ExpertMedium1 markMultiple Choice
CPA · Question 25 · Area I: Information Systems
An auditor is reviewing a flowchart of the 'Order-to-Cash' process. The flowchart shows that the 'Sales Department' approves credit limits for new customers. What is the control deficiency?
An auditor is reviewing a flowchart of the 'Order-to-Cash' process. The flowchart shows that the 'Sales Department' approves credit limits for new customers. What is the control deficiency?
Answer options:
A.
Inadequate documentation.
B.
Segregation of Duties conflict.
C.
Lack of automation.
D.
Process bottleneck.
How to approach this question
Identify who has the authority to authorize a transaction vs. who initiates it.
Full Answer
B.Segregation of Duties conflict.✓ Correct
Credit approval should be performed by a Credit or Finance department independent of Sales to ensure objective risk assessment.
Common mistakes
Focusing on efficiency rather than control risk.
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