ExpertHard1 markMultiple Choice
CPA · Question 07 · Area I: Information Systems
An auditor is reviewing the 'Order-to-Cash' process. The documented flowchart indicates that a credit check is performed automatically by the system before a sales order is approved. However, during a walkthrough, the auditor observes a sales representative manually overriding the credit hold to expedite a shipment for a VIP client. What is the primary concern?
An auditor is reviewing the 'Order-to-Cash' process. The documented flowchart indicates that a credit check is performed automatically by the system before a sales order is approved. However, during a walkthrough, the auditor observes a sales representative manually overriding the credit hold to expedite a shipment for a VIP client. What is the primary concern?
Answer options:
A.
The system is not functioning as designed.
B.
The actual process deviates from the documented control, creating a risk of uncollectible accounts.
C.
The sales representative should be fired immediately.
D.
The flowchart needs to be updated to include the manual override.
How to approach this question
Identify the discrepancy between design (documentation) and operation (observation) and the resulting risk.
Full Answer
B.The actual process deviates from the documented control, creating a risk of uncollectible accounts.✓ Correct
A discrepancy between documented procedures and actual practice indicates a control deficiency. Allowing manual overrides without approval defeats the purpose of the credit check control.
Common mistakes
Thinking the solution is just to update the documentation.
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