IPA IP 2020 Question 52
A question IPA Japan published in 令和2年度 10月 ITパスポート試験 公開問題 問52, translated into English. ITPEC is based on the same exams.
Same question on ITPEC: Apr 2024 Q65
The information system department implements the development and operation of the order entry system and the accounting system. The user of the order entry system is the sales department and the user of the accounting system is the accounting department. Which of the following is the appropriate description concerning internal control of financial reports?
Explanation
The sales, accounting and information system departments all participate — internal control over financial reporting covers every activity that affects the financial statements.
Internal control over financial reporting exists so that external reports such as the financial statements are reliable. Their figures start in business activities, not in the accounting department: an order entered by the sales department becomes sales and receivables, the order entry and accounting systems carry the data, and the accounting department closes the books. Controls are needed at every step: approving and checking orders in sales, the checks built into the systems and the control of their development and operation (IT controls) in the information system department, and the reviews in accounting.
Answer (c)
Why not others:
- •(a) — excludes the sales department, although the orders it enters become the sales figures in the financial statements
- •(b) — limits internal control to the accounting department, ignoring the processes and systems that produce the accounting data
- •(d) — automated processing needs internal control too: the controls over developing, operating and accessing the systems are an essential part of it
Key rule: Internal control over financial reporting follows the data: every department and system a transaction passes through on its way to the financial statements takes part, IT included.
System Audit · AI-written, may contain errors
This question comes from the past questions IPA Japan publishes, translated into English by ITPEC Practice. ITPEC Practice is an independent study tool and is not affiliated with IPA or ITPEC. See the original paper (PDF) or Report an issue.