The least effective control for preventing an organization from processing fraudulent credit memo is to
A)match each credit memo with a receiving report.
B)require approval for each credit memo by the credit manager.
C)reconcile total of credit memos to total debits posted to customers' subsidiary ledgers.
D)sequentially prenumber all credit memos and perform a sequence check at the end of each day.

Question

Quizplus · Accepted Answer

Reconciling the total of credit memos to total debits posted to customers' subsidiary ledgers is a detective control rather than a preventive control. It helps identify discrepancies after they occur, rather than preventing fraudulent credit memos from being processed in the first place.

The Least Effective Control for Preventing an Organization from Processing