Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

S EC T I O N 3
K APLA N PUBLISH ING
147 
193 B 
They are employed by the management of the company and yet are expected to give an 
objective opinion on matters for which management are responsible. 
194 D 
The audit committee would act as an interface between the directors and internal auditors 
to reduce the problem of independence. 
195 B 
Statement (ii) is the wrong way round – external auditors test the underlying transactions 
that make up the financial statements, while internal auditors test the operations of the 
company’s systems. Statement (iii) is also incorrect as internal audit is not usually a legal 
requirement, though corporate governance principles state that if an internal audit 
function is not present, the company should annually assess the need for one. 
196 A 
Guidance for an internal audit is limited to fundamental principles and a small quantity of 
standards and these factors are largely responsible for the greater flexibility in how the 
work is done. However, there is no legal requirement for an internal auditor to possess an 
accounting qualification, though it is highly desirable. 
197 A 
Control environment refers to the overall attitude of managers to the importance of 
internal controls. 
198 D 
A TPS records and summarises the basic transactions of the organisation. This would be 
summarised and form part of the financial statements of the organisation. As such, it would 
form part of the retail company’s information systems. 
199 B 
Segregation of roles may happen to identify frauds that have occurred in some 
circumstances, but its primary role is to prevent fraud as it would require collusion between 
multiple members of staff. Statement two is correct – general controls are designed to 
ensure that IT systems are operating correctly. 
200 B 
There should be a division of responsibilities for authorising or initiating a transaction, the 
physical custody and control of assets involved, and recording the transaction.
 
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