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CIMA CIMAPRA19-P03-1 Exam Questions
P3 Risk Management (Online) (Page 3 )

Updated On: 15-Feb-2026
Page 3 of 56
PDF with 275 Questions

H is a departmental manager in a private college. The main measure of performance used to assess the Department Manager's effectiveness is meeting the college budgets. The budget for each year is based on the actual expenditure of the previous year adjusted for specific one-off items.
Which of the following would arise from using the meeting of this type of budget as a performance measurement?

  1. Cost overruns because managers might fail to meet their budgets.
  2. Managers taking on new projects that have too much risk attached to them.
  3. Managers engaging in unnecessary spending in order to avoid having their budgets reduced the following year.
  4. Management of various departments not cooperating sufficiently with each other because each is very concerned that to do so would incur extra costs against their budgets.
  5. Management refusing to provide some necessary service to students (for example, extra tutorials) because it would cause their budget not to be met.
  6. Management taking more than the optimal number of students into their department.

Answer(s): C,D,E



Company C wishes to recruit an employee who will have responsibility for, among other things, the receipt and handling of cash. Which THREE of the following would be most likely to provide useful information about the candidate from the point of view of the Internal Auditor?

  1. The candidate's academic qualifications.
  2. References from previous employers of the candidate.
  3. The candidate's personal referees.
  4. The candidate's membership of a professional body.
  5. Confirmation that the candidate does not have a criminal record.

Answer(s): B,D,E



YUI owns 18 factories, which are spread around the country. Each factory employs 500-700 production staff and has its own administrative and accounts departments. It has recently been discovered that the manager in charge of YUI's Hightown factory has been overstating his personal expenses claims for the past five years. The total amount stolen in this manner has been estimated at $10,000.
Why would it have been relatively difficult to have prevented this fraud?

  1. Senior members of management can often override controls.
  2. It is impossible for anybody to check expenses claims submitted by a senior manager.
  3. Managers are generally highly intelligent and are generally capable of designing ways to defeat control systems.
  4. Internal controls cannot address fraud, only error.

Answer(s): A



Which of the following are threats to the control environment?

  1. Directors not producing receipts for their expenses.
  2. Internal auditors not following up on internal control problems.
  3. Directors ignoring unethical practices that increase sales.
  4. Regularly changing procedures to comply with legislation.
  5. Allowing staff to follow unwritten policies.

Answer(s): A,B,C



SDF is a quoted company that has a large internal audit department.
Which of the following would impair the independence of SDF's internal audit?

  1. The head of internal audit reports directly to SDF's chief accountant.
  2. Junior internal audit staff are recruited directly from university. They spend two years with the company before moving into other departments within SDF.
  3. Internal audit staff receive a bonus whenever they discover a compliance error.
  4. It is left to the individual members of the internal audit department to report any conflicts of interest associated with a proposed investigation to which they have been assigned.
  5. Internal audit staff salaries are linked to a company-wide salary scheme.

Answer(s): A,B,C






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