direct controls

Especially in a large organisation it will likely be the credit controller - the sales director has more important things to do than perform control activities of a routine nature.

exactly also there r chances he would set high limits just to boost sales right,, but in the kaplan kit answers they have sales director should set the limits.. now what should we write in the exam?

Please specify the Q you are referring to so I can clarify/find the "prompt" in the scenario for you.

question wiht the name EQUESTRIAN in kaplan kit - this is the extract i am talking about

A new receivables system was introduced in May 20X5 and will continue to be run in parallel with the old system until IA has completed its checks between the two systems. New customers obtained by the sales team are required to undergo a full credit check. On the basis of this, a credit limit is proposed by sales staff and approved by the sales director via emails and any amendments are made via a credit limit review form which must be authorised by the sales director.

here i hv another doubt too. it says the credit limits are reviwed every 6 months... isnt it too long? shdnt that be a control deficiency? but the kaplan kit answer did not mention this as a deficiency

To set credit limits is a control

To have credit limits approved is a control

A sales director is an officer of the company - with statutory and fiduciary duties - there is no reason why they should not have this authority - especially as the scenario does not refer to a credit controller (e.g. because there is no one person in that role - the responsibilities of credit controlling having been distributed between people with other roles - such as the sales director!)

You are making a supposition about the sales director - there is nothing to say that he/she is motivated to generate sales to bad credit risks - e.g. there is no reference to a bonus or revenue targets.

It would be a control deficiency to not have credit limits reviewed at all - but six monthly? why not? A twice-yearly review of credit limits would not preclude there being other triggers for changes in credit limits. E.g. if a customer is becoming an increasingly slow payer, their credit limit might be reduced (or credit stopped entirely).