ICAEW ARF · Chapter 5 · Question 3 of 11
A company sends statements to all credit customers each month. Which risk does this control mainly address?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Errors or misappropriations in customers' ledger accounts going undetected
Explanation
Customers who receive statements are likely to query balances that are too high, so errors, or the misappropriation of payments, are more likely to be detected. The control works best when statements are prepared and sent by someone independent of the receivables ledger and cash. It does not address credit checks, cut-off or unauthorised invoicing directly.
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