The employee in charge of authorizing credit to the company's customers does not fully understand the concept of credit risk. This lack of knowledge would
A) constitute a deficiency in operation of internal controls.
B) constitute a deficiency in design of internal controls.
C) constitute a deficiency of management.
D) not constitute a deficiency.

Question

Quizplus · Accepted Answer

A lack of understanding of credit risk by the employee responsible for authorizing credit indicates a deficiency in the operation of internal controls, as it affects the effectiveness of the control process.

The Employee in Charge of Authorizing Credit to the Company's