The person in charge of authorizing credit to customers does not properly understand what constitutes a credit risk. This is an example of:
A)A material weakness.
B)A design deficiency.
C)A deficiency in operation.
D)This is not an internal control deficiency.

Question

Quizplus · Accepted Answer

This is a deficiency in operation because there is a failure to implement internal controls effectively. The person in charge of credit authorization may not have been properly trained or supervised, resulting in a misunderstanding of credit risk.

The Person in Charge of Authorizing Credit to Customers Does