Final answer:
The scenario described pertains to a deficiency in internal controls. In particular, it seems to align with a **design deficiency**. Design deficiencies occur when there's an issue with the structure or framework of internal controls within an organization. In this case, the lack of understanding about credit risk by the person authorizing credit to customers indicates a flaw in the design of internal controls related to credit authorization or risk management.
Thus the corret opction is:b
Step-by-step explanation:
The person in charge of authorizing credit to customers does not properly understand what constitutes a credit risk can be classified as an example of a design deficiency.
In internal control terminology, a design deficiency occurs when a control necessary to meet the control objective is missing, or an existing control is not properly designed so that, even if the control operates as designed, the control objective is not always met.
In this case, the individual responsible for authorizing credit lacks the necessary understanding to evaluate credit risk effectively, indicating that the internal control system was not appropriately designed to handle credit risks.