Us prom happening! Case 2: The Control Environment and Control Activities: Proper Authorization of Credit Richie was the Controller at Ralph Malph Enterprises (RME), a publicly traded sales- supported company. He started the job six months ago and after observing the activities in his area, he determined that the accounts receivables procedures needed to be tightened up. He approached Marion, the Accounts Receivable clerk, requesting her assistance in documenting the procedures related to new customer approvals, credit limits, and cash receipts. Marion indicated that there were no formal procedures for approving new customersshe received names and billing ad- dresses from the sales representatives, Warren, Arthur, and Howard. When the information was passed on from the sales representatives, Marion then performed file maintenance to add the new customers to the customer master file without putting a customer file together for review. Marion then told Richie that the credit limit was set at whatever level the related sales representative told her to give the customer. As for cash receipts. Marion prepared the deposits and took the deposits to the bank, reconciling the bank statement on a monthly basis. Marion also entered the cash receipts into the system. DAN ..... hannes German be . Case 2 1. Describe the flaws in RME's credit authorization process, and what recommendations you would suggest to implement in the process. 2. As the auditor, what other information (not given in the case) might you inquire about related to the overall sales cycle / process? Why would you be interested in such information