CIMA CIMAPRA19-P03-1 Exam Practice Test Instant Access

Question 1

TDC is a company which runs gas-fired power stations in western Europe. The Risk Committee has just received a report that a power station built to the same design and specification in a developing country has recently collapsed. The causes of the collapse are unclear but the consequences for TDC would be catastrophic if something similar were to happen in Europe

Which of the following actions being considered by the Risk Committee are ethical?

Select ALL that apply

ACommission a reputable firm of structural engineers to carry out a review of all power stations owned by TDC

BSend experts employed by TDC to the site of the collapse so that they can gather information first hand on what happened

CDraw up contingency plans in case some of TDC's power stations need to be shut down

DDecide that the information available to date is too uncertain to take any action for now

EAttempt to increase the level of insurance cover against this type of eventuality

FIssue a press release confirming that all TDC's power stations are 'entirely safe'.

Answer : A, B, C

Question 2

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 3

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 4

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 5

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 6

You are the management accountant for YY a food manufacturing company with an annual sales revenue of $6 million

You discover that the production manager's records are inconsistent Raw materials purchased do not agree with the total recorded for transfers to production plus wastage There is an average shortfall of 2% of purchases

You have investigated and discovered that there are often errors made during manufacturing that results in food that is safe to eat but. because of visual flaws, cannot be sold

The production manager is supposed to scrap all such damaged products and write all such losses off as waste You have discovered however that he has been giving the damaged food to a charity that assists homeless people No records are made of such gifts in order to conceal the losses due to manufacturing errors

Which of the following actions should you take? Select ALL that apply

AInstigate disciplinary action this is both theft and poor management

BDo nothing; this is a good cause and the amount is insignificant

CInstigate a review of the production process to potentially reduce the amount of wastage.

DInstigate a confidential but documented review with the production manager and tell him to stop

EInstigate a process whereby edible but unsellable items can be given to the charity officially

Answer : A, C, E

Question 7

Which of the following is the major advantage of Cloud storage for an enterprise?

AIt provides unlimited free use for the enterprise

BThe enterprise has complete control over it

Cin-house staff are not required to maintain the infrastructure

DSharing storage space with others

Answer : C

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