Assume that a computerized credit- checking procedure operates as follows: As orders are entered into the computer by a CSR, the computer calculates the total of the customer order and adds to this the customer’s out-standing balance from the accounts receivable master data and the customer’s outstanding orders on the sales order master data (i. e., orders not yet billed). This total (customer order, open accounts receivable, open sales orders) is then compared to the credit limit stored on the customer master record. If the customer’s order would cause the credit limit to be exceeded, the computer displays a warning on the sales representative’s screen. The sales representative may choose to cancel the order or to override the credit limit warning. If the representative overrides the warning, the computer accepts and records the order. Assume that you cannot change the computer program (i. e., answer the question based on how the system works now), and discuss the effectiveness of this credit- check procedure. Specifically:
a. Describe what this credit- checking procedure does accomplish.
b. Describe a weakness in this procedure and a control (remember, assume that you cannot change the computer program) that would compensate for that weakness.

  • CreatedDecember 15, 2014
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