Free CIMA CIMAPRA19-P03-1-ENG Exam Questions

Question 1

M plc is an IT company thatbids for large contracts to sell computer systems and also to serviceexisting systems. M plc's senior management hasalwayssetbudgets which are hard to achieve andhavemade no allowances for the recession.
The economy has improved andM plc's senior managershave made the budget even more optimistic. The budgetedsalestargethas been increased by 40%.
In the past,sales staffhave not tried to achievethe budgetsales because itwas generallybelieved that the targets wereimpossible to reach.
M plc has recently appointed a new Sales Directorwhohas decided that sales staff will bedismissedif they fail to meet sales targets for three successive months. He is also looking forhighersalesmargins than wereachievedbefore.
What are the likely consequences ofthe new Sales Director'spolicy?

A : les staff will be happier in their jobs.

B : les staff will tender for riskier contracts.

C : les staff will encroach on other sales staff territories to get more work.

D : les staff will look for new jobs.

E : les staff will feel more settled and secure in their jobs.

Answer: B,C,D

Question 2

C is a large international supermarket chain. It has many thousands of suppliers and many thousands of potential suppliers competing for shelf space m its supermarkets.
Which of the following provisions would be appropriate for C to include m its ethical code in relation to its suppliers?
Select ALL that apply

A : hall insist on an exclusivity agreement with each supplier so that identical products are not available from other outlets

B : hall endeavour to adhere to the terms of its contracts with its suppliers at all times

C : hall continuously remind suppliers that it always has several alternative suppliers to choose from.

D : hall not use its buying power unscrupulously.

E : hall keep confidential all information received from suppliers and potential suppliers

F : hall endeavour to take as high a percentage of each supplier's output as possible

Answer: A,B,D

Question 3

With regard to the rote of the audit committee which of the following statements are correct? Select ALL that apply

A : audit committee should design the system of internal controls

B : audit committee should decide annually whether it needs an internal audit function

C : audit committee should decide annually whether it needs an external audit function

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

E : audit committee should provide arrangements for whistle blowing

F : The audit committee should engage consultants to carry out business reviews

Answer: A,D

Question 4

GHY is a listed company. Tom isGHY'sCEO and Peter isitsnon-executive Chair of the Board. Tom and Peterbothhave substantial relevant business and industrial experience andboth are believed to have considerable integrity. Tom and Peter quickly developed a good working relationship after Peter's appointment. They have become close friends.
Tom briefs Peter on every aspect of the business. Tom and Peter jointlyagreethe agenda foreveryboard meetingandboth agree on the manner in which matterswill be presented to theboard.
Taking account of the principles of goodcorporategovernance, which of the following statements is correct?

A : is entirely appropriate that Tom and Peter have this kind of relationship and both are acting in the best interests of the company

B : n-contentious board meetings show how well Tom and Peter are running the company and shows that the management is cohesive.

C : relationship between Peter and Tom may have a detrimental effect on company decision making as the Boardis not always being informed about matters in an unbiased manner.

D : nce the non-executive chair clearly has a significant role within this company there is little danger that any individual will become excessively dominant.

Answer: C

Question 5

SDF is a quoted company. Which of the following matters should normally be dealt with by SDF's audit committee?

A : external auditor has requested a higher fee than normal for the forthcoming financial year because new legislation will require additional audit work.

B : Head of Internal Audit is concerned that a recent internal audit investigation may have revealed serious compliance failures.

C : external auditor is concerned that an accounting policy selected by the Finance Director does not comply with the spirit of the relevant accounting standard.

D : external auditor has identified a material error, due to a clear miscalculation, in the draft financial statements.

E : Finance Director will be retiring within the next year and a replacement will have to be found.

Answer: A,B,C