CFC ERP Systems & Financial Technology 3 — Questions and Answers
Question 1: Which financial technology concept involves using algorithms to automatically match incoming bank transactions to open accounting entries?
- Robotic Process Automation (RPA)
- Bank Reconciliation Automation / Cash Application (Correct answer)
- Blockchain Ledger Verification
- Predictive Revenue Analytics
Correct answer: Bank Reconciliation Automation / Cash Application
Automated cash application uses rule-based algorithms and AI to match bank receipts to open invoices, dramatically reducing manual reconciliation effort.
Question 2: A company adopts a cloud-based ERP under a SaaS model. Which of the following is a key financial implication compared to an on-premise deployment?
- Higher upfront capital expenditure for hardware and licenses
- Costs shift from capital expenditure (CapEx) to operating expenditure (OpEx) (Correct answer)
- The company owns the software license outright
- IT maintenance responsibilities shift entirely to the finance team
Correct answer: Costs shift from capital expenditure (CapEx) to operating expenditure (OpEx)
SaaS ERP converts large upfront license and hardware purchases (CapEx) into recurring subscription fees (OpEx), impacting financial statement presentation and cash flow.
Question 3: What is the purpose of an ERP 'sandbox' or 'development' environment?
- To store archived financial records for audit retrieval
- To test configurations, customizations, and upgrades without affecting the live production system (Correct answer)
- To provide read-only reporting access for external auditors
- To host the system's disaster recovery failover instance
Correct answer: To test configurations, customizations, and upgrades without affecting the live production system
A sandbox environment is an isolated copy of the ERP where changes can be safely tested before being promoted to the production environment.
Question 4: Which ERP concept ensures that a single transaction automatically updates multiple related accounts, such as inventory, COGS, and accounts payable simultaneously?
- Workflow Approval Routing
- Real-time automatic journal entry posting (Correct answer)
- Role-based access control
- Month-end accrual processing
Correct answer: Real-time automatic journal entry posting
ERP systems post journal entries automatically in real time when transactions occur, ensuring all affected accounts are updated simultaneously and consistently.
Question 5: A financial controller is evaluating an RPA solution for invoice processing. Which metric BEST measures the ROI of this automation?
- Number of ERP user licenses reduced after automation
- Cost per invoice processed before vs. after automation, multiplied by invoice volume (Correct answer)
- Reduction in the number of accounting software vendors
- Increase in the number of invoices received from vendors
Correct answer: Cost per invoice processed before vs. after automation, multiplied by invoice volume
ROI for invoice processing automation is best measured by comparing the fully loaded cost per invoice before and after, scaled to the actual processing volume.
Question 6: In ERP security, what is 'Segregation of Duties' (SoD) designed to prevent?
- Unauthorized access to system configuration settings by IT staff
- A single user from having system access rights that enable them to commit and conceal fraud alone (Correct answer)
- Data loss from hardware failure or natural disaster
- Excessive customization of financial reporting templates
Correct answer: A single user from having system access rights that enable them to commit and conceal fraud alone
SoD prevents fraud by ensuring no single employee can initiate, approve, and record a transaction without a second person's involvement.
Question 7: What does an ERP 'go-live cutover' plan primarily address?
- Long-term software maintenance and support agreements
- The sequence of steps to transition from the old system to the new ERP on a specific date (Correct answer)
- Ongoing user training after the system is live
- The process for adding new modules years after initial implementation
Correct answer: The sequence of steps to transition from the old system to the new ERP on a specific date
The cutover plan details the precise steps, timing, data migration tasks, and rollback procedures for switching from the legacy system to the new ERP.
CFC ERP Systems & Financial Technology 3
Which financial technology concept involves using algorithms to automatically match incoming bank transactions to open accounting entries?