P3 CIMA Risk Management exact Exam Questions

Risk Management

Last Update 1 day ago Total Questions : 339

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Question # 1

XYZ is unhappy with the way it decides on the likelihood and impact of risks when it completes the TARA matrix XYZ has decided to try other ways to get more consensus over the evaluation of risks as high, medium and low impact and likelihood

Which of the following methods is likely to be most successful?

Searching online to see how the risks are evaluated in other companies

Sending questionaires to all employees

Using the Delphi method

Allowing the risk manager to decide.

Question # 2

Achieving the budget is often used as a good performance measure. However, there are problems with budgets which may mean they are not always good measures of performance.

Which TWO of the following statements about budgets suggest that they should not always be used to measure performance?

Budgets may deliberately be set too low by managers so they are easily achieved and make the manager look good.

Budgets are a commitment. They therefore act as a constraint on doing anything different.

Budgets can be used to motivate staff if they are set correctly.

Budgets can give people goals to achieve and if everyone strives to achieve these goals the whole organisation will benefit.

Question # 3

Which of the following statements best explains why a corporate treasury department should be established as a cost centre rather than a profit centre?

The Treasury Department should not be encouraged to speculate.

The Treasurer should not have a great deal of responsibility.

There is no way for the Treasury Department to generate revenue.

The Treasurer has the ability to manipulate the Department ' s reported profit.

Question # 4

VBN is a multinational company that has 60 subsidiary companies that operate in 11 countries. VBN evaluates the performance of each subsidiary as an investment centre, using residual income to measure performance.

Which THREE of the following threats of dysfunctional behaviour may arise from VBN ' s use of residual income to measure subsidiaries ' performance?

Subsidiary boards may actively hedge translation risks.

Subsidiary boards may take a short-term view to investment projects.

Subsidiary boards may waste time by arguing over transfer prices.

Subsidiary boards may waste time and incur unnecessary fees in order to recognise gains on the revaluation of property.

Subsidiary boards may be motivated to spend heavily on capital expenditure in order to ensure that budget allocations are maintained and even increased.

Question # 5

In terms of Cyber Security, which THREE of the following represent Personally Identifiable Information (Pll)?

Old phone number

First pet ' s name

Position held in a charity.

Sports club membership number

Model of first car.

Football team affiliation

Question # 6

Which of the following are objectives of the audit planning procedure?

To work out the time and resources required for the audit.

To perform substantive tests.

To work out how audit evidence will be obtained.

To perform analytical review to identify possible areas for investigation.

To set out how audit objectives will be achieved.

Question # 7

FGT is evaluating the political risks associated with its operations around the world.

Which of the following would indicate that a particular subsidiary has a high level of political risk?

Forthcoming elections in the subsidiary ' s host country.

The subsidiary ' s host country requires the active participation of local partners before the subsidiary can operate.

Company law in the subsidiary host country is lax.

The subsidiary is located a considerable distance from FGT ' s home country.

The subsidiary employs a large number of nationals from the host country.

Question # 8

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?

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.

Agree to sign the documentation on the grounds that these matters are highly subjective anyway and the proposed changes are, at least, plausible.

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.

Seek legal advice on the matter because you feel you are being placed in a very difficult position.