Summer Sale Limited Time 65% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: ecus65

CIMA P3 - Risk Management

Page: 4 / 11
Total 339 questions

A company has a sound system of internal controls that have been reviewed by the internal audit department.

Which TWO of the following correctly identify reasons why the company's control system might fail to prevent or detect an irregularity?

A.

A dishonest member of staff could input an invalid transaction

B.

Two fraudulent members of staff could collude.

C.

The internal audit department cannot be expected to identify control weaknesses.

D.

The accounting system could combine manual and computerised controls.

E.

A director could override a control procedure.

JNH is a major corporation that stores its customer database in the Cloud JNH has suffered a data breach that has led to customer credit card details being made available for sale on the internet JNH's Head of Security wishes to analyse network traffic at the cloud-based server in order to gain a better understanding of the manner in which the data was intercepted, but has been refused access.

Which of the following is the most likely explanation for the third-party owner's refusal to assist JNH's Head of Security?

A.

The Cloud is impregnable and so the breach must have been elsewhere

B.

The network data will not have been stored by the server's owner

C.

The server will contain data belonging to other clients

D.

Admitting the breach would harm the reputation of the Cloud

M, a manufacturing company, has had some problems with defects in one of the main products it produces. This product has been made by the company for many years and is very profitable. Last month it had over 300 defects reported by customers which is more than 15% of products sold. This is a reputation risk for M and is also affecting profitability.

Which of the following controls could M introduce to reduce defects and also increase profitability?

A.

M could increase the number of quality control staff.

B.

M could introduce a procedure where quality control staff sign a form at the end of each day to say they have examined 1 in 10 products for defects and they are satisfied with the quality.

C.

The production director could examine one in every 10 products and sign a form to say they are satisfactory.

D.

M could service machinery at least once a month as recommended by the machinery supplier.

E.

M could check all employees qualifications to ensure they are qualified for their jobs.

ABC is an online retail chain which operates on a 24/7 basis It has been updating its Cyber Security processes and has implemented a centralised monitoring process to track activity through its web access portal

Which of the following activities will increase the awareness of its cyber security risk most effectively?

A.

ABC should monitor and record every device type used for access

B.

ABC should monitor and record every out of hours access

C.

ABC should monitor and record all failed access attempts.

D.

ABC should monitor and record every keystroke of every user.

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?

A.

Forthcoming elections in the subsidiary's host country.

B.

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

C.

Company law in the subsidiary host country is lax.

D.

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

E.

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

A large, publicly funded university is considering introducing a new information system in order to enhance its ability to store and retrieve academic records for past and current students, including the registration and deregistration of students.

In conducting an evaluation of the system, which THREE features would the management of the college be most likely to consider as essential prerequisites to implementation?

A.

The system has the capacity to deal with all existing records and all new records to be created in the foreseeable future.

B.

The system is capable of being run in parallel with the current system so as to have the opportunity to examine and overcome any unforeseen difficulties that might arise.

C.

The system has been demonstrated to operate with a degree of accuracy at least as good as the existing system and as good as that used by similar universities.

D.

The system can link seamlessly with the system used by the university for processing financial transactions and producing financial statements.

E.

All information on the system can be accessed easily from outside the university through the internet.

Smalltown had a problem with people parking cars on the town's mam shopping streets instead of in the nearby car parks The parked cars created congestion and made it difficult for delivery vehicles to unload Smalltown's local government had employed traffic wardens to enforce parking regulations by issuing parking fines to motorists who parked for more than the permitted 30 minutes.

The local government took further action to deal with this problem It banned parking on the busiest streets, it introduced parking charges in the remaining streets and it made it free to park m the town's car parks for up to two hours Fewer people now park cars on the streets because of the charges, but those who do generate significant revenues for the local government Fewer traffic wardens are required and so wage costs have reduced

The local goverment auditors have decided to carry out a value for money audit of the parking system

Which of the following is a measure of effectiveness?

A.

The main shopping streets are no longer congested

B.

The remaining traffic wardens are less stressed because they no longer receive abuse by motorists.

C.

Parking enforcement costs less than before

D.

Revenues from parking have increased

M is a multinational IT company with headquarters in Asia and with operations in all continents.

It is now trying to expand its operations in Europe. This is seen as a major challenge as the European market is very well developed with established players in fierce competition against each other.

As well as developing and producing its own products, it sources products across Asia, America and Europe as part of infrastructure deals which have to include as much of its own equipment as possible. In doing this, transfer prices can be set in YEN, USD, EURO, GBP. Transfer prices are revised every month in line with production times as most goods are made on short order times with sales cycles running at 3-4 months.

The longer sales cycle against committed transfer pricing presents problems as customers expect quotes to be valid for 90 days whereas M's suppliers reserve the right to revise pricing at the end of every month with quotes only valid for 8 days in the following month.

How should M deal with this problem?

A.

Use a centralised treasury function to set up unilateral netting so that all trades can be balanced off against each other before any money is transferred.

B.

Offer a small discount for any customers who pay in M's home currency.

C.

Do nothing, everyone is in the same situation.

D.

Incentivise sales persons to be more accurate when forecasting prices.

Y Company wishes to recruit an employee who will have responsibility for the receipt and handling of cash

From the point of view of the internal auditor which THREE of the following would be most likely to provide useful information about the candidate"?

A.

Confirmation that the candidate does not have a criminal record

B.

The candidate's personal referees

C.

The candidate's membership of a professional body

D.

The candidate's academic qualifications.

E.

References from previous employers of the candidate.

DBB is a mining company. The company's business requires manners to work underground in hazardous conditions DBB takes every possible precaution to protect the safety and wellbeing of its miners, but that does not prevent the occurrence of four or five serious injuries every year. That number is small in relation to the many thousands of owners employed by DBB.

DBB's Board is preparing a risk map Most directors believe that injuries to miners should be classified as high Likelihood and high impact, which Is a category of risk that should be avoided according to the TARA framework One of the directors has suggested that the risk should be classified as low likelihood and high impact because that would move the risk into the quadrant associated with transference or sharing and so could be draft with by, say, insurance

Which TWO of the following are correct?

A.

it is unlikely that DBB will be able to transfer the risk of these injuries by insurance.

B.

The fact that there are very few accidents supports the argument that the likelihood

C.

The director's recommendation that the risk should be reclassified will make the risk map more useful

D.

Risk maps enable companies to identify the correct migration for any given risk

E.

Discussing likelihood and impact will help DBB's Board to mitigate the risk of industrial inquiry