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AAT Level 4 > Synoptic > Flashcards

Synoptic Flashcards

1
Q

What are features of a Tall/heirarchical structure centralised?

A
  • Many Levels of management
  • Few Staff per manager
  • Often centralized
  • Decision making at ‘high’ level - slower
  • Support Functions centralized
  • Good co-ordination between businesses
  • Resources can be allocated according to need effectively
  • Economies of scale
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2
Q

What are the features of a Flat structure Decentralised?

A
  • Few management levels
  • Many staff working for managers
  • Often decentralised
  • Decisions made ‘locally’ - better morale and more experienced staff - faster
  • Local support functions
  • Businesses may make decisions to detriment of other parts of the business
  • Decision based on more local market/operations
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3
Q

What type of financial transactions do different types of businesses perform?

A
  • Sales
  • Purchases
  • Payroll
  • Production
  • Banking/Cash
  • Financial Reporting
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4
Q

Who will control resources in businesses?

A

Management

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5
Q

How does management control resources?

A
  • Depends on the level in the organisation at to how much can be controlled
  • Controlled via budgets
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6
Q

Which type of companies will more likely have more regulations to comply with?

A
  • Public Limited Companies
  • Private Limited Companies
  • Public Sector Companies
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7
Q

What is a stakeholder?

A

A person or organisation that has an interest in another organisation. They can be internal or external.

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8
Q

What does MIS stand for?

A

Management Information System

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9
Q

What are the 5 ethics?

A
  • Professional Behavior
  • Professional competence and due care
  • Integrity
  • Objectivity
  • Confidentiality
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10
Q

What are some examples of external regulations?

A
  • Accounting Regulations
  • Company Law
  • Terrorism Act
  • Finance Act
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11
Q

What are some example of external stakeholders?

A

Customers
Suppliers
Banks
Tax Authorities

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12
Q

What are some examples of internal stakeholders?

A

Employees
Managers
Directors

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13
Q

What is MIS?

A
  • Computer based
  • Up-to-date, accurate, relevant information
  • Enable decisions to be made promptly and on an informed basis
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14
Q

What does KPI stand for?

A

Key Performance Indicators

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15
Q

A good internal control system will achieve what?

A
  • Assets protected
  • Fraud risk is as low as possible
  • Errors or missing items unlikely
  • Financial records accurate and current
  • All liabilities are identified and recorded
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16
Q

What are some internal controls in a small organisation?

A
  • small number of accounts staff means they will know the business well so are likely to spot errors quickly
  • More emphasis on authorisation and management review by the owner then on policies and procedures
  • You must be careful with segregation of duties. A lack of segregation could give an opportunity for fraud.
17
Q

When we have a good accounting system what is it you want to see?

A

Lots of controls, operating effectively

18
Q

When controls are missing what does it lead to?

A

Systemic weaknesses, missing assets or income, fraud, errors

19
Q

What does SOAPSPAM stand for?

A 
Segregation of duties
Organisational
Authorisation
Physical controls
Supervision
Personnel
Arithmetical and Accounting
Management
20
Q

What is fraud?

A

An activity within an organisation where the employer loses money, time or assets.

21
Q

What is the four different types of fraud?

A
  • theft
  • false accounting
  • bribery & corruption
  • deception
22
Q

How can management reduce the risk of fraud?

A
  • Identify areas where the risk of fraud exists
  • Set up control systems, to prevent fraud
  • Monitor the control systems
  • Deal with any incidence appropriately
23
Q

How can we detect fraud?

A
  • suspicious behaviour
  • low income, flash car
  • long hours/few holidays
  • disgruntled staff
  • staff known to need money - high mortgage, drugs
24
Q

An effective system in a business ensure transactions are what?

A
  • complete
  • accurate
  • business only
  • value correctly
  • owned by the business
  • presented accurately - in the right account an the right period
25
Q

Why are effective accounting systems important to a business?

A
  • All transactions recorded
  • Staff paid for the work they do
  • Accurate information
  • Reliable information
  • Necessary purchases only
  • Information is up to date for decision making
  • Financial statements are ‘true and fair’
26
Q

What controls can we put in place for the purchase system?

A
  • Reqs should come from the user
  • Authorised order forms should be used
  • All orders should be approved before being dispatched
  • Suppliers are approved
  • Pre-numbered order forms
27
Q

What controls can we put in place for good received?

A
  • Pre-numbered Goods Received Notes (“GRN”)
  • Quantity and conditions verified
  • Documented comparison of GRN to original authorised order
  • Sign off delivery note (if appropriate)
28
Q

What controls can we put in place for processing of invoices?

A
  • Invoices are arithmetically confirmed and evidenced to say so
  • Invoice details are compared to order to ensure everything is correct
  • Invoice should be matched to GRN and/or delivery note
  • Invoice approve by appropriate authority
  • PLCA reconciled regularly to purchase ledger
29
Q

What controls can we put in place for cash payment?

A
  • Two cheque signatories
  • All cheques issued sequentially
  • Cheque books locked away
  • Cancelled cheques retained
  • No cheque produced without supporting documentation
30
Q

If internal controls are not in place what can go wrong?

A
  • Purchases will be made the business does not need
  • Goods and services may be poor quality & expensive
  • Unauthorised suppliers may be used – loss of discounts
  • Orders may be placed by unauthorised staff
  • Goods received may not have been ordered
  • Fraud, through processing of false invoices
  • Incorrect invoice amounts being paid
  • Invoices not paid or paid twice – supplier?
  • Poor cashflow
  • Incorrect management information – costing, inventory
31
Q

If the internal controls in the sales system are not met working, what can go wrong

A
  • Sales to non-creditworthy customers – irrecoverable debts, less profit
  • Failure to supply goods – lost sales and profit
  • Incorrect VAT – fines from HMRC
  • Goods supplied not invoiced, reduced profit, possible fraud
  • Goods sold at incorrect price, loss of profits, possible fraud
  • Credit notes issued for items other than goods returns (to pay off debt), potential fraud
  • Poor cash flow due to poor credit control
  • Incorrect management information – sales, inventory
  • Theft of money received from customers, fraud
  • Inefficient and poor service for customers – loss of reputation.

AAT Level 4 (7 decks)

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