The financial director and the sales director meet to assess the accounts receivable on a monthly basis. SolarTech Ltds terms to debtors are 30 days and debts over 120 days are considered to be bad debts and will usually be written off with the approval of the financial director. Both directors sign the necessary journal entry and supporting documentation at the conclusion of the meeting.

Q1. Identify the component(s) of the system of internal control to which each of the above points relates. Give reasons for your choice. If you have chosen control activity, state which type(s) of control is (are) being implemented, for example segregation of duties.