2. Weakness: The physician who approves credit also approves the write-off of uncollectible accounts.
Threat: Accounts receivable could be understated and bad debts expense overstated because write-offs of accounts could be approved for accounts that are, in fact, collectible. Accounts receivable could be overstated and bad debt expense understated because write-offs may not be initiated for accounts that are uncollectible.
Control: Separate the duties of approving credit and approving the write-off of accounts receivable.