The employee in charge of authorizing credit to the company's customers does not fully understand the concept of credit risk.This lack of knowledge would constitute:
A)a deficiency in operation of internal controls.
B)a deficiency in design of internal controls.
C)a deficiency of management.
D)not constitute a deficiency.

Question

Quizplus · Accepted Answer

A deficiency in operation of internal controls occurs when a control is not being performed as intended. In this case, the employee in charge of authorizing credit does not fully understand the concept of credit risk, which means that they are not performing the control as intended.

The Employee in Charge of Authorizing Credit to the Company's