently left his wife for a younger work colleague and splashed out €/£ 75,000 on a
brand new sports car. If anyone questioned his new-found wealth, Price claimed that he had
inherited money from a rich aunt. He hid his scam by producing fake invoices.

Peter Scott, the Chairman of AMY, said: "The loss of the money from the shop has slowed
down the charity's programme of helping families devastated by natural disasters throughout
the world. We are extremely concerned that the publicity surrounding the case will have an

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adverse impact on future donations and sales in the charity shop. We will address the fraud
issues and implement a new Management Information System to improve controls and
procedures and protect the assets of the charity".

Today, Judge Helen Giggs sentenced Price, a father of two, to jail for four years and nine
months. Sentencing him, Judge Giggs said: "People trusted you and you betrayed that trust.
Stealing from a charity is a despicable crime". The judge also commented that she was
shocked at the lack of controls and procedures within the charity, and was concerned that the
fraud had not been identified earlier.

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