Accounting Systems & Controls Flashcards
6 cards from real AAT L4 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Accounting Systems & Controls flashcards as text
The purpose of physical controls (e.g., locked safes, restricted access) is to:
Answer: Safeguard physical assets and confidential records from theft, loss, or damage
Physical controls protect tangible assets (cash, inventory, equipment) and sensitive records by restricting access to authorised personnel — preventing theft, unauthorised use, and accidental damage.
A system of internal controls can never provide absolute assurance against fraud because:
Answer: Controls can be circumvented through management override or collusion between employees
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.
Cash controls in a business typically include:
Answer: Daily counting and reconciliation of cash, with receipts banked promptly and handled by separate people
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.
IT general controls in an accounting system include:
Answer: Access controls, change management procedures, and backup and recovery policies
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.
An accounting system review (systems evaluation) typically results in a report that:
Answer: Identifies weaknesses in the current system and recommends improvements
A systems review or evaluation identifies control weaknesses, inefficiencies, and risks in the accounting and control environment, recommending cost-effective improvements to address them.
Which of the following best describes the role of the internal audit function?
Answer: Providing independent assurance to management and the board on risk management, controls, and governance
Internal audit provides independent assurance on the adequacy and effectiveness of internal controls, risk management, and governance — reporting to the audit committee and/or board, not to operational management.