CFC ERP Systems & Financial Technology 4 — Questions and Answers
Question 1: Which technology enables ERP systems to communicate and share data with external applications such as banking portals or tax filing systems?
- Virtual Private Network (VPN)
- Application Programming Interface (API) (Correct answer)
- Relational Database Management System (RDBMS)
- Multi-factor Authentication (MFA)
Correct answer: Application Programming Interface (API)
APIs define the protocols and data formats that allow ERP systems to securely exchange information with external third-party applications.
Question 2: A company using an ERP discovers that a user in Accounts Payable can both create vendors and approve payments to those vendors. This is BEST described as a:
- Change management risk
- Segregation of duties (SoD) conflict (Correct answer)
- Data migration error
- System performance bottleneck
Correct answer: Segregation of duties (SoD) conflict
Allowing one person to create vendors and approve payments is a classic SoD conflict that creates risk of fraudulent vendor creation and unauthorized payments.
Question 3: In ERP financial reporting, what is the key difference between a 'drill-down' report and a standard summary report?
- Drill-down reports are only available in cloud ERP systems
- Drill-down reports allow users to click from summary totals to the underlying transaction detail (Correct answer)
- Summary reports include forecasts while drill-down reports show only historical data
- Drill-down reports require a separate business intelligence tool to generate
Correct answer: Drill-down reports allow users to click from summary totals to the underlying transaction detail
Drill-down functionality lets users navigate from high-level aggregated balances directly to the individual journal entries or transactions that comprise them.
Question 4: What is the primary purpose of data migration 'cleansing' before an ERP implementation go-live?
- Encrypting sensitive financial data for secure transfer to the new system
- Identifying and correcting duplicate, incomplete, or inaccurate records before they are loaded into the new ERP (Correct answer)
- Compressing historical data to reduce storage costs in the new system
- Archiving data that exceeds the new system's storage capacity
Correct answer: Identifying and correcting duplicate, incomplete, or inaccurate records before they are loaded into the new ERP
Data cleansing ensures only accurate, complete, and deduplicated records are migrated, preventing legacy data quality issues from contaminating the new system.
Question 5: A controller wants to use predictive analytics within the ERP to forecast cash flow. Which data source MOST directly supports this capability?
- Fixed asset depreciation schedules and tax records
- Historical accounts receivable aging, accounts payable due dates, and sales order pipeline (Correct answer)
- Employee payroll records and benefits enrollment data
- Inventory reorder points and supplier lead times only
Correct answer: Historical accounts receivable aging, accounts payable due dates, and sales order pipeline
Cash flow forecasting models draw primarily on AR aging (expected inflows), AP due dates (expected outflows), and the open sales order pipeline for near-term projections.
Question 6: Which ERP implementation approach goes live with all modules simultaneously across the entire organization?
- Phased rollout
- Big Bang implementation (Correct answer)
- Parallel running strategy
- Pilot deployment
Correct answer: Big Bang implementation
A Big Bang implementation deploys all ERP modules enterprise-wide on a single go-live date, maximizing speed but also concentrating implementation risk.
Question 7: In financial technology, what does 'continuous accounting' refer to?
- Running accounting software on servers that operate 24 hours a day
- Distributing close tasks throughout the period so month-end becomes a verification rather than a data entry event (Correct answer)
- Continuously hiring additional accounting staff to handle growing transaction volumes
- Automatically renewing software subscriptions without manual intervention
Correct answer: Distributing close tasks throughout the period so month-end becomes a verification rather than a data entry event
Continuous accounting spreads reconciliations, accruals, and adjustments throughout the month so the period-end close is fast and low-effort.
