Free IOFM APS Practice Exam with Questions & Answers | Set: 2

Procurement card (P-card) statements provide purchase data at different levels of detail. Level 3 detail includes comprehensive transaction information, such as itemized descriptions, quantities, unit prices, and merchant category codes, making it suitable for conducting spend analysis to track spending patterns and optimize procurement strategies. Level 1 provides basic data (e.g., merchant name, amount), and Level 2 includes additional data (e.g., tax amounts), but neither is sufficient for detailed analysis. Level 4 is not a standard term in P-card reporting.

The web source from Corcentric explains: “Level 3 data on P-card statements includes detailed transaction information, such as line-item details and quantities, enabling organizations to perform robust spend analysis.” This confirms that Level 3 detail (Option C) is necessary for spend analysis.

The IOFM APS Certification Program covers “Payments,” including P-card program management and reporting. The curriculum’s focus on “peer-tested best practices” supports the use of Level 3 data for effective spend analysis in P-card programs.

In the context of technology and accounts payable, the acronymASPstands forApplication Service Provider, which refers to a third-party provider that delivers software applications over the internet, typically on a subscription basis. This is distinct from automated secure processing (Option A), accounting standards protocol (Option C), or accrual statement period (Option D), which are not standard terms in this context.

The web source from NetSuite states: “An Application Service Provider (ASP) delivers software applications over the internet, allowing businesses to access tools like AP automation without on-premises infrastructure.” This directly supports Option B.

The IOFM APS Certification Program covers “Technology and Automation,” including cloud-based and hosted software solutions like those provided by ASPs. The curriculum’s focus on “peer-tested best practices” aligns with understanding ASPs as a delivery model for AP tools.

Reducing the cost of invoice processing involves streamlining workflows and minimizing labor-intensive tasks. Reducing paper handling (e.g., through e-invoicing or digital workflows) and manual data entry (e.g., through optical character recognition or automation) are proven methods to lower costs. Eliminating the approval process entirely (Option I) is not a recommended practice, as it increases the risk of errors and fraud, undermining internal controls.

The web source from NetSuite states: “Automation and digitization can significantly reduce invoice processing costs by minimizing manual data entry and paper-based processes… Technologies like OCR and e-invoicing reduce the need for physical handling and manual input.” The Esker source adds: “Reducing paper handling and manual data entry are key to lowering AP processing costs, as they eliminate time-consuming tasks.” These sources confirm that Options II and III are effective cost-reduction strategies, while Option I is not supported, as approvals are a critical control.

The IOFM APS Certification Program covers “Invoices” and “Technology and Automation,” emphasizing efficient invoice processing. The curriculum’s focus on “peer-tested best practices” includes adopting automation to reduce manual tasks, aligning with Options II and III.

The tolerance level for discrepancies between a purchase order (PO) and an invoice refers to the acceptable variance (e.g., in price or quantity) that an organization allows before requiring additional approval or investigation. Keeping this tolerance level confidential is critical to prevent vendor fraud, as vendors could exploit knowledge of the tolerance to submit invoices with intentional discrepancies just within the acceptable range, leading to overpayments or unauthorized charges.

The web source from NetSuite highlights the importance of internal controls in invoice matching: “Three-way matching is an AP process used to verify a supplier invoice by checking it against its corresponding purchase order and order receipt. It reduces the chances of fraudulent invoices going undetected and, worse, being paid.” While this source does not explicitly address confidentiality of tolerance levels, the emphasis on fraud prevention implies that exposing tolerance thresholds could undermine these controls. If vendors know the tolerance, they might adjust invoices to exploit it, bypassing scrutiny.

Options B, C, and D are incorrect. Keeping procurement alert (Option B) is a general goal but not directly tied to confidentiality of tolerance levels. Avoiding internal audit scrutiny (Option C) is not a legitimate reason, as internal audits ensure compliance. Option D (depositing overages into a fund) is unethical and unrelated to accounts payable processes.

The IOFM APS Certification Program covers “Internal Controls,” which includes measures toprevent fraud and ensure accurate invoice processing. The program’s focus on “peer-tested best practices” and fraud prevention, as noted in the curriculum description, supports the need to keep tolerance levels confidential to safeguard against vendor manipulation.

Assumed receipt, also known as assumed receipt invoicing, is a process where payment is made based on the assumption that goods have been received, typically when receiving documents are not immediately available. This contrasts with processes like three-way matching, which require explicit confirmation of receipt. The term “Assumed Receipt” directly describes this practice, while “Positive Payment” and “Negative Assurance” are not standard terms in accounts payable for this context.

The web source from Tipalti explains: “Assumed receipt invoicing allows payments to be processed based on the purchase order and invoice, assuming goods have been received, often used to expedite payments when receiving data is delayed.” This aligns with the definition of assumed receipt as the process described in the question.

Positive Payment (I)is not a recognized term in accounts payable for this process.

Negative Assurance (II)is a term used in auditing, not accounts payable.

Assumed Receipt (III)is the correct term, making Option C the only accurate choice.

The IOFM APS Certification Program covers “Payments,” including various payment processes and their terminology. While the specific term “assumed receipt” is not directly quoted in the provided sources, the curriculum’s emphasis on “peer-tested best practices” includes understanding alternative payment methods, supporting the use of “Assumed Receipt” as the standard term.

Data integrity refers to the assurance that data remains accurate, complete, and unaltered throughout its lifecycle, whether during storage, processing, or transmission. It ensures that data is free from unauthorized modifications or corruption. While testing for accuracy (Option D) is related, data integrity specifically focuses on preventing unauthorized changes (Option A). A digital signature (Option B) or encryption (Option C) are security measures that may support data integrity but do not define it.

The web source from Corcentric states: “Data integrity means that data remains unaltered and consistent, ensuring it is free from unauthorized modifications or errors.” This directly supports Option A.

The IOFM APS Certification Program covers “Internal Controls,” including data security and integrity in AP processes. The curriculum’s focus on “peer-tested best practices” aligns with the definition of data integrity as preventing unauthorized alterations.

Cash management refers to an organization’s processes for managing the inflow and outflow of funds to optimize liquidity, ensure financial stability, and meet operational needs. This includes overseeing cash receipts, payments, and forecasting cash flow. While payment terms (Option A) and payroll disbursements (Option B) are components of cash management, they are not the comprehensive definition. Enterprise resource planning systems (Option C) are tools that may support cash management but are not the definition itself.

The web source from Corcentric states: “Cash management involves managing an organization’s inflow and outflow of funds to maintain liquidity and meet financial obligations.” This directly supports Option D.

The IOFM APS Certification Program covers “Payments,” including cash management principles as they relate to AP processes. The curriculum’s focus on “peer-tested best practices” aligns with the definition of cash management as managing cash inflows and outflows.

TheInternal Controlstopic in the APS Certification Program details the COSO framework’s Control Environment component, which establishes the foundation for effective internal controls. Key elements include clear roles and responsibilities, timely information distribution, and ongoing monitoring of controls. However,staff working in self-directed teamsis not a COSO requirement, as the framework focuses on structure and accountability rather than specific team management styles.

Option A (Internal controls are monitored and evaluated): This aligns with COSO’s Monitoring Activities component but also supports the Control Environment by ensuring controls are enforced. It is a necessary element.

Option B (Staff work in self-directed teams): COSO does not mandate self-directed teams. While teamwork may be beneficial, the Control Environment emphasizes defined roles and oversight, not specific team structures. This is the correct answer.

Option C (Information is distributed in a timely way): This supports the Control Environment by ensuring employees have the information needed to perform their duties, aligning with COSO’s Information and Communication component. It is a necessary element.

Option D (People know their responsibilities and limits of authority): This is a core element of the Control Environment, ensuring clear accountability and authority structures. It is a necessary element.

Reference to IOFM APS Documents: The APS e-textbook underInternal Controlsexplains, “The COSO Control Environment requires clear responsibilities, timely information flow, and ongoing monitoring to establish effective controls.” It lists elements like “defined roles and authority limits” and “effective communication” but does not mention self-directed teams as a requirement. The training video emphasizes COSO’s focus on accountability and structure, noting that team configurations are organizational choices, not COSO mandates.

Value Added Tax (VAT) invoices are subject to strict regulatory requirements, as they impact taxreporting and compliance. When a VAT invoice contains a billing error (e.g., incorrect amount, tax rate, or details), the recommended solution is to withhold payment and return the invoice to the vendor for correction. This ensures that the corrected invoice complies with VAT regulations, allowing accurate tax reporting and reclaiming of input VAT. Paying an incorrect invoice or reporting the error to the VAT administration without correction risks non-compliance and audit issues.

The web source from Avalara explains: “If a VAT invoice is incorrect, it must be corrected by the supplier issuing a new invoice or a credit note, depending on the nature of the error.” This aligns with the option to return the invoice to the vendor for correction. Paying the incorrect amount (Option B) or short/overpaying with an explanation (Option D) can complicate VAT reconciliation and may not be accepted by tax authorities, as the invoice must accurately reflect the transaction. Reporting the transaction to the VAT administration (Option A) is unnecessary unless the error involves fraud or persistent issues, and it does not resolve the invoice discrepancy.

The IOFM APS Certification Program covers “Tax and Regulatory Compliance,” including VAT compliance and invoice handling. While the specific question is not directly quoted in the provided sources, IOFM’s curriculum emphasizes compliance with tax regulations, as noted in the program description: “Review peer-tested best practices for each phase of the payment process – from receipt of invoice, through processing and payment.” The focus on accurate invoice processing supports returning the invoice for correction as the standard practice.

Data security in accounts payable requires a comprehensive approach involvinghardware(Option I, e.g., secure servers and firewalls),software(Option II, e.g., encryption tools and authentication systems), andhuman resources(Option III, e.g., employee training on security protocols and access management). All three components are essential to protect sensitive financial data from breaches and unauthorized access.

The web source from Corcentric states: “Effective data security in AP combines hardware, such as secure servers, software, like encryption and access controls, and human resources, through training and policy enforcement, to safeguard sensitive information.” This supports Option D, as all three elements are integral to data security.

The IOFM APS Certification Program covers “Internal Controls,” emphasizing a multi-faceted approach to data security. The curriculum’s focus on “peer-tested best practices” aligns with using hardware, software, and human resources to ensure robust security.