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NEW QUESTION # 76
N, a large company in the food production industry, has grown over the years by the acquisition of several smaller rivals. The company has ten branches located in its home country and has just opened a foreign branch for the first time. It has recently made some changes to the structure and implementation of its control system.
Which TWO of these would be most likely to improve the overall control system?
- A. A policy has been initiated to complete a physical inventory of all non-current assets at least annually.
This is then reconciled with the non-current asset register. - B. Establishing an Internal Audit department.
- C. Excess funds are now invested, by the Finance Director, in short-term securities. The Finance Director initiates buy and sell transactions and she also receives and retains all correspondence relating to the investments.
- D. N has just opened a bank account in the currency in which the newly opened branch is now operating.
- E. Purchase invoices are now approved for payment at branches and a list of approved invoices are sent to head office for payment. The invoices, supporting documentation and suppliers' statements are retained at the branches.
Answer: A,B
NEW QUESTION # 77
In-depth analysis showing the identification and quantification of exposure to financial risk has become more accessible in recent years. Several varieties of analysis are now available.
Which of the following statements are true?
- A. Value at risk analysis, which has become available through increased computing power, is now easier to implement and can cater for extreme market conditions.
- B. Simulation, which is becoming available through standard computing packages, is complex to implement but dynamic and adaptable to cater for different assumptions.
- C. Monte Carlo analysis is a modelling technique which can be applied to financial analysis, allowing thousands of variables to be integrated together to show standard behaviours and outlier abnormalities requiring detailed understanding in a 'what if?' environment.
- D. Sensitivity analysis involves checking the performance of a financial risk model against the various interrelationships between the different input variables in the model.
- E. Regression analysis is easy to understand and implement, and based on future expectations.
Answer: B,C
NEW QUESTION # 78
TT is a jewellery manufacturer in country A It makes jewellery from precious metals and stones and sells it to shops in country A and also overseas It is the 3rd largest company in country A with a huge turnover TT has found it very difficult to prevent staff committing fraud and last year the Board was sure that the year end inventory was lower than it should have been Gross profit was also slightly lower than expected Which TWO of the following internal controls would be most effective in helping to reduce staff fraud within TT?
- A. Perform random checks of staff bags as they leave work and ensure the staff all wear overalls provided by the company in the workshop Their own clothes must be left in lockers during working hours
- B. Install-several CCTV cameras in the workshop
- C. Carry out inventory checks daily to make sure the correct quantity of materials is being used every day and the correct number of items are being produced
- D. Employ two more managers to watch the staff working and look for them stealing items
- E. Have a senior manager such as the Production Director to supervise the workshop at all times
Answer: A,B
NEW QUESTION # 79
GHY is a listed company. Tom is GHY's CEO and Peter is its non-executive Chair of the Board. Tom and Peter both have substantial relevant business and industrial experience and both are believed to have considerable integrity. Tom and Peter quickly developed a good working relationship after Peter's appointment. They have become close friends.
Tom briefs Peter on every aspect of the business. Tom and Peter jointly agree the agenda for every board meeting and both agree on the manner in which matters will be presented to the board.
Taking account of the principles of good corporate governance, which of the following statements is correct?
- A. The relationship between Peter and Tom may have a detrimental effect on company decision making as the Board is not always being informed about matters in an unbiased manner.
- B. It is entirely appropriate that Tom and Peter have this kind of relationship and both are acting in the best interests of the company.
- C. Since the non-executive chair clearly has a significant role within this company there is little danger that any individual will become excessively dominant.
- D. Non-contentious board meetings show how well Tom and Peter are running the company and shows that the management is cohesive.
Answer: A
NEW QUESTION # 80
Company C wishes to recruit an employee who will have responsibility for, among other things, the receipt and handling of cash. Which THREE of the following would be most likely to provide useful information about the candidate from the point of view of the Internal Auditor?
- A. The candidate's membership of a professional body.
- B. The candidate's personal referees.
- C. Confirmation that the candidate does not have a criminal record.
- D. References from previous employers of the candidate.
- E. The candidate's academic qualifications.
Answer: A,C,D
NEW QUESTION # 81
H sells machinery and also associated services, such as advice and repairs. H's industry is going through considerable transformation.
Classify each of the examples of information available to H's management as strategic, operational or of having little value.
Answer:
Explanation:
NEW QUESTION # 82
E purchases parts for one of the machines it manufactures from Country X Place the risk classification next to the risk it relates to:
Answer:
Explanation:
NEW QUESTION # 83
DFG's home currency is the D$.
DFG is heavily exposed to the exchange rate between the D$ and the L$, country L's currency. DFG's treasurer has noted the following:
* Inflation has been running at 5% in DFG's home country and 8% in country L
* Interest rates are 7% in DFG's home country and 11% in country L
* The spot rate is D$1.0000 = L$2.1000 and the three month forward rate is D$1.0 = L$2.1196 Which of the following statements is consistent with these figures?
- A. Country L's interest rate is expected to decline relative to that of DFG's home country and inflation rates are expected to continue unchanged.
- B. Interest rates are expected to continue unchanged, but country L's inflation rate will increase in proportion to the inflation rate in DFG's home country.
- C. Interest rates are expected to continue unchanged, but country L's inflation rate will decrease in proportion to the inflation rate in DFG's home country.
- D. Country L's interest rate is expected to increase relative to that of DFG's home country and inflation rates are expected to continue unchanged.
Answer: B
NEW QUESTION # 84
Select the correct ethical principle that corresponds to each ethical dilemma described.
Answer:
Explanation:
NEW QUESTION # 85
A large department store has just discovered that the staff in the store coffee shop have been defrauding the company for the past three years. The six employees who work in the coffee shop have been keeping a proportion of the cash takings, concealing the theft by not recording all sales up in the till They shared the proceeds of this fraud between them The fraud was only uncovered when one of the employees left and his replacement reported the theft to management rather than becoming involved in the crime Which of the following best describes the role of the store's internal controls in the context of this fraud?
- A. This fraud indicates that there are serious shortcomings in the store's system of internal controls
- B. Even a well-designed system can be overridden by collusion between employees
- C. The coffee shop should be closed down because it is impossible to control its revenues.
- D. The store's board of directors should face disciplinary action for failing to prevent this fraud
Answer: B
NEW QUESTION # 86
G plc has decided to move its production plant to overseas Country A.
This would make the product cheaper to produce. The technology used to make the product is very advanced and some of the staff would have to move to Country A.
The Production Director has identified that there are some political risks in moving to Country A.
Match the methods of reducing the political risks associated with the move to Country A with the corresponding risks.
Answer:
Explanation:
NEW QUESTION # 87
V buys vegetables and fruit from three farms located in a different part of V's country and sells them to large supermarket chains.
A recent newspaper magazine had an article on these farms showing that the farms employ illegal immigrants whose status was used by the factory's owners to force them to work for low wages and in unpleasant conditions. They are forced to live in small overcrowded caravans with no running water. They are also given meals which are cold and poor quality. These farms are located in a developed country with strong labour laws.
Classify each of the following statements as true or false.
Answer:
Explanation:
NEW QUESTION # 88
You are a member of the Chartered Institute of Management Accountants (CIMA) and you have recently taken up the position of Sales Manager with a company that is facing financial difficulties. The company's terms include a commitment to maintain specified profitability, liquidity and solvency measures; failure to do so would render bank loans immediately repayable. The draft financial statements show that the company has not succeeded in complying with all of these requirements.
The financial results are very dependent on various estimates such as receivables impairments. The Chief Executive Officer (CEO) has suggested that these be recalculated so as to bring the financial results within the requirements of the bank. He has asked you to sign pre-dated internal documentation which would imply that, as Sales Manager, you initiated these changes in the belief that they would enhance the accuracy of the Financial Statements.
Which TWO of the following courses of action available to you would be ethically acceptable according to the CIMA Code of Ethics?
- A. Agree to sign the documentation on the grounds that these matters are highly subjective anyway and the proposed changes are, at least, plausible.
- B. Seek legal advice on the matter because you feel you are being placed in a very difficult position.
- C. Refuse to actually sign the documentation but make clear to the CEO that you will raise no objection if he amends the Financial Statements as if you had signed.
- D. Refuse to sign the documentation on the grounds that you did not initiate this action, and to give the impression that you did would be unethical.
Answer: B,D
NEW QUESTION # 89
AZX sells electrical components.
AZX's annual turnover is S24 million. Half of all sales are on 30 days' (1 month) credit
5% of credit sales have to be written off as unrecovered debt
25% of such write off is subsequently recovered through debt collection and legal action.
What is the expected loss each year due to credit risk?
- A. 51,200,000
- B. $900,000
- C. S450,000
- D. $600,000
Answer: C
NEW QUESTION # 90
D's Board has been advised by the auditors that D's control environment is weak and should be improved.
Which TWO of the following measures will help to improve the control environment?
- A. The Board will appoint an additional accountant in the Finance Department.
- B. The Board will meet annually to discuss the report from the external auditors.
- C. The Board will put in place a fraud policy
- D. The sales managers will encourage the sales team to increase sales by 50% in the next six months.
- E. The directors will have special rules for claiming expenses and will not have to follow the procedures in place for all staff
Answer: B,C
NEW QUESTION # 91
VBN uses a balanced scorecard to monitor the performance of its divisions.
Classify each of the following decisions taken by a division's management team as either commercially sound or dysfunctional.
Answer:
Explanation:
NEW QUESTION # 92
The Dean of Information Technology at Capital City University wishes to develop a degree in 'ethical hacking" Students will graduate from this course with the skills needed to develop malware, so that they have the ability to reverse engineer malicious software The Dean believes that there will be strong demand for such graduates from employers in IT security and related fields.
Which TWO of the following statements are correct?
- A. The course should teach students to reverse engineer malware without enabling them to write malware
- B. The academic staff teaching on this degree may struggle to keep up to date with the latest developments in malware
- C. Potential employers would be suspicious of job applicants whose choice of degree indicates an interest in malware
- D. The University should not be equipping its students with skills that could be abused for the purposes of committing crime or causing harm
- E. The University should conduct detailed background checks on applicants before they are admitted to this degree
Answer: A,E
NEW QUESTION # 93
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CIMA P3 (Risk Management) Exam is an essential exam for those looking to become qualified management accountants. P3 exam is designed to assess your knowledge of risk and how it affects business decisions, as well as your ability to mitigate these risks. The P3 exam is part of the CIMA Professional Qualification, which is highly respected in the accounting industry.
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