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 sign the pick list.
C)Sales representatives set up new customer accounts and determine their credit limits.
D)When payments are received,they are sent to the cashier's office and remittance data are sent to the accounts receivable department.

Question

Quizplus · Accepted Answer

Allowing sales representatives to set up new customer accounts and determine their credit limits poses an internal control problem as it increases the risk of fraud, errors, and misuse of data. The credit limit should be set based on objective criteria determined by a credit analyst or finance department to ensure the creditworthiness of the customer.

Which of the Following Poses an Internal Control Problem