CIMA CIMAPRA19-P03-1 Exam Questions Instant Access

Question 1

W plc is a large international supermarket chain. It has many thousands of suppliers and many thousands of others competing for "shelf space" in its supermarkets.

Which of the following would be appropriate provisions for W plc to include in its Ethical Code in relation to its suppliers?

AW plc shall not use its buying power unscrupulously.

BW plc shall endeavour to adhere to the terms of its contracts with its suppliers at all times.

CW plc shall keep confidential all information received from suppliers and potential suppliers.

DW plc shall continuously remind suppliers that it always has several alternative suppliers to choose from.

EW plc shall endeavour to take as high a percentage of each supplier's output as possible.

FW plc shall insist on an exclusivity agreement with each supplier so that identical products are not available from other outlets.

Answer : A, B, C

Question 2

Under the COSO Enterprise Risk Management Framework, who is responsible for risk management?

AEvery member of the entity.

BThe board of directors only.

CManagers and directors only.

DThe shareholders.

Answer : A

Question 3

Company M has lost 25% of its revenue in the last three months due to bad debts. One of thereceivables written offwasfroma long standing customer and the other three werefromnew customers. The management accountant has warned the sales team that the company cannot survive any more substantial bad debts.

Which of the following internal controls should be put in place to try and prevent further bad debts?

AA credit check should be carried out on each new customer.

BCredit limits should be set for all customers. However, if the credit limit will cost a sale then sales staff can override this limit.

CTwo sales staff must authorise new customers and sign a form stating that they have done so.

DAn aged analysis of customer balances must be reviewed every month.

EAs soon as a customer payment is overdue they should not be allowed to purchase more until their balance has been reduced.

Answer : A, D, E

Question 4

The managers of a company are agents for the shareholderstasked with increasing shareholders' wealth. Which of the following will usually increase shareholders' wealth?

AInvesting in projects with the shortest payback period.

BInvesting in projects with positive net present value.

CInvesting in projects with the greatest level of risk.

DNot paying a dividend for several years in order to invest innew projects.

Answer : B

Question 5

Which of the following are true of an effective risk management culture?

AStaff should be penalised for being associated with negative events.

BAll risk should be eliminated.

CResponsibility for risk management should be devolved to a risk manager.

DAll staff should be aware of risks affecting the entity.

ERisk management should be regarded as part of the overall business strategy.

FThe directors should take an active interest in risk management.

Answer : D, E, F

Question 6

With regard to the internal audit department,whichTWO of the following statements arecorrect?

AThe internal audit department should co-opt a manager from the department it is auditing onto the teamin order to ensure it can follow the processes applied in that department.

BThe internal audit department should report directly to the board of directors, especially if it suspects a director has circumvented any internal controls.

CThe internal audit department should make recommendations on actions to be taken following any engagement within a department.

DThe internal audit department should make recommendations on how to improve the control systems withina department following any engagement within that department.

EThe internal audit department should follow a planned work schedule which is reviewed at least annually.

Answer : C, E

Question 7

GUJ A small but rapidly expanding company has recently opened several branches in locations far away from the Head Office. All of the branches are relatively small with no one branch accounting for more than 5% of turnover. Management has decided that the company is not yet large enough to install an Internal Audit function but is, nonetheless, concerned about maintaining adequate control and monitoring at the branches whilst allowing Branch Managers the opportunity to react to local circumstances as appropriate.

Which of the following measures would assist Head Office management in maintaining appropriate monitoring and control at the branches?

ARestricting the autonomy of individual Branch Managers to purely routine matters and instructing them to refer everything else to Head Office.

BDealing with all Human Resource, recruitment, and similar issues directly from Head Office.

CArranging visits by senior management to each branch periodically.

DInstituting the use of a formalised budgetary control system at head office for all branches.

EEstablishing an open communication policy for employees at branches to allow them to contact Head Office on any matter that concerns them.

Answer : C, D, E

CIMA P3 Risk Management (Online) CIMAPRA19-P03-1 Exam Questions