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1. Sales are made through a network of sales staff employed by heraklion co, but new customer leads are generated through a third party company.
Why is this not a control deficiency as the customer leads are being generated by a third party company. Also what is customer leads
2. Sales staff are responsible for assessing new customers’ credit worthiness and proposing a credit limit which is then authorised by the sales director.
What is the deficiency in this statement
Why credit limits are not being reviewed and sales staff not sufficiently senior to assess credit worthiness has not been identified as a deficiency in this statement
1. A “customer lead” is a contact generated my marketing efforts – which may be internal or external/3P. These are business activities.
2. Following on from what I wrote here https://opentuition.com/topic/june-12-pear-international the deficiency would be it the credit limits were not authorised.
1. Pear’s retail customers undergo credit checks prior to being accepted and credit limits are set accordingly by a sales manager.
2. Sales staff are responsible for assessing new customers’ credit worthiness and proposing a credit limit which is then authorised by the sales director.
The first statement and the second statement look the same but why the first one is a direct control whereas the second one is a deficiency
In 1. the Q says that the credit limits are set “by sales ledger clerks” – i.e. individuals responsible for recording sales. The are not the same as “sales staff” meaning those whose job it is to make sales. Especially if sales staff are incentivised (e.g. with commissions or bonuses for achieveing sales targets), there is a risk that they may set too high credit limits.
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