An auditor for a large wholesaler is evaluating the controls over the approval and oversight of credit sales. Which of the following procedures would be a control weakness?
A) The credit department is responsible for approving shipments to all customers.
B) The finance committee of the board of directors periodically reviews credit standards.
C) Customers who fail to meet credit requirements must pay cash for shipments upon delivery.
D) The sales department is responsible for determining the credit ratings of customers.

Question

Quizplus · Accepted Answer

The sales department determining credit ratings is a control weakness because it may lead to conflicts of interest, as the sales department might prioritize sales over creditworthiness, potentially increasing the risk of bad debts.

An Auditor for a Large Wholesaler Is Evaluating the Controls