Separation of duties in the sales and collection cycle should mandate that the credit-granting function be separate from the sales function.

Question

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Separation of duties is a crucial internal control for preventing fraud and errors in financial processes. Separating the credit-granting function from the sales function ensures that sales personnel do not have the authority to approve credit applications or set credit limits, which could create conflicts of interest and increase the risk of granting credit to risky customers. Instead, credit-granting should be performed by a separate department or individual with the expertise and authority to assess creditworthiness and make credit decisions based on objective criteria.

Separation of Duties in the Sales and Collection Cycle Should