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ACCA Strategic Professional · Strategic Business Leader · Management and internal control systems

Orlin Pharma's sales ledger clerk can also amend customer credit limits and issue credit notes. Management proposes: (1) a monthly review of all credit notes by the financial controller, (2) restricting credit limit amendments to the credit controller, and (3) hiring more sales staff. Which combination of proposals best addresses the weakness?

Proposals 1 and 2 together best address the weakness. Limiting credit limit changes to the credit controller prevents the clerk holding incompatible powers, and the controller's review of credit notes detects misuse. Hiring more sales staff is unrelated to control.

  1. AProposals 1 and 3 only
  2. BProposal 3 only
  3. CProposals 2 and 3 only
  4. DProposals 1 and 2 onlyCorrect

Explanation

The weakness is excessive access and incompatible duties in the sales ledger. Restricting credit limit changes to the credit controller removes the conflict (preventive), and independent review of credit notes detects abuse (detective). Hiring sales staff does not affect the control weakness.

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