AAT L2 Work Effectively in Finance 4

Question 1

Professional competence and due care requires a finance professional to:

Accepted Answer

Maintain knowledge and skills at the level required to ensure clients or employers receive a competent service, and act diligently

Answer

This ethical principle requires finance professionals to maintain their professional knowledge and skills through CPD, act carefully and thoroughly in their work, follow applicable standards and regulations, and not undertake work they are not competent to perform.

Question 2

A conflict of interest in the finance function might arise when:

Accepted Answer

A finance team member is asked to authorise payments to a company owned by their relative

Answer

A conflict of interest occurs when a professional's personal interests could influence their professional judgement. Authorising payments to a relative's company creates a clear conflict and should be declared and managed according to the organisation's policies.

Question 3

The purpose of an internal control system is to:

Accepted Answer

Safeguard assets, ensure accuracy of records, promote operational efficiency, and encourage compliance with policies

Answer

Internal controls are policies and procedures designed to protect business assets, maintain reliable accounting records, promote efficiency, and ensure compliance with laws and management policies. Examples include segregation of duties, authorisation limits, and physical controls.

Question 4

Segregation of duties means:

Accepted Answer

Different stages of a transaction or process are handled by different people to reduce the risk of fraud or error

Answer

Segregation of duties is a key internal control. By ensuring no single person controls all stages of a transaction (e.g., ordering, receiving, and paying for goods), the risk of fraud and error is significantly reduced because it would require collusion.

Question 5

Which of the following is a legal requirement under UK employment law relevant to the finance function?

Accepted Answer

Operating PAYE to deduct income tax and National Insurance from employee pay and remitting it to HMRC

Answer

Under UK law, employers must operate the Pay As You Earn (PAYE) system to deduct income tax and National Insurance Contributions (NICs) from employee pay and remit these to HMRC. The finance function is responsible for accurate payroll processing.

AAT Level 2 Practice Test

AAT Level 2 Practice Test

AAT L2 Work Effectively in Finance 4