A company has a policy that customers cannot make a purchase on account if the purchase would have them owe the company more than $$30,000.$ The

sales manager, however, has permission to override this control, which the sales manager does on occasion to avoid losing major customers.

Which of the following statements is most evident?

Multiple Choice

The auditor should assess the control risk for the valuation assertion for the allowance for uncollectible receivables as Low.

The auditor needs to consider management's ability to override controls when assessing control risk.

The company does not have a legitimate business purpose for allowing the managerial override of this control.

The auditor should perform a test of controls to determine if the controls are operating effectively.