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    PracticeCPA®CPA ISC Practice Exam 2Question 25
    Medium1 markMultiple Choice
    Area I: Information SystemsEnterprise SystemsArea I

    CPA · Question 25 · Area I: Information Systems

    An auditor is reviewing a flowchart of the 'Order-to-Cash' process. The flowchart shows that the 'Sales Department' approves credit limits for new customers. What is the control deficiency?

    Answer options:

    A.

    Inadequate documentation.

    B.

    Segregation of Duties conflict.

    C.

    Lack of automation.

    D.

    Process bottleneck.

    How to approach this question

    Identify who has the authority to authorize a transaction vs. who initiates it.

    Full Answer

    B.Segregation of Duties conflict.✓ Correct
    Segregation of Duties conflict.
    Credit approval should be performed by a Credit or Finance department independent of Sales to ensure objective risk assessment.

    Common mistakes

    Focusing on efficiency rather than control risk.
    Question 24All questionsQuestion 26

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