AAT L4 Accounting Systems & Controls 3

Question 1

The purpose of physical controls (e.g., locked safes, restricted access) is to:

Accepted Answer

Safeguard physical assets and confidential records from theft, loss, or damage

Answer

Physical controls protect tangible assets (cash, inventory, equipment) and sensitive records by restricting access to authorised personnel — preventing theft, unauthorised use, and accidental damage.

Question 2

A system of internal controls can never provide absolute assurance against fraud because:

Accepted Answer

Controls can be circumvented through management override or collusion between employees

Answer

Even well-designed controls have limitations: management can override them; employees may collude; and controls designed for routine transactions may not detect unusual or complex fraudulent schemes.

Question 3

Cash controls in a business typically include:

Accepted Answer

Daily counting and reconciliation of cash, with receipts banked promptly and handled by separate people

Answer

Cash controls include: counting and reconciling cash daily, banking receipts promptly, segregating cash handling from recording, using prenumbered receipts, and restricting access to the cash register.

Question 4

IT general controls in an accounting system include:

Accepted Answer

Access controls, change management procedures, and backup and recovery policies

Answer

IT general controls (ITGCs) provide the framework supporting all applications: user access management, change management controls (testing before live implementation), backup and disaster recovery, and physical security of IT infrastructure.

Question 5

An accounting system review (systems evaluation) typically results in a report that:

Accepted Answer

Identifies weaknesses in the current system and recommends improvements

Answer

A systems review or evaluation identifies control weaknesses, inefficiencies, and risks in the accounting and control environment, recommending cost-effective improvements to address them.

AAT Level 4 Practice Test

AAT Level 4 Practice Test

AAT L4 Accounting Systems & Controls 3