CIMA CIMAPRA19-P03-1 Exam Practice Test Instant Access

Question 1

C is an accounts clerKwho is supposed to sign each invoice as evidence that she has conducted checks against supporting documents Sometimes C signs invoices without making these checks

D is a member of the internal audit team He has been told to conduct compliance tests on whether C is checking the invoices property

Which of the following would grve D a false sense of assurance that C's checks have been in operation?

Select ALL that appry

AD reviewed a sample of invoices for purchases of plant and equipment and found that C had not signed them C explained that she believed that those were authonsed by someone else although the accounts manual indicates that it was her responsibility

Basked C a series of open-ended questions about the operation of the purchases system She did not mention anything about detailed checks of invoices against documents

CD examined a sample of invoices to make sure that they had been signed by C AH had been signed
selected a sample of purchase invoices and compared each to the supporting documents that C is supposed to review Every one of D's invoices was supported by the related documents

DD worked at a spare desk in the accounts department and quietly watched C without telling her She checked every invoice carefully while D was present

Answer : B, C, D

Question 2

HWG is a large company which grows and processes coffee The coffee is sold to supermarkets, branded with their names for sale as "own brand" products HWG brands and packages the coffee using the supermarkets' own designs

HWG's directors are considering a strategic proposal to develop a range of coffees to be sold under a brand that HWG will develop

Which TWO of the following should the directors consider as part of their strategic analysis?

AThe design of packaging for the new brand

BThe reaction of the supermarkets who currently buy coffee from HWG

CThe sales volume forecast for the new coffee

DThe choice of name for the new brand

ERecruiting a marketing firm to advertise the new coffee

Answer : B, C

Question 3

JC is a car manufacturing company in country C and manufactures diesel cars It is facing a number of serious risks Which TWO of the following nsk factors are external?

AJC's marketing director is considering an attractive job offer from one of J's main competitors

BCountry F, JC's main market, is threatening to impose tariffs on car imports

CJC is facing court action arising from injuries to customers caused by an alleged brake failure in one of its cars

DDiesel cars are being criticised by experts because it is believed they cause more harmful pollution than petrol

EJC's production staff are complaining that their wages are too low compared to wages paid to other employees.

Answer : B, D

Question 4

The Board of Directors of VCX, a state-owned electricity company, includes four executive directors the Chief Executive Officer, the Finance Director the Operation Director and the Technical Director

All of the shares in the company vest in the Office of the Minister for Energy, who is entitled to appoint two non-executive directors to the Board It has been alleged that the Minister appoints political "insiders" who have no particular knowledge of. or interest in. the electricity industry

There are three further non-executive directors

* L, who spent seven years as Chief Executive of VCX, but retired from that role two years ago,

* M, who spent several years on the Board of a state electricity company in a different country to VCX but who resigned from it before accepting the position with VCX: and

* N, who is a qualified and experienced professional accountant

In relation to best practice in respect of Corporate Governance, which of the following statements are valid? Select ALL that apply

ANone of the executive directors should be allowed to sit on the Remuneration Committee

BM is unsuitable to be part of the Board because his previous involvement with a similar company in another country is a conflict of interest.

CL can now be considered to be an independent non-executive director

DM and N are both suitable appointees to the Audit Committee

EThe Finance Director should be part of the Audit Committee because of her expertise

FNon-executive directors should be responsible for monitoring the performance of executive management especially with regard to company strategy and objectives

Answer : A, D, F

Question 5

Smalltown had a problem with people parking cars on the town's mam shopping streets instead of in the nearby car parks The parked cars created congestion and made it difficult for delivery vehicles to unload Smalltown's local government had employed traffic wardens to enforce parking regulations by issuing parking fines to motorists who parked for more than the permitted 30 minutes.

The local government took further action to deal with this problem It banned parking on the busiest streets, it introduced parking charges in the remaining streets and it made it free to park m the town's car parks for up to two hours Fewer people now park cars on the streets because of the charges, but those who do generate significant revenues for the local government Fewer traffic wardens are required and so wage costs have reduced

The local goverment auditors have decided to carry out a value for money audit of the parking system

Which of the following is a measure of effectiveness?

AThe main shopping streets are no longer congested

BThe remaining traffic wardens are less stressed because they no longer receive abuse by motorists.

CParking enforcement costs less than before

DRevenues from parking have increased

Answer : A

Question 6

JKL makes large export sales to customers in country X, whose currency fluctuates significantly against JKL's home currency JKL also makes large purchases from suppliers in countrrOC All of these transactions are in country X's currency

JKL's treasurer does not actively hedge currency risks because there is a natural hedge in place due to the company making both sales and purchases in the same currency

JKL's board has instructed the treasurer to put active hedging measures in place because the risk report would otherwise have to disclose the fact that JKL has a currency risk which is not actively hedged

Which of the following statements are correct? Select ALL that apply.

ARisk reports can change behaviour

BRisk reporting is a bad thing

CThe board may be concerned it will be criticised if it does not hedge

DThe board does not want to be blamed for ignoring a risk.

ERisk reporting drives the whole risk management process

Answer : A, C, D

Question 7

Which TWO of the following scenarios should be considered in strategic scenario planning by a publishing company that specialises in academic textbooks?

AThere could be a change in the technology used by consumers, such as smaller mobile phones with smaller screens

BBudget changes could have an impact on the funding available to college and university libraries

CThe terms offered by media companies for film rights for books could change

DThe quality of output from printing presses might improve

EEnvironmental concerns could lead to a decrease in the availability of trees to make paper

Answer : B, C

CIMAPRA19-P03-1 P3 Risk Management (Online) Exam Practice Test