AAT L4 Accounting Systems & Controls

Question 1

An accounting system is effective when it:

Accepted Answer

Processes transactions accurately and completely, providing reliable financial information for decision making and control

Answer

Uses the most expensive software available

Answer

Produces the most detailed reports possible

Answer

Minimises the number of staff in the finance function

Question 2

Segregation of duties as an internal control means:

Accepted Answer

No single individual has control over all stages of a transaction, reducing the risk of fraud or error

Answer

All financial duties are performed by one trusted person

Answer

Duties are separated between departments based on seniority

Answer

The accounts team works in separate rooms

Question 3

Which of the following is an example of a preventive control?

Accepted Answer

Requiring authorisation before a purchase order is raised

Answer

Bank reconciliation performed monthly

Answer

Reviewing management accounts for unusual items

Answer

Investigating a budget overspend after the period end

Question 4

The audit trail in an accounting system enables:

Accepted Answer

Tracing any transaction from its source document through to the final accounting records and vice versa

Answer

The preparation of the annual financial statements

Answer

Calculating the tax liability automatically

Answer

Generating automated payment runs

Question 5

A key risk associated with cloud-based accounting systems is:

Accepted Answer

Dependence on internet connectivity and reliance on the provider's security measures to protect data

Answer

The inability to produce financial statements

Answer

The high cost of hardware requirements

Answer

The inability to process more than 100 transactions per day

Question 6

The purchase order authorisation control ensures:

Accepted Answer

Only authorised staff can commit the business to spending through a formal approval before ordering

Answer

Goods are only accepted from approved suppliers at the correct price

Answer

Payments are made only to approved suppliers

Answer

Invoices are matched to delivery notes