AAT L4 Accounting Systems and Controls 2

Question 1

Which of the following is a key objective of an internal audit function?

Accepted Answer

To provide an independent assessment of the effectiveness of internal controls

Answer

Internal audit provides independent, objective assurance on the effectiveness of risk management, governance, and internal control processes. It reports to management and the audit committee rather than to shareholders.

Question 2

A company is considering moving from manual accounting to cloud-based software. Which risk is specific to cloud-based systems?

Accepted Answer

Dependency on internet connectivity and third-party data security

Answer

Cloud-based systems rely on internet connectivity and store data on third-party servers, raising concerns about availability, data security, GDPR compliance, and vendor reliability. These risks do not apply to on-premise solutions.

Question 3

Under UK GDPR, a data controller must:

Accepted Answer

Ensure personal data is processed lawfully, fairly, and transparently

Answer

Under UK GDPR, the data controller must comply with principles including lawfulness, fairness, and transparency. Data must be collected for specified purposes, kept to a minimum, accurate, stored only as long as necessary, and protected with appropriate security.

Question 4

The payroll clerk can add new employees, process payroll, and distribute pay. What control recommendation best addresses this risk?

Accepted Answer

Segregate duties so different people add employees, process payroll, and authorise payments

Answer

Segregation of duties is the most effective control. By ensuring different individuals handle employee setup, payroll processing, and payment authorisation, the risk of ghost employees or fraudulent payments is significantly reduced.

Question 5

What is the purpose of a systems flowchart in an accounting systems evaluation?

Accepted Answer

To visually map the flow of data and processes through the accounting system

Answer

A systems flowchart uses standard symbols to represent the flow of data, documents, and processes through an accounting system. It helps identify bottlenecks, control weaknesses, and areas for improvement.

AAT Level 4 Practice Test

AAT Level 4 Practice Test

AAT L4 Accounting Systems and Controls 2