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ACCA Applied Knowledge · Business and Technology · The impact of advances in technology

A manufacturer's accountant says an automated purchasing system that approves and pays invoices under a set value with no human review is 'fully controlled because the system follows its rules'. Which is the strongest criticism of this view?

The strongest criticism is that the rules may be badly set or deliberately exploited, for example by splitting invoices below the approval limit. Automated controls apply rules consistently but cannot detect such abuse alone, so exception reporting and review of parameters are still needed.

  1. AAutomated systems cannot process payments of any value
  2. BRules may be wrongly set or exploited, such as by splitting invoices below the limit, so exception reporting and review of the rules are still neededCorrect
  3. CAutomation always increases the cost of each transaction above manual processing
  4. DAuditors are not permitted to test automated controls

Explanation

Automated controls apply rules consistently, but they are only as good as their design and parameters. Invoice splitting below an approval threshold can defeat them, so monitoring, exception reports and periodic review of parameters remain necessary. The other options are false statements about automation.

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