ExpertMedium1 markMultiple Choice
CPA · Question 15 · Area 2: Risk Assessment
An auditor is assessing control risk for the sales cycle. The auditor observes that the software automatically prevents the processing of a sales order if the customer's credit limit is exceeded. This is an example of:
An auditor is assessing control risk for the sales cycle. The auditor observes that the software automatically prevents the processing of a sales order if the customer's credit limit is exceeded. This is an example of:
Answer options:
A.
A detective general control.
B.
A preventive general control.
C.
A detective application control.
D.
A preventive application control.
How to approach this question
Classify the control: Does it stop (prevent) or find (detect)? Is it specific (application) or infrastructure (general)?
Full Answer
D.A preventive application control.✓ Correct
A preventive application control.
Application controls apply to the processing of individual transactions (like sales). Preventive controls are designed to avoid errors or irregularities from occurring. Blocking a sale over credit limit is a classic preventive application control.
Common mistakes
Confusing General vs Application controls.
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