Free Access CIMA.P3.v2024-03-04.q113 Practice Test (Page 22)

Question 101

A's directors do not believe that they always get value for money from their investment in capital projects.
Over the past decade the company has invested in 55 projects that have cost more than $1m. They are considering introducing a system of post completion audit to see if this will help them to understand any problems they have had with projects in the past. They hope to use the results of the post completion audits to significantly improve the results of their capital investments State whether you agree or disagree with the points raised by A's directors.

Question 102

Why do businesses take risks?
Select the TWO correct answers.

A.Risk taking allows businesses to save time by not having to find out all the facts before they embark on new projects.

B.Risk taking provides businesses with opportunities to make better returns.

C.Risk taking can assist businesses to gain an advantage on their competitors.

D.Risk taking can give the impression that senior management roles are very dynamic.

E.Risk taking allows for multiple random outcomes, some of which may be worth chasing.

Question 103

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

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.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.

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

E.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.

Question 104

SC is a professional football club which is currently listed on a recognised stock exchange. There is a proposal that it builds a new stadium at a location a considerable distance from its current stadium.
There is strong support within the club for the move as the current ground is now over 40 years old and has not been extensively modernised in that time.
However, there is a lot of opposition to the move in the area where it is proposed to locate the new stadium. Objectors claim that the new stadium will increase traffic and pollution in the area and will adversely affect the value of their properties.
Which of the following statements about the responsibility of the board of SC is correct?

A.The board should share information about the new development with the local community only to the extent that it is legally obliged to do so.

B.The board should conclude that objectors to the new stadium have a legal course of action open to them and if they do not take legal action they should ignore them.

C.If the board of directors is seen as acknowledging its responsibility to stakeholders other than shareholders this will enhance the reputation of the club and it will be more likely that a compromise can be reached with objectors.

D.A football club needs to be part of the community in which it exists and so the board should consider the other stakeholders.

E.SC is now a listed company and so the board should prioritise the interests of shareholders to the exclusion of other stakeholders.

Question 105

Which TWO of the following are benefits of carrying out a post-completion audit of capital projects?

A.A post-completion audit can help find out where a project went wrong so it can be fixed immediately.

B.A post-completion audit can help management understand what went wrong with a project in order to try and prevent the same problem occurring in the future.

C.A post-completion audit can help find out who was to blame for a project exceeding the budget.

D.A post-completion audit can investigate variances from the budget on completed projects.

Other Version: 3572CIMA.P3.v2022-08-07.q119; 3583CIMA.P3.v2022-04-01.q119; 53CIMA.Fast2test.P3.v2021-09-23.by.clare.126q.pdf

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