Free CIMA P3 Practice Exam with Questions & Answers | Set: 4

internal controls could stop the company getting good new clients as it will slow down the process by having more checks in place

X ill usually be working in the office so there is no risk of any fraud. Therefore, the company does not need internal controls

The employees may feel they are not trusted if more controls are put in place

Employees can try to circumvent internal controls

A small business which has just started up does not need internal controls.

Only manufacturing companies need internal controls

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.

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

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

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

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

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

Omit the problems from the report, but recommend that the Branch Manager and Branch Administrator should both receive HR training

Document the changes that are required at the branch in the audit report and set a time for a return visit to review the changes

Describe the problems encountered at the branch in detail and recommend that disciplinary action be taken against the Branch Manager.

Expand the report to develop it into a description of lUY's HR procedures, but tailored to the needs of the Springtown Branch.

Include the Branch Manager's claim that the HR problems are due to a lack of HR training in the report

The shares have more unsystematic risk than the stock market average.

The shares have more systematic risk than the stock market average.

The shares have more total risk than the stock market average.

The shares have less unsystematic risk than the stock market average.

Risk reports can change behaviour

Risk reporting is a bad thing

The board may be concerned it will be criticised if it does not hedge

The board does not want to be blamed for ignoring a risk.

Risk reporting drives the whole risk management process

It would be part of the internal control system of the company

It would show that the company is taking the risk of fraud seriously.

It would lay down processes and procedures that internal audit should follow if they suspect fraud

It would clarify the role of various staff in detecting fraud

Managers have good job descriptions that define their roles in the organisation clearly

Management has just revisited the annual budget and made it much harder to achieve in order to try and boost profits

The Board has just issued an ethical code

The Finance Director has just been given a place on the audit committee to increase the committee's financial knowledge

Management did not have time to carry out all the staff appraisals this year but all staff have received a pay increase instead

RFD's shareholders are exposed to the systematic risk from this project and the directors are exposed to total risk.

RFD's lenders are likely to suffer a greater risk than RFD's equity investors.

Neither RFD's shareholders or lenders are likely to have the means to prevent the directors from making this investment.

RFD's existing employees are likely to enjoy a significant upside risk from this project.

The diversification of RFD's interests will reduce the risks for all stakeholders.