Controls around credit limits. 2018

  • The following are 2 controls that have been documented as key for the 404 assessment. I am of the opinion that these are not necessary to a SOX review due to the fact a failure in either of these controls would not cause a misstatement in the financials. If a customer were extended a line of credit that was not in accordance with company policy and the customer subsequently was unable to satisfy their commitment to pay, it would be recorded as bad debt. Thoughts?
    -Obtain a report of all changes to credit limits in the customer master file. Take a sample of 5 changes and verify that the change was properly approved.
    -Attempt to enter an order for a customer who has exceeded his or her credit limit or who is on credit hold. Verify that the order goes on credit hold.

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