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NEW QUESTION 157
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. A dishonest member of staff could input an invalid transaction
- B. Two fraudulent members of staff could collude.
- C. A director could override a control procedure.
- D. The internal audit department cannot be expected to identify control weaknesses.
- E. The accounting system could combine manual and computerised controls.
Answer: B,C
NEW QUESTION 158
Z is a multinational pharmaceuticals company with operations across Europe, America and Asia.
It is currently investigating the possibility of setting up a chemical and specialist production facility in South America. This would be a multi $billion investment. What steps should Z take to manage the following risks in this long term venture.
Answer:
Explanation:
NEW QUESTION 159
V buys vegetables and fruit from three farms located in a different part of V's country and sells them to large supermarket chains.
A recent newspaper magazine had an article on these farms showing that the farms employ illegal immigrants whose status was used by the factory's owners to force them to work for low wages and in unpleasant conditions. They are forced to live in small overcrowded caravans with no running water. They are also given meals which are cold and poor quality. These farms are located in a developed country with strong labour laws.
Classify each of the following statements as true or false.
Answer:
Explanation:
NEW QUESTION 160
B is a quoted construction company. Its Board consists of qualified and experienced engineers Which TWO of the following statements are correct?
- A. The greater consistency arising from the composition of B's Board will be beneficial
- B. The quality of Board decisions may decrease.
- C. B's Board cannot be blamed for recruiting like-minded individuals
- D. Creating a nominations committee from B's Board will resolve any issues
- E. There is a greater risk of B's Board making strategic errors.
Answer: A,D
NEW QUESTION 161
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.
Answer:
Explanation:
NEW QUESTION 162
Systems Development Lifecycle (SDLC) is used to manage risk within the development of new computer systems.
Which THREE of the following are appropriate controls to manage risk within the SDLC Process?
- A. When designing the new system, controls must be put in place to ensure that all the functionalities of the old system are replicated.
- B. When developing the new system, the developers must follow defined programming standards and carry out component test to specified test harness outputs.
- C. The Post Completion Review should take place immediately after the implementation while all the facts are still fresh in everyone's minds.
- D. When planning the new system, a clear business case must be approved specifying functionality, data transformation, expected costs and benefits.
- E. When the implementation of the new system is taking place, parallel running must be undertaken to ensure the output for the new system exactly matches that from the old system.
- F. When doing the analysis for the new system particular care should be taken over the data specification, transformation and manipulation, ensuring that expected outputs are defined and that such output meets the needs and expectations of the business users.
Answer: B,D,F
NEW QUESTION 163
A UK manufacturing company has simultaneously:
* purchased a put option to sell USD 1million at an exercise price of GBP1.00 = USD1.65
* sold a call option that grants the option holder the right to buy USD 1million at a price of GBP1.00 = USD1.61 (this option has the same maturity date as the put).
Which of the following is a valid explanation for entering into these option positions?
- A. The company expects to pay USD 1million to a supplier and wishes to offset the premium from the call option against the cost of the put option.
- B. The company expects to receive USD 1million from a customer and wishes to obtain an additional benefit if the USD strengthens beyond GBP 1.00 = USD 1.61.
- C. The company expects to pay USD 1million to a supplier and wishes to obtain additional protection against the USD strengthening beyond GBP 1.00 = USD 1.65.
- D. The company expects to receive USD 1million from a customer and wishes to offset the cost of the put option by the premium on the call option.
Answer: D
NEW QUESTION 164
Which of the following statements best explains why a corporate treasury department should be established as a cost centre rather than a profit centre?
- A. There is no way for the Treasury Department to generate revenue.
- B. The Treasury Department should not be encouraged to speculate.
- C. The Treasurer should not have a great deal of responsibility.
- D. The Treasurer has the ability to manipulate the Department's reported profit.
Answer: B
NEW QUESTION 165
Which of the following represents the greatest risk associated with introducing a system of post-completion audit for investment projects?
- A. Decision makers may be deterred from taking responsible risks.
- B. The entity may withdraw from a project without good cause.
- C. The entity will realise that its approach to project appraisal is flawed.
- D. The audit itself will waste time.
Answer: A
NEW QUESTION 166
An internal auditor has just completed an investigation into human resource (HR) procedures in the Springtown branch of IUY The Springtown branch is too small to have its own full-time HR staff All HR work is undertaken by the Branch Manager, assisted by the Branch Administrator The internal auditor has discovered a number of problems with branch HR records. These are due to a misunderstanding of the regulations by the Branch Manager and the Branch Administrator, neither of whom has any specific HR training The Branch Manager has asked that the problems be omitted from the internal audit report because they were due to a lack of training and will be rectified immediately Which TWO of the following actions should the internal auditor take with regard to the audit report on the Springtown Branch?
- A. Describe the problems encountered at the branch in detail and recommend that disciplinary action be taken against the Branch Manager.
- B. Expand the report to develop it into a description of lUY's HR procedures, but tailored to the needs of the Springtown Branch.
- C. Include the Branch Manager's claim that the HR problems are due to a lack of HR training in the report
- D. Omit the problems from the report, but recommend that the Branch Manager and Branch Administrator should both receive HR training
- E. 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
Answer: C,E
NEW QUESTION 167
Which of the following risks should be given highest priority?
- A. Risks which have a high impact and have a low likelihood of arising
- B. Risks which have a low impact and a low likelihood of arising
- C. Risks which have a high impact and which may arise occasionally
- D. Risks which have a low impact but which arise frequently
Answer: C
NEW QUESTION 168
Company N is considering opening another production plant in Northland, a country 2000 km from its current production plant location N would also sell its products in Northland Which TWO of the following are business risks'
- A. The risk that the Northland currency may strengthen making it expensive.
- B. The risk that Northland's government may introduce policies that would be unfavorable to N.
- C. The risk that Northland may not be able to support N's technology requirements.
- D. The risk that it may be difficult to sell its products in Northland.
- E. The risk that interest rates may rise making N's loans expensive.
Answer: C,D
NEW QUESTION 169
CDE an online ticket sales agent, has unwittingly become an accomplice in cyber crime and is suffering attacks on its own business as a result CDE's website was poorly designed and cyber-attackers have managed to inject the site with malware, so that it collects all of CDE's customer log-in information and enables the cyber-attackers to retrieve it.
The cyber-attackers subsequently use this information to set up Botnet agents in the customers' devices which are then used in a Distributed Denial of Service (DDoS) attack whenever very popular tickets are being placed on sale such as international football matches.
The cyber-attackers secure access to a single portal on the site and buy multiple tickets for subsequent sale on the black market while the DDoS causes all other portals to be overloaded preventing real fans acquiring the tickets at face value.
Which TWO of the following apply in this scenario?
- A. CDE will need to implement a new firewall to prevent this type of attack.
- B. CDE is likely to lose the ticket franchise for international football events
- C. CDE is likely to face significant fines for the breach.
- D. CDE customers will turn to other ticket sources for their tickets
- E. CDE will remain just as profitable selling to the black market as to real fans
Answer: A,C
NEW QUESTION 170
Identify, from the list provided, which category of business risk most accurately describes the events detailed below.
Answer:
Explanation:
NEW QUESTION 171
The long-term prospects for interest rates in the UK and the USA are 2% and 6% per annum respectively.
The GBP/USD spot rate is currently GBP/USD1.71.
Using interest rate parity theory, what GBP/USD spot rate would you expect to see in six months' time?
- A. GBP/USD = 1.74
- B. GBP/USD = 1.65
- C. GBP/USD = 1.67
- D. GBP/USD = 1.78
Answer: A
NEW QUESTION 172
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