[2024] Pass CIMA P3 Exam Updated 287 Questions [Q131-Q149] – IT Certification Exam Questions & Answers

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[2024] Pass CIMA P3 Exam Updated 287 Questions

Get 2024 Updated Free CIMA P3 Exam Questions and Answer

The CIMA P3 exam covers three main areas: risk identification, risk assessment, and risk management. Candidates are required to demonstrate their knowledge and proficiency in these areas through a series of questions and case studies. P3 exam is designed to assess the candidate’s ability to apply risk management principles in real-world scenarios, making it a highly practical and relevant qualification.

NEW QUESTION 131
B, a construction company, has a policy of carrying out a post completion audit on every construction project undertaken where the value exceeds $1 million.
What is the role of the post completion audit?

To reward staff and celebrate success.

To signify the end of the project.

To highlight what can be done to improve similar future projects.

To apportion blame for things not done well.

NEW QUESTION 132
HGY is a major global corporation that has decided to implement the COSO Enterprise Risk Management Framework and integrate management practices throughout the organisation Which THREE of the following would be appropriate for HGY?

Authorise managers and supervisors to respond immediately to any risks that emerge

Make risk management an element of everyone’s responsibility

Recruit a Director of Risk, who will lead risk management procedures.

Train staff at all levels to identify and report risks to their superiors

Create a risk management team that will take responsibility for identifying and mitigating risk

Identify risk as an element of HGY’s overall strategy.

NEW QUESTION 133
D plc is a public relations company. Shares in D plc have recently been listed on the UK stock exchange.
D plc has an internal audit department that reports to the Chief Executive Officer (CEO). The CEO is considering outsourcing internal audit to an audit firm, which would not be the firm that conducts D plc’s external audit.
Identify THREE advantages to D plc of outsourcing internal audit in this way.

Doing so may improve independence.

Decisions relating to internal audit can be based solely on cost.

Internal audit will have a better understanding of D plc’s objectives and culture.

Specialist skills may be more readily available.

Risk of staff turnover is passed to the outsource company.

NEW QUESTION 134
You are the management accountant for YY a food manufacturing company with an annual sales revenue of
$6 million
You discover that the production manager’s records are inconsistent Raw materials purchased do not agree with the total recorded for transfers to production plus wastage There is an average shortfall of 2% of purchases You have investigated and discovered that there are often errors made during manufacturing that results in food that is safe to eat but. because of visual flaws, cannot be sold The production manager is supposed to scrap all such damaged products and write all such losses off as waste You have discovered however that he has been giving the damaged food to a charity that assists homeless people No records are made of such gifts in order to conceal the losses due to manufacturing errors Which of the following actions should you take? Select ALL that apply

Instigate disciplinary action this is both theft and poor management

Do nothing; this is a good cause and the amount is insignificant

Instigate a review of the production process to potentially reduce the amount of wastage.

Instigate a confidential but documented review with the production manager and tell him to stop

Instigate a process whereby edible but unsellable items can be given to the charity officially

NEW QUESTION 135
Which TWO of the following are likely to be consequences of a weak control environment?

The Board will insist on improved controls.

Mid-level Managers will request improved controls

The Board will be free to focus on strategy.

Poor compliance with control procedures

The Board risks being poorly informed

NEW QUESTION 136
HWG is a large company which grows and processes coffee The coffee is sold to supermarkets, branded with their names for sale as “own brand” products HWG brands and packages the coffee using the supermarkets’ own designs HWG’s directors are considering a strategic proposal to develop a range of coffees to be sold under a brand that HWG will develop Which TWO of the following should the directors consider as part of their strategic analysis?

The design of packaging for the new brand

The reaction of the supermarkets who currently buy coffee from HWG

The sales volume forecast for the new coffee

The choice of name for the new brand

Recruiting a marketing firm to advertise the new coffee

NEW QUESTION 137
B uses a balanced scorecard to monitor the performance of its divisions.
Classify each of the following decisions taken by a division’s management team as either commercially sound or dysfunctional.

NEW QUESTION 138
When a new computer system is being implemented there are several possible methods for managing the changeover from the old system to the new system.
Which THREE of the following are true?

Phased changeover is the safest and slowest method of changeover.

Phased changeover moves individual portions of the business to the new system one at a time.

Pilot changeover moves the simplest part of the business to the new system first.

Parallel running involves keeping the old system running, normally until certain data retention criteria are met or confidence is gained, while the new system deals with the new workload. Data input is usually carried out on both systems.

Direct changeover, or Big Bang is only used when the systems are significantly different such that comparing the outputs of the two systems is largely irrelevant.

All methods of changeover carry high risk and it is the preparation, consideration of data compatibility and data cleansing before the changeover which has the biggest impact on the smoothness of the transition.

NEW QUESTION 139
Internal controls are designed to provide reasonable assurance of which of the following?

Material errors will be prevented or detected in a reasonable time period by employees in the course of carrying out their job

Management’s plans have not been circumvented by collusion

Management procedures and processes are properly evaluated

The internal auditing department’s oversight of management’s performance is achieved economically and efficiently

NEW QUESTION 140
The list below has duties performed by risk managers and internal auditors. Show who would carry out the duties assuming the company has both risk managers and internal auditors.

NEW QUESTION 141
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?

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

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

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.

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.

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.

NEW QUESTION 142
H has a floating rate loan that it wishes to replace with a fixed rate. The cost of the existing loan is LIBOR +
4%. H would have to pay a fixed rate of 8% on a fixed rate loan. H’s bank has found a potential counterparty for a swap arrangement.
The counterparty wishes to raise a variable rate loan. It would pay LIBOR + 1% on a variable rate loan and
9% on a fixed rate.
The bank will require 10% of the savings from the swap and H and the counterparty will share the remaining saving equally.
Calculate H’s effective rate of interest from this swap arrangement.

H would pay 6.2%

H would pay 6%

H would pay Libor + 1%

H would pay 6.4%

NEW QUESTION 143
W plc is a large international supermarket chain. It has many thousands of suppliers and many thousands of others competing for “shelf space” in its supermarkets.
Which of the following would be appropriate provisions for W plc to include in its Ethical Code in relation to its suppliers?

W plc shall not use its buying power unscrupulously.

W plc shall endeavour to adhere to the terms of its contracts with its suppliers at all times.

W plc shall keep confidential all information received from suppliers and potential suppliers.

W plc shall continuously remind suppliers that it always has several alternative suppliers to choose from.

W plc shall endeavour to take as high a percentage of each supplier’s output as possible.

W plc shall insist on an exclusivity agreement with each supplier so that identical products are not available from other outlets.

NEW QUESTION 144
You have just been appointed Financial Controller of Y, a marketing consultancy.
You are in a meeting with the Chief Executive Officer (CEO) of Y, and have been discussing the need for a major upgrade of all the information systems throughout Y, as they are all very old.
Knowing that major change should be managed effectively, you have suggested that Y should have a ‘systems steering committee’.
Advise the CEO which of the following should be included in the terms of reference of the steering committee.

Plan for new systems

Develop new systems

Manage the project

Consider the competitive issues raised by the new system

Ensure the new system will meet the company’s goals

NEW QUESTION 145
An oil company has entered into a joint venture with a competing oil company to develop a new oil field. The joint venture arrangement is intended to mitigate the risks associated with developing the oil field.
The following disclosure appears in the oil company’s risk report:
“Many of our large projects and operations are conducted through joint ventures. These arrangements involve complex risk allocation and indemnification arrangements and we have less control over these activities than we would have if we had full ownership and control. Our partners may have economic or business interests that are opposed to ours, and may exercise the right to block key decisions or actions. We believe the joint arrangement is in our best interest.” Which of the following statements are correct?

The risk report means that the shareholders know exactly how bad the risk is.

The risk report says nothing useful about the risk.

Now the shareholders know the directors are aware of the risk.

If the risk report had not reported the risk the shareholders might not have been aware of the risk.

The shareholders now have more useful information.

NEW QUESTION 146
The internal audit department should always give a report at the end of its audit. This report is intended to be useful and help the company going forward. The report should always include any recommendations for improvements. Which of the following statements are true and which are false?

NEW QUESTION 147
YGH has recently completed a post completion audit on a five year contract that has only recently come to a conclusion. The main finding was that the project delivered most of the expected benefits, but that it cost significantly more to implement than had been anticipated at the project appraisal stage. YGH would not have proceeded if the true cost had been known at that stage.
The project was the responsibility of the production department, which is presently managed by G.
When the project was proposed, the production department was managed by H.
H is now YGH’s Director of Operations.
How should the finding from this post completion audit be interpreted?

YGH should consider introducing more detailed checking of the assumptions underlying the costs of future projects.

The production department should not be granted funding for future projects unless there are compelling reasons to proceed.

G should be held accountable for the overspend on the project.

H should be held accountable for the overspend on the project.

NEW QUESTION 148
A has an opportunity to invest $90,000 in a project that is expected to generate annual cash inflows of $60,000 for each of the next three years. The project’s beta coefficient implies a discount rate of 12% for this project, based on a risk-free rate of return of 3%.
A is prepared to forego the expected cash flows from this project in return for a guaranteed payment of
$50,000 at the end of year 1, $42,000 at the end of year 2 and $30,000 at the end of year 3.
What is the certainty equivalent value of this opportunity to A?

$9,493

$25,606

$54,120

$115,606

NEW QUESTION 149
S Doc is an out-of-hours service provided by a country’s government. The service allows members of the public to call and speak to a nurse who can advise on medical situations which are not obviously emergencies.
Depending on the situation the caller can be referred to the full emergency services, or be advised to go to Accident and Emergency at the nearest hospital. Alternatively, a callout from a general practitioner (GP) can be organised; the caller can be advised of where GP services are available; advice can be given over the phone; or a decision can be taken that no further action is required at least until normal services resume on the next working day.
There has been a suggestion that the nurses who take these calls could be replaced by suitably trained operatives who have available to them a specially designed expert system.
Which of the following are advantages of using an expert system instead of nurses?

The operatives would be too careful and therefore would recommend unnecessary treatments or interventions.

Some callers may present with complicated scenarios that a non-medically trained operative or expert system would be unable to recognise (for example, psychological issues).

Using an expert system would make operatives less inclined to feel sorry for the caller and ensure that only relevant facts were considered in coming to a decision.

The use of an expert system would ensure that only relevant questions were asked of the caller and that operatives did not miss something vital due to distraction or fatigue.

The expert system will always follow the same path whereas the nurses may have more knowledge about some health issues and very little about others.

CIMA P3 (Risk Management) Certification Exam is an excellent way for professionals to demonstrate their expertise in risk management and enhance their career prospects. By obtaining this certification, individuals can demonstrate to potential employers that they have the skills and knowledge to effectively manage risks within their organizations.

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