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

P AP E R F 1 ( F A B )
: A CCOU N TAN T IN B US INES S
 
148 
KA P LA N P UBL I SH IN G 
201 B 
Reconciliations check for errors or frauds that have already occurred – they are therefore 
(mainly) detective in nature. If management takes subsequent action to deal with problems 
identified by the reconciliation, these would be corrective. 
202 C 
Validity involves checking that the information is valid (i.e. that it is possible data). For 
example, it could check the birth date given for the customer and ensure it is a valid age. 
This is not demonstrated by the computer system in the scenario. 
203 A 
Options (iii) and (iv) are both application controls, which focus on whether information 
inputted into the system is correct or not. Options (i) and (ii) are general controls which 
check that the IT system is operating correctly and meeting their objectives. 
204 A 
The presence of a supervisor may deter people from committing fraud, such as taking 
money out of the till. B and C are examples of detective controls whereas D is an example 
of a corrective control. 
205 B 
Remember that it is the management’s responsibility to ensure that the organisation has 
proper accounting records and true and fair financial statements. This would usually involve 
the company having internal controls. 
206 A 
Statement (ii) is incorrect as this issue of independence would normally be an issue for 
internal auditors – not external auditors. Statement (iv) is also incorrect as, if the internal 
controls are reliable, it will reduce the amount of substantive testing that the external 
auditor is required to perform. 
207 D 
Physical controls also include access controls, key-locked cabinets, CCTV and so on. 
208 B – APPLICATION CONTROLS 
By definition. 
209 B – FALSE 
If an organisation’s internal controls are strong, it will reduce the amount of substantive 
testing that the external auditor will need to undertake. 
 
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ANSWERS TO PRA C TICE O BJECTIVE TEST QUESTIONS :