DQ look at once
1. Tata Steel ERP System & Financial Accounting
Answer:
The adoption of an ERP (Enterprise Resource Planning) system enhances financial
accounting by integrating financial data across departments and geographies.
For Tata Steel, this improves the accuracy, timeliness, and consistency of
financial reports. Key functions improved include ledger maintenance, real-time
financial consolidation, cost control, and compliance tracking. ERP aids
decision-making by providing reliable data, enabling budgeting, forecasting,
and variance analysis, which are critical for strategic planning.
2. Financial Accounting for Stakeholders
Answer:
External stakeholders (e.g., investors, creditors, regulators) benefit more
directly from standardized financial statements because they rely on uniform
and comparable data for evaluating financial health and compliance. Internal
stakeholders also benefit, but they often need more detailed, customized, and
real-time data than what financial accounting provides. Hence, while both
groups benefit, external users depend more critically on standardized formats.
3. ERP & Financial Accounting Objectives
Answer:
ERP systems align with financial accounting objectives by promoting reliability,
transparency, and compliance. For Tata Steel, the ERP implementation ensures
that financial data is recorded and reported consistently across locations.
Internally, this supports cost control and strategic analysis, and externally,
it ensures compliance with IFRS/GAAP standards and regulatory bodies. It
minimizes errors, reduces fraud risk, and improves audit readiness.
4. Going Concern & Accrual Concepts
Answer:
The Going Concern concept assumes the business will continue operations
indefinitely, while the Accrual Concept ensures revenues and expenses are
recorded when incurred, not when cash changes hands. Together, they allow
financial statements to reflect long-term value and obligations. If going
concern is violated (e.g., liquidation), assets would be reported at net
realizable value, and long-term plans like depreciation schedules become
invalid—leading to major distortions in the financials.
5. Startup Delaying GAAP Adoption
Answer:
Risks:
- Loss
of stakeholder trust due to non-comparability and lack of transparency
- Difficulty
in due diligence during fundraising or M&A
- Costly
retroactive compliance
Benefits:
- Reduced
initial compliance burden
- Greater
flexibility in early-stage decision-making
However, long-term disadvantages outweigh short-term
benefits. Without GAAP, reports lack credibility, potentially affecting
investor confidence and regulatory approval later.
6. Business Entity Concept & Sole Proprietorship
Answer:
The Business Entity Concept dictates that business and personal transactions
must be separated. In this scenario, failing to do so can lead to:
- Inaccurate
financial reporting
- Distorted
tax calculations
- Compromised
legal liability clarity
To resolve, the entrepreneur must maintain separate bank
accounts, keep distinct records, and draw a fixed capital or salary from the
business. Not applying this concept risks tax penalties and decision-making
based on misleading data.
7. Dual Aspect Concept: Share Issuance
Answer:
Issuing shares for cash affects the accounting equation as follows:
- Assets
increase (Cash ↑)
- Equity
increases (Share Capital ↑)
There is no effect on liabilities. This maintains the equation:
Assets = Liabilities + Equity
For example, issuing ₹1,00,000 worth of shares for cash
will increase assets and equity by ₹1,00,000 each.
8. Limitations: Non-Quantifiable Factors
Answer:
Financial accounting fails to represent intangible but impactful factors such
as brand value, employee satisfaction, or corporate culture. These are often
crucial to valuation and profitability (e.g., Apple’s brand value). As these
are not recorded unless acquired, the book value may significantly understate a
firm's worth, leading to misleading valuations especially during M&A or
investment analysis.
9. Inconsistency in Depreciation Method
Answer:
Switching from Straight-Line to Written Down Value (WDV) without disclosure
violates the Consistency Convention, leading to:
- Distorted
comparisons over time
- Misleading
profit trends and asset valuation
- Potential
audit qualifications
To restore credibility, the company must:
- Disclose
the change and justify the rationale
- Restate
prior period financials (if required)
- Ensure
consistency moving forward
10. Conservatism Convention: Underreporting?
Answer:
Conservatism promotes prudence by recognizing anticipated losses but not unrealized
gains. This may understate performance but protects users from over-optimism.
For instance, inventory is recorded at the lower of cost or market value. While
this may distort short-term profitability, it prevents inflated expectations
and overvaluation. The principle favors caution over optimism, enhancing stakeholder
trust, though at the cost of not fully reflecting economic reality.
Here are model answers for Unit 2: Accounting Process
& Rules and Unit 3: Preparation of Financial Statements, based on the
provided image content:
Unit 2: Accounting Process & Rules
1. Case: E-commerce company returns not recorded properly
Answer:
Inconsistent recording leads to:
- Trial
balance discrepancies
- Revenue
overstatement
- Inventory
mismatches
- Poor
customer liability tracking
Improvements:
- Implement
a centralized return recording system
- Use
integrated ERP with automated journal entries
- Enforce
departmental coordination protocols
2. Scenario: MiraTech skips journal maintenance
Answer:
Omitting the journal reduces:
- Audit
traceability
- Error
tracing capacity
- Chronological
documentation
Recommendation: Maintain a digital journal log even in
automated systems to uphold transparency and compliance. Traditional practices
(like journal logs) should be digitally adapted, not discarded.
3. Accounting cycle checklist for retail business
Answer:
Checklist:
- Record
sales (digital/POS) & credit invoices
- Post
to journal with automation rules
- Daily
ledger update
- Periodic
trial balance prep
- Reconciliation
checks
- Adjusting
entries
- Final
accounts
- Review
controls:
- Transaction
validation
- Segregation
of duties
- Auto-alerts
on discrepancies
4. Impact of misclassification
Answer:
Example: Classifying loan repayment as salary expense
- Trial
Balance: Unbalanced if wrongly posted
- P&L:
Overstated expenses
- Balance
Sheet: Loan balance remains unpaid
Result: Misinterpretation of debt and profitability.
5. Intern training – flowchart
Answer:
Flowchart Steps:
- Transaction
occurs (sale/purchase)
- Journal
Entry
- Posting
to Ledger
- Trial
Balance generation
- Adjustments
(depreciation, provisions)
- Final
Accounts prep
Key controls:
- Entry
validation
- Ledger
review
- Auto-reconciliation
- Approval
workflows
6. Automation solution proposal
Answer:
Use software like Tally, Zoho Books, QuickBooks:
- Capture
transaction via invoice scanning, bank sync
- Auto-journal
entry
- Real-time
ledger updates
- Trial
Balance auto-generated
- Built-in
adjustments and tax modules
- Final
reports generation (P&L, BS)
7. ERP + manual backups
Answer:
Manual records can be efficient under certain risks:
- Power
outages
- ERP
glitches
- Legal/tax
inspections requiring physical trail
Keep as secondary control, not primary source.
9. Decision-making framework: Classifying accounts
Answer:
- Real
Account – Assets (e.g., Furniture A/c)
- Personal
Account – Individuals/firms (e.g., Ram’s A/c)
- Nominal
Account – Expenses/incomes (e.g., Rent Paid)
Example 1: Capital introduced → Personal (Capital A/c)
Example 2: Equipment purchase → Real (Asset A/c)
Example 3: Salary paid → Nominal (Salary A/c)
10. Double-entry and accounting equation
Answer:
Each transaction has dual impact ensuring:
Assets = Liabilities + Equity
Transaction flow:
- Capital
₹5L introduced → Cash ↑ (Asset), Capital ↑ (Equity)
- Buy
furniture ₹1L → Asset ↔ Asset
- Revenue
₹2L → Cash ↑, Income ↑ (equity via P&L)
Maintains balance and traceability.
Unit 3: Preparation of Financial Statements
1. Trial Balance mismatch causes
Answer:
- Omitted
entries
- Unequal
debit/credit posting
- Misclassification
- Calculation
errors
Steps:
- Recheck
ledger balances
- Verify
journal entries
- Trial
Balance sheet cross-checking
- Use
suspense account if needed temporarily
2. Intern mentorship: Final account steps
Answer:
- Trial
Balance review
- Add
adjustments:
- Prepaid
Rent
- Accrued
Salary
- Depreciation
- Outstanding
Expenses
- Income
Received in Advance
- Prepare:
- Trading
A/c
- P&L
A/c
- Balance
Sheet
Include adjusted closing stock in Trading A/c.
3. Step-by-step with hypothetical data
Example:
- Trial
Balance:
- Sales:
₹5,00,000
- Purchases:
₹3,00,000
- Salaries:
₹50,000
- Depreciation:
₹10,000
- Prepaid
Rent: ₹5,000
Adjustments:
- Adjust
purchases with closing stock
- Prepaid
rent → less in P&L, more in BS
- Depreciation
→ expense + reduced asset
Prepare final accounts with adjusted figures.
4. Profit & Loss vs Balance Sheet
Answer:
- P&L:
Operating performance (profit/loss)
- BS:
Financial position (assets/liabilities)
Combined, they guide: - Working
capital analysis
- Retention
policy (reserves, dividends)
5. Limitations of single-year FS
Answer:
- Ignores
trends
- No
benchmark
- Misleads
stakeholders
Improvement:
- Use
horizontal & vertical analysis
- Ratio
analysis over 3–5 years
- Trend
graphs
6. Prepaid insurance error
Answer:
- Mistake:
₹50,000 expense overstated in P&L
- BS
asset (prepaid) understated
Fix: Adjust ₹50,000 to Prepaid Insurance (asset)
Controls: Period-end review, adjustment tracking, trial balance scrutiny
7. Vertical vs Horizontal Balance Sheet
Answer:
- Vertical:
Modern format, step-by-step clarity
- Easier
to read, suits external users & investors
- Clear
separation of current vs non-current
Conclusion: Vertical preferred for analysis.
8. Ignoring non-cash adjustments
Answer:
Leads to:
- Overstated
profits (no depreciation)
- Missing
obligations (no outstanding expenses)
Example:
Net profit shows ₹2L, but if depreciation ₹30k ignored, profit is inflated.
Accrual-based adjustments show true performance.
9. Profit ↑ but poor BS health
Answer:
Red flags:
- High
liabilities
- Low
liquidity
- Delayed
receivables
Combined reading needed to see:
- Earnings
quality
- Financial
risks
- Sustainability
of operations
Unit 4: Accounting for Assets (Cash, Inventory,
Receivables, Fixed Assets)
Q1. Case: XYZ Ltd. - rising receivables and declining
cash flow
- Financial
Implication: Increasing receivables reduce cash inflows, potentially
leading to liquidity issues.
- Indicators
to assess collectability risk:
- Debtor
turnover ratio
- Aging
schedule of receivables
- Percentage
of overdue receivables
- Bad
debts to total receivables ratio
Q2. Effectiveness of aging report
- Helps
segment receivables by age (e.g., 30/60/90+ days).
- Supports
credit policy by:
- Identifying
slow-paying customers
- Prioritizing
collection efforts
- Influencing
decisions on credit limits and terms
Q3. Scenario: Shift from SLM to WDV
- SLM
provides equal expense yearly; WDV matches depreciation to asset usage.
- Industry
vs. Business-specific: Industry alignment improves comparability; business
usage aligns costs with revenue.
- Implications:
Change in method affects profit trends, compliance (AS 10), and disclosure
requirements.
Q4. Depreciation Method Analysis
- SLM:
Consistent expense, preferred in stable asset-use industries (e.g.,
infrastructure).
- WDV:
Higher initial depreciation, suitable for tech/vehicles.
- Impact:
Profit (higher in early years under WDV), Asset value (lower under WDV in
early years).
Q5. Historical Cost Limitation
- Fails
to capture asset appreciation during inflation.
- Alternatives:
- Fair
value accounting (AS 10/Ind AS 16)
- Revaluation
model
- Pros/Cons:
More realistic but introduces volatility and subjectivity.
Q6. Asset Impairment Reporting for Obsolete Tech
- Conduct
impairment test (Ind AS 36): Compare carrying value with recoverable
amount.
- Impact:
- Balance
Sheet: Reduction in asset value.
- P&L:
Recognition of impairment loss.
Q7. Cash vs. Accrual Accounting
- Cash
accounting: Records on payment/receipt basis.
- Accrual
accounting: Records based on economic events.
- Accrual
is better for fixed assets as it reflects depreciation and liabilities;
cash gives an incomplete picture.
Q8. Scenario: Manual inventory control issues
- Issues:
Stock mismatches, delays, inaccurate financials.
- AIS
Role:
- Automates
inventory tracking (perpetual system)
- Enhances
accuracy & real-time updates
- Entries
impacted: Inventory (Dr/Cr), COGS, Purchase returns, Spoilage write-offs.
🧾 Unit 4: Accounting for
Assets (Cash, Inventory, Receivables, Fixed Assets)
1. Rising receivables & declining cash flow
- Implications:
Strains liquidity, higher credit risk, potential inflation of profit
without cash backing.
- Key
indicators:
- Debtor
turnover ratio
- Average
collection period
- Aging
report (e.g., % beyond 90 days)
- Bad
debt ratio
2. Ageing report utility
- Segmentation:
Categorizes receivables by aging buckets.
- Supports
decisions: Sets credit limits, prioritizes collections, enables dynamic
credit policy in B2B.
3. SLM vs WDV depreciation method choice
- Industry
alignment aids comparability; usage-based selection reflects actual wear.
- Changing
method impacts:
- Profit
(higher early and lower later under WDV)
- Net
asset values
- Disclosure
requirements as per Ind AS/AS 10
4. Depreciation method effects
- SLM:
Steady expense, preserves asset value early—preferred in low-depletion
industries.
- WDV:
Front-loaded expense—common in tech/manufacturing.
- Impacts
reported profit and book value.
5. Historical cost vs fair value
- Limitations:
Doesn’t reflect inflation; undervalues assets.
- Alternatives:
- Fair
value/revaluation (more current but volatile).
- Cost-historical
plus periodic revaluation (introduces subjectivity).
6. Asset impairment process
- Under
Ind AS 36: Compare carrying amount with recoverable amount (higher of
value-in-use or net selling price), and impair if needed.
- BS:
Write down asset; P&L: Impairment loss is expensed.
7. Cash vs accrual for fixed assets
- Cash
method: Records purchases only when paid.
- Accrual
method: Includes depreciation and related liabilities—provides richer
financial insight and matching of expense to usage.
8. Automated inventory systems
- Shifts
to perpetual tracking—reduces mismatches, manual errors.
- Entries
impacted:
- Inventory
WIP, purchases, COGS, returns, write-offs.
💳 Unit 5: Accounting for
Liabilities and Equity
1. Non-convertible debentures impact
- Entries:
- Dr
Cash, Cr Debentures Payable
- Impact:
- Higher
liabilities
- Lower
equity ratio
- Key
ratios: Debt-to-equity ↑, interest coverage ↓
2. Debenture issue cost error
- Impact:
Profit understated, equity reduced
- Correction:
Capitalize issue cost under Ind AS 32/108 and amortize over life of
debenture
3. Capital structure comparison
- Debt-heavy:
Tax shield via interest; higher financial risk
- Equity-heavy:
No mandatory payouts; ownership dilution
- Stronger:
Depends on ROE, cost of capital, risk appetite
4. Retained earnings without dividends
- Pros:
Funds future growth
- Cons:
May disappoint shareholders
- Balance:
Firms in growth phase should retain; mature firms should deliver returns
5. Role of retained earnings
- Reinvestment
fuels growth; dividends support investor trust.
- Strategic
distribution builds goodwill and capital flexibility
6. Liquidity mismatch scenario
- Balance
Sheet: Current liabilities > current assets
- Ratios:
Current ratio low (<1), quick ratio, working capital negative
- Risk:
Signals potential default risk, liquidity crunch
7. Preference shares vs equity
- Preference:
Fixed dividend, no voting, priority claim
- Equity:
Dividend dependent on P&L, voting rights
- Implications:
Affects dividend obligations and EPS
📊 Unit 6: Financial
Statement Analysis & Interpretation
1. Identical profit, different debt‑equity ratios
- Ratios
reveal financial stability differences.
- High
debt increases risk; lower equity ratio signals vulnerability
2. Profitability ratios in isolation
- Ignore
efficiency (asset turnover), leverage, liquidity
- Integrate
ratios for balanced view
3. Same profit; current ratio varies
- Low
current ratio (Beta) flags liquidity concerns despite same profit
- Risk
of inability to finance operations immediately
4. Strong EBIT, low interest coverage
- Business
generates profit but can’t service interest
- Need
to adjust risk assessment; cautious stance
5. Share-based ratios (EPS, P/E, dividend yield)
- Useful
but influenced by accounting policies, one-off items, market sentiment
- Should
be used with broader context
6. Strong current ratio but negative operating cash flow
- Inconsistency
due to receivables, inventory, prepayments
- Liquidity
ratios can mislead if not backed by cash flow
7. Integrated analysis model
- Common-size:
Standardizes item sizes
- Trend:
Shows changes over time
- Ratio:
Highlights specific relationships
- Combined:
detects operability, liquidity, solvency, growth
💵 Unit 7: Statement of
Cash Flows
1. Rising profits, negative operating cash flow
- Caused
by accrual accounting (receivables ↑, payables ↓), indicates low cash
integrity
2. Indirect vs direct method
- Indirect:
Adjusts profit for cash effects; understands net adjustments
- Direct:
Lists actual receipts/payments—clearer where customers and suppliers
impact lies
3. Profit ≠ cash flow (e.g., GreenTech)
- Examine
changes in working capital—like receivables, inventory
- Identify
depreciation, provisions, and deferred taxes
4. Omitting cash flow from pitch deck
- Misleading—investors
look closely at cash
- Operating,
investing, financing sections provide full picture of sustainability
5. Financing cash flow
- Shows
debt issuance/repayment, equity issues, dividends
- Red
flags: Persistent borrowing, excessive dividends vs. cash
6. Capex vs income statement timing
- Capex
reduces cash immediately but doesn’t show as expense on P&L (only over
time via depreciation)
7. Triangulating the three statements
- Cash
flow reconciles profit with actual cash change
- Balance
sheet shows financial position
- Profit
& Loss shows performance—together provide comprehensive view
8. Transition to direct method
- Systems:
Modify ERP for daily cash classification
- Staff:
Train in cash flow content and significance
- Investor
communication: Explain transparency benefits, transitional impact
9. Frequent short-term borrowings
- Sign
of structural liquidity deficiency
- Credit
agencies: view unfavorably, may downgrade
- Stakeholder
trust declines due to higher perceived risk
📚 Units 8 & 9:
Financial Reporting Standards I & II
1. GAAP to Ind AS transition
- Challenges:
- Reconciling
previous financials (opening balance sheet)
- Fair
value adjustments
- New
recognition methods
- Changes
may distort comparability across periods
2. Role of ASB
- ASB
promotes transparency, global alignment
- Its
role has improved Indian standards, though some divergence persists (e.g.,
IFRS vs Ind AS pathways)
3. Depreciation method flexibility
- Pros:
Aligns with matching principle
- Cons:
Comparability issues
- Uniformity
vs discretion is a delicate trade-off
4. Principles-based (IFRS) vs rules-based (US GAAP / AS)
- IFRS:
Flexibility, global applicability, but need judgment
- US/AS:
Specific guidance reduces divergence, may limit emergence of new models
- Multinationals
prefer IFRS for global standardization
5. Roadmap: AS → Ind AS
- Phased
goals:
- 0–6
months: training & assessments
- 6–12
months: system upgrades & pilot runs
- 12–18
months: parallel financials & disclosures
- Ongoing:
full reporting under Ind AS
6. UK & UAE subsidiaries
- Local
standards differ in fair value, consolidation rules, financial instruments
- Harmonization
tools:
- Bridge/reconciliation
statements
- Uniform
accounting policies
- Uniform
consolidation methods and forex policies
✅ Unit 10: Corporate Financial
Statements
1. Scenario: Exceptional Items
Q: A listed company reports exceptional items in the
Profit and Loss Statement.
A: Exceptional items may distort the assessment of recurring profitability.
Proper classification helps stakeholders distinguish ongoing performance from
one-time events, thus ensuring more reliable financial analysis.
2. Misclassification of Operating Income
Q: What are the implications of misclassifying operating
income as other income?
A: It skews EBITDA, PBT, and Net Profit Margin, giving a false picture of core
operating efficiency. Misclassification undermines comparability and investor
trust.
3. Scenario: Profit vs Loan (XYZ Ltd.)
Q: Profit of ₹5 crore vs ₹15 crore loan on Balance Sheet.
A: Profit is reported in P&L; loan is a financing activity in the Balance
Sheet. Reading both together is crucial for full understanding of financial
health—profitability alone doesn't indicate solvency.
4. Other Comprehensive Income (OCI)
Q: How does OCI relate to shareholder equity?
A: OCI affects equity without impacting net income. It includes items like
actuarial gains/losses or revaluation reserves. Changes in OCI reveal long-term
financial risks or gains.
5. Case: No Dividend Despite Profits
Q: Why might a profitable company not pay dividends?
A: Possible reasons include reinvestment needs, debt repayment, or building
reserves. Shareholders must evaluate long-term strategy, not just short-term
returns.
6. Scenario: Vehicle Recorded as Expense
Q: Vehicle classified under ‘office expenses’ instead of
an asset.
A: This inflates expenses, reduces net profit, and undervalues assets. It
misleads users and violates accounting principles (e.g., Matching &
Consistency).
7. Scenario: Sharp Drop in PAT but Stable EBITDA
Q: What explains this divergence?
A: Factors like higher depreciation, interest, or tax can reduce PAT while
EBITDA remains stable. Analysts should focus on underlying components to assess
performance quality.
8. Segment Reporting
Q: Why is segment reporting useful?
A: It allows investors to evaluate risk and performance across different
business units. Aids capital allocation decisions and helps in identifying
growth areas or problem segments.
9. Case: No ‘Other Income’ Disclosure
Q: Why is it critical to disclose ‘other income’?
A: Transparency about non-core income like rent/interest aids accuracy in
profitability assessment. Helps users distinguish operating vs. non-operating
performance.
10. Scenario: Reserves and Surplus
Q: Why are profits retained in reserves?
A: Companies retain earnings for expansion, risk management, or debt servicing.
Reserves enhance financial stability and signal prudent management.
✅ Unit 11: Ethics in Accounting
1. Scenario: Adjusting Revenue for Targets
Q: Is this ethical?
A: No. It violates integrity, objectivity, and fairness. Stakeholders,
including investors, are misled, potentially affecting valuations and
decisions.
2. Scenario: Delaying Expenses
Q: Is this proper accounting?
A: No. It breaches the accrual principle and ethical norms. Deliberately
manipulating period-end entries for appearance is deceptive and unethical.
3. Case: Ignoring Small Errors
Q: Why disclose small mistakes?
A: Ethical accounting demands full transparency. Even small errors can
accumulate, affect audit trails, and compromise reliability.
4. Forensic Accounting
Q: How is forensic auditing different from internal
audit?
A: It focuses on detecting fraud, uses legal evidence, and is often used in
litigation. Internal audits assess control effectiveness and operational risks.
5. Creative Accounting
Q: When does smoothing earnings become unethical?
A: If used to mislead stakeholders or violate accounting principles, it crosses
into manipulation. Intent and impact determine ethics.
6. Scenario: Pending Legal Case Note
Q: Is the note sufficient?
A: No. Readers need estimates of potential liability or disclosure of
uncertainty to assess risk exposure properly.
7. Case: Auditor Overlooks Minor Error
Q: What's at risk here?
A: Independence and professional skepticism. Long-term consequences include
loss of audit credibility, regulatory penalties, and firm reputation damage.
8. Ethics Education
Q: Should ethics be standalone or integrated?
A: Integration ensures ethics becomes a natural part of professional judgment.
However, a standalone module builds strong foundational values.
9. Case: Whistleblower Fear
Q: How can firms encourage whistleblowing?
A: Establish anonymous reporting, whistleblower protection policies, and an
ethical culture through leadership support and training.
10. Scenario: No Explanation in Annual Report
Q: Why is contextual reporting important?
A: Numbers alone can be misleading. Explanations add clarity, enhance investor
trust, and meet transparency expectations.
✅ Unit 12: Emerging Trends in
Accounting
1. Scenario: Cloud-Based Accounting
Q: What are the effects of shifting to the cloud?
A: Benefits: Real-time data, accessibility, cost efficiency.
Risks: Data security, compliance, cyber threats. Requires robust controls.
2. Blockchain & Auditing
Q: Can blockchain enhance audits?
A: Yes—immutable records and transparency reduce fraud. However, it complements
but doesn’t yet fully replace traditional audits.
3. Digital Transformation Roadmap
Q: What should a roadmap include?
A:
- Phase
1: Assess & Plan
- Phase
2: Infrastructure Upgrade
- Phase
3: Training & Culture Change
- Phase
4: AI & Compliance Integration
- Phase
5: Review & Optimize
4. Big Data & Accountants’ Role
Q: How does big data change accounting?
A: Accountants become strategic advisors, requiring skills in data
interpretation, visualization, and forecasting—not just bookkeeping.
5. AI vs. Human Judgment
Q: Can AI fully replace accountants?
A: No. AI reduces errors in routine tasks but judgment in complex cases (e.g.,
valuation, risk assessment) still requires human intervention.
6. Ethical Risks of Automation
Q: What safeguards are needed?
A: Strong internal controls, transparency logs, human oversight, and regular
audits of AI outputs to avoid bias or fraud.
7. Scenario: Fintech Startup with Bots
Q: What risks arise in such automation?
A: Regulatory non-compliance, errors without human checks, data leaks. Needs
risk management, role-based access control, and regular validation.
Comments
Post a Comment