Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?

At a construction company, an internal auditor is planning an audit of the company’s process for designing and building grid connections.

The process involves customers making payments m three parts

• The first payment of 10% after approval of the customer s application

• The second payment of 70% prior to construction

• The third payment of 20% after construction is complete

Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?
A . Controls that ensure that grid connection design is finalized before construction is approved to begin
B . Controls that ensure construction orders are initiated after the second invoice is paid
C . Controls that ensure all three invoices are calculated correctly according to the total project cost
D . Controls that ensure that applications are verified for approval prior to initiating design and construction

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Answer: D