You Are Analyzing the Exceptions That Arose After Your Control

question 22

Essay

You are analyzing the exceptions that arose after your control testing of credit limit approvals.There were four exceptions where credit had not been approved.One was for a customer that was subsequently placed on C.O.D.(cash on delivery),and three occurred while the business was in the middle of its busy season,processing three times more transactions than most other times of the year.The company's busy season normally lasts about two months.
Required:A)What is an anomaly? B)Are any of the exceptions that you found anomalous? Why or why not? C)Provide an example of a credit approval testing exception that would be anomalous.

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Definitions:

Subsequent Periods

Time frames following the current reporting period, often relevant in financial forecasting and analysis.

Individual Accounts

Financial records or statements that pertain to a single individual or entity, detailing their financial transactions and position.

Deferred Tax Asset

An accounting term representing a future tax benefit that results from the difference between the accounting and tax treatment of a transaction, recognizable in future periods when taxes are settled.

Deferred Tax Liability

A tax obligation that a company owes but does not have to pay until a future date, often due to timing differences in recognizing income and expenses.