Free Access CIMA.CIMAPRA19-P03-1.v2022-01-31.q79 Practice Test (Page 15)

Question 66

A publicly funded hospital has put various features in place in an attempt to improve strategic control and create an improved control environment.
Which TWO of the following features are most likely to meet this objective?

A.Ensuring that the Head of Internal Audit examines and authorises all expense claims by hospital staff.

B.A strict policy of capping the maximum salary payable to any employee at 110% of the average earned by that category of employee in the country in which the hospital is located.

C.The setting up of a Risk Management Committee to examine the strategic risks applicable to the entity and to formally report on a quarterly basis.

D.Ensuring that all medical staff are aware that their first priority should be to discharge patients as quickly as possible at all times so as to minimise wasting hospital resources.

E.An Audit Committee consisting of five independent persons with expertise in finance, human resources, and medicine.

Question 67

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.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.

B.N has just opened a bank account in the currency in which the newly opened branch is now operating.

C.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.

D.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.

E.Establishing an Internal Audit department.

Question 68

Which of the following statements are true of residual risk?

A.If residual risk is too great then the company should not expose itself to the risk situation.

B.Residual risk is the risk that remains after risk mitigation has taken place.

C.Residual risk should never be accepted.

D.Residual risk may be accepted if management feels the company can bear the risk.

E.Residual risk has to be accepted.

Question 69

B is a horticultural retailer with limited funds available to acquire new retail property.
B's Finance Manager has analysed two potential property investments. Investing in property P shows an IRR of 21% while the IRR on property Q is 17%.
The Finance Manager has also advised that the NPV for property P is $750K, while the NPV of property Q is $850K.
The Board needs to choose between the two properties as it has insufficient funds for both. Based purely on the Finance Manager's analysis, which of the following is true?

A.Premises Q is clearly better than property P in all respects.

B.Premises P is clearly better than property Q in all respects.

C.Board members who wish to maximise return on capital employed will want property Q while those who wish to maximise shareholder wealth will want property P.

D.Board members who wish to maximise return on capital employed will want property P while those who wish to maximise shareholder wealth will want property Q.

Question 70

You are a junior accountant in a local accountancy firm with many clients in various businesses.
Your immediate manager has asked you to collect certain personal details about clients' staff from the firm's records. You suspect that his intentions are malicious.
You asked your manager to explain why he required these details and he told you it is none of your business.
What should you do? Select TWO responses.

A.You should keep a log of all the facts that the manager has requested, including the dates on which those requests were made.

B.You should seek to have a confidential discussion with the manager's superior and express your concerns.

C.You should raise the matter with the firm's external auditors.

D.You should try to find out what the manager wishes to use the details for.

E.You should stop being impertinent and obtain the details as instructed.

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Question 66

Question 67

Question 68

Question 69

Question 70

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