Free CIMA P3 Practice Exam with Questions & Answers | Set: 8

Policy 2 is the more risky.

Policy 1 will always be the more expensive in any given period.

Policy 2 is the more likely to cost more than $500,000 in any given year.

Policy 2 has the greater potential upside risk.

Policy 2 is clearly the better policy.

Complying with the COSO Framework will mean all employees of a company will comply with internal controls

Complying with the COSO Framework will mean that a company's internal controls will work properly

Complying with the COSO Framework will mean there is a good structure to a company's risk management system

Complying with the COSO Framework will mean that all staff will understand a company's risk management system

Complying with the COSO Framework will improve a company's reputation

L should cease trading

L should pay the very high insurance premiums demanded by its insurance company

L should diversify into low risk diving contract s.

L should stop accepting these risky contracts.

Ensuring that patients undergoing procedures sign documentation to confirm that the risks have been explained to them and that they understand.

Allocating a risk score to patients depending on age, general heath and similar consideration and refusing to admit patients whose risk score exceeds a certain threshold.

Ensuring that a policy is in place to transfer or discharge critically ill patients so as to minimise fatalities in the hospital.

Ensure that proper documentation is in place for all patients showing such details as symptoms, treatments, and test results.

The management refuses to allow the hospital to participate in the Major Accident Plan for the city in which it is located. It believes the Plan could expose the hospital to excessive risk.

Prepare the report.

Establish whether the controls are adequate or not.

Decide how the controls will be tested.

Learn all about the systems and controls in the department.

Carefully consider any control weaknesses that are reported.

Review previous audit findings for the department.

Residual risk has to be accepted.

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

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

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

Residual risk should never be accepted.

There is a risk that the system will not capture all of the existing terms and conditions of staff, thus leading to industrial relations problems later.

There is a risk that significant anomalies in the current system will be highlighted.

Any initial problems in running the system could have serious repercussions as it could lead to, for example, staff not being paid, payroll tax not being properly collected, and similar difficulties.

The system could make it more difficult to employ specialist medical staff on terms and conditions which are different from the normal terms and conditions available.

The amount of data storage space required to run the system may not be available.

The government is very heavily dependent on the contractor to whom this assignment is outsourced and if they do not to perform as required this could have serious consequences.

The fact that the purchasing manager uses a very small number of suppliers is, in itself, a sign of poor internal controls.

It is acceptable for clerks in the trade receivables section to make journal adjustments without authorisation provided the amounts involved are not material to U's financial statements.

It is acceptable for clerks in the trade receivable section to make journal adjustments without authorisation, provided they have no access to cash receipts.

The fact that the purchasing manager does not keep documentation relating to negotiations with suppliers, or potential suppliers, is evidence that they are involved in fraudulent activity.

Clerks making journal adjustments without reference to their supervisor is evidence of inadequate separation of duties.

The way the role of purchasing manager is carried out in U increases the chance that the company will fall victim to fraudulent activity.

The audit committee should design the system of internal controls

The audit committee should decide annually whether it needs an internal audit function

The audit committee should decide annually whether it needs an external audit function

The audit committee should review and monitor the effectiveness of the company's internal audit function

The audit committee should provide arrangements for whistle blowing

The audit committee should engage consultants to carry out business reviews