Auditing Question

Finlay Electricals produces and wholesales small electrical products. It sells the products to a large group of regular customers and makes most sales by electrical and accessories to this group. Additionally, it receives orders online by its sales team who sign up new customers within the sales area. In the past, Finlay Electricals has had trouble with customers who do not pay their accounts on time. Despite instructing the sales team not to make sales to customers before their creditworthiness has been assessed, sales are still being made to new customers before their limits have been set and to existing customers beyond their credit limit. Also, the economic recession has started to affect its customers, and Finlay Electricals's management is concerned about the possibility of increasing bad debts. Required 3. Determine sort of prevent control could be used to deal with the problems faced by Finlay Electricals. Explain how the control would work. b. Assume the prevent control is implemented, and during this year there have been no sales to customers that have taken any customer beyond its credit limit. What are two possible explanations for this that the auditor must consider? c. If an auditor finds two sales transactions during the year that are in excess of a customer's credit limit at the time of the sale, what conclusion would the auditor draw from this evidence? What other evidence could the auditor consider before concluding that the prevent control has failed? Be sure to also indicate the relevant ASA number and paragraph