Which of the following most likely would be the result of ineffective internal control policies and procedures in the revenue process?
A)Final authorization of credit memos by personnel in the Sales Department could permit an employee defalcation scheme.
B)Fictitious transactions could be recorded, causing an understatement of revenues and an overstatement of receivables.
C)Irregularities in recording transactions in the subsidiary accounts could result in a delay in goods shipped.
D)Omission of shipping documents could go undetected, causing an understatement of inventory.

Question

Quizplus · Accepted Answer

Ineffective internal control policies and procedures in the revenue process could allow personnel in the Sales Department to have final authorization of credit memos, potentially enabling an employee defalcation scheme. This is because such controls are meant to prevent unauthorized transactions and ensure the integrity of financial records.

Which of the Following Most Likely Would Be the Result