Which of the following poses an internal control problem?
A)Physical inspection of inventory quantity and condition is outsourced to a firm that specializes in this service.
B)Products are released from inventory after a warehouse employee and a shipping clerk both sign the pick list.
C)Sales representatives have authority to increase customers' credit limits in $1,000 increments.
D)When customer payments are received in the mail,checks are sent to the cashier's office and remittance advices are sent to the accounts receivable department.

Question

Quizplus · Accepted Answer

Sales representatives having authority to increase customers' credit limits in $1,000 increments poses an internal control problem as it increases the risk of granting credit to customers who may not be creditworthy, leading to bad debts or accounts receivable issues. It also increases the risk of fraudulent activities by the sales representatives. The other options are examples of good internal control practices.

Which of the Following Poses an Internal Control Problem