AAT L4 Accounting Systems and Controls — Questions and Answers
Question 1: Which of the following is an example of an application control in an accounting information system?
- Physical access restrictions to the server room
- Password policies requiring regular changes
- Input validation checks on data entry fields (Correct answer)
- Uninterruptible power supply for the server
Correct answer: Input validation checks on data entry fields
Application controls are specific to individual software applications and include input validation, processing controls, and output controls. The other options are general IT controls that protect the overall IT environment.
Question 2: The internal control principle of segregation of duties requires that:
- All employees should be able to perform all tasks
- No single person should control all aspects of a transaction from initiation to completion (Correct answer)
- The managing director should approve all transactions
- Only qualified accountants should access the system
Correct answer: No single person should control all aspects of a transaction from initiation to completion
Segregation of duties ensures no single individual can initiate, authorise, record, and reconcile a transaction. This reduces the risk of errors and fraud by requiring collusion between multiple people to bypass controls.
Question 3: A SWOT analysis conducted as part of an accounting systems review considers:
- Only financial data from the trial balance
- Strengths, Weaknesses, Opportunities, and Threats related to the system (Correct answer)
- Staff holiday entitlements and absence records
- The company's share price performance
Correct answer: Strengths, Weaknesses, Opportunities, and Threats related to the system
A SWOT analysis evaluates the internal strengths and weaknesses of the current accounting system and the external opportunities and threats that may affect it. This is a standard tool used in the AAT Level 4 unit to evaluate and recommend system improvements.
Question 4: Which of the following would be classified as a weakness in an accounting system?
- Monthly bank reconciliations performed by an independent person
- The purchase ledger clerk can also authorise payments to suppliers (Correct answer)
- All journal entries require supporting documentation
- Access to the payroll system is restricted to HR and payroll staff
Correct answer: The purchase ledger clerk can also authorise payments to suppliers
Allowing the purchase ledger clerk to also authorise payments violates segregation of duties. This person could create fictitious suppliers and authorise payments to themselves.
Question 5: Under the Bribery Act 2010, a UK organisation can be held liable if:
- An employee commits bribery but the organisation had adequate procedures to prevent it
- A person associated with the organisation bribes another to obtain business, and the organisation lacked adequate procedures (Correct answer)
- A competitor engages in bribery in the same market
- A foreign subsidiary operates in a country where bribery is customary
Correct answer: A person associated with the organisation bribes another to obtain business, and the organisation lacked adequate procedures
Section 7 of the Bribery Act 2010 creates a corporate offence of failure to prevent bribery. An organisation is liable if an associated person bribes another to obtain or retain business, unless it can prove it had adequate procedures in place.
Question 6: When evaluating an accounting system, a cost-benefit analysis is used to:
- Calculate the company's profit margin
- Compare the costs of proposed system changes against the expected benefits (Correct answer)
- Determine the depreciation charge on computer equipment
- Allocate overhead costs to departments
Correct answer: Compare the costs of proposed system changes against the expected benefits
A cost-benefit analysis weighs the costs of implementing system improvements against the expected benefits. A change is only recommended if the benefits outweigh the costs.
AAT L4 Accounting Systems and Controls
Which of the following is an example of an application control in an accounting information system?