P3 Exam Dumps - Risk Management

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Question # 4

CW is a large company in the food production industry. It has grown over the years by the acquisition of several smaller rivals CW has ten branches located in its home country and has just opened a foreign branch for the first time It has recently made some changes to the structure and implementation of its control system.

Which TWO of the following changes would be most likely to improve the overall control system?

CW has just opened a bank account in the currency in which the newly opened branch is now operating

Establishing an internal audit department

Excess funds are now invested, by the finance director, in short-term securities The finance director initiates buy and sell transactions and she also receives and retains all correspondence relating to the investments

Purchase invoices are now approved for payment at branches and a list of approved invoices are sent to head office for payment The invoices, supporting documentation and suppliers' statements are retained at the branches

A policy has been initiated to complete a physical inventory of all non-current assets at least annually This is then reconciled with the non-current asset register

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Question # 5

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 dishonest member of staff could input an invalid transaction

Two fraudulent members of staff could collude.

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

The accounting system could combine manual and computerised controls.

A director could override a control procedure.

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Question # 6

P Ltd, a service company, is seeking to recruit engineers to work in its maintenance division. WhichÂ TWOÂ of the following suggestions will be most likely to help prevent fraud when recruiting the engineers?

Checking that the engineers have previous experience in a similar business.

Checking that the engineers do not belongÂ to a union.

Checking that the engineers have a professional engineering qualification.

Taking up references from previous employers.

Having a defined fraud policy statement that includes recruitment issues.

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Question # 7

A US company enters into a five year borrowing with bank A at a floating rate of USD Libor plus 2%.

It simultaneously enters into an interest rate swap with bank B at 3.5% fixed against USD Libor plus 1%.

What is the hedged borrowing rate, taking the borrowing and swap into account?

Give your answer to 1 decimal place

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Question # 8

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?

The main shopping streets are no longer congested

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

Parking enforcement costs less than before

Revenues from parking have increased

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