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CIMA CIMAPRA19-P03-1 Exam Questions
P3 Risk Management (Online) (Page 8 )

Updated On: 16-Feb-2026
Page 8 of 56
PDF with 275 Questions

Under the COSO Enterprise Risk Management Framework, who is responsible for risk management?

  1. Every member of the entity.
  2. The board of directors only.
  3. Managers and directors only.
  4. The shareholders.

Answer(s): A



Which of the following are true of interest rate swaps?

  1. Risk of default is high from the floating interest rate payer if interest rates rise.
  2. An interest rate swap is an external hedging technique.

  3. When interest rates are falling, the risk of default by the fixed interest rate payer is low.
  4. Some companies use interest rate swaps to deliberately increase their risks because they believe that they are better at predicting future interest rates than the market.
  5. An interest rate swap is an internal hedging technique.

Answer(s): A,B,D



Q is a company which generates electricity from alternative energy sources. It has just begun constructing a wind farm near a well-known beauty spot. The project has been controversial as campaigners say it will be noisy and unsightly.
The campaigners took legal action but lost the case. Some of them have started a campaign of direct action against Q and are physically blocking roads leading to the site and attempting to intimidate Q's staff.
Q has hired a security company to help it to protect its staff. In relation to the ethics of this scenario, which of the following statements are valid?

  1. Q is within its rights to hire the security firm because it has duty of care to its employees.
  2. Q no longer has any duty of care to the protestors since their actions are illegal because they lost their court case.
  3. The security firm must take care not to use more force against the protestors than is absolutely necessary.
  4. Since the protestors have already lost their court case they would no longer be ethically justified in engaging in political lobbying to try to get the government to change the law in this area.
  5. The generation of electricity from clean, renewable and sustainable sources is too important for the protestors' concerns to be considered.

Answer(s): A,C



You are a member of the Chartered Institute of Management Accountants (CIMA) and you have recently taken up the position of Sales Manager with a company that is facing financial difficulties. The company's terms include a commitment to maintain specified profitability, liquidity and solvency measures; failure to do so would render bank loans immediately repayable. The draft financial statements show that the company has not succeeded in complying with all of these requirements.
The financial results are very dependent on various estimates such as receivables impairments. The Chief Executive Officer (CEO) has suggested that these be recalculated so as to bring the financial results within the requirements of the bank. He has asked you to sign pre-dated internal documentation which would imply that, as Sales Manager, you initiated these changes in the belief that they would enhance the accuracy of the Financial Statements.
Which TWO of the following courses of action available to you would be ethically acceptable according to the CIMA Code of Ethics?

  1. Refuse to sign the documentation on the grounds that you did not initiate this action, and to give the impression that you did would be unethical.
  2. Agree to sign the documentation on the grounds that these matters are highly subjective anyway and the proposed changes are, at least, plausible.
  3. Refuse to actually sign the documentation but make clear to the CEO that you will raise no objection if he amends the Financial Statements as if you had signed.
  4. Seek legal advice on the matter because you feel you are being placed in a very difficult position.

Answer(s): A,D



Kate is a management accountant. Her immediate superior plans to apply for a promotion and his strongest competitor is the sales manager. Kate's superior has ordered her to set unattainable sales targets in a sales budget in order to reduce the sales manager's promotion prospects. He told her not to tell anybody.
Kate asked the finance director for advice. He told her that he wanted her immediate superior to get the promotion and so she should set the unattainable budget as instructed.
Kate set the budget as instructed.
Which THREE fundamental ethical principles has Kate breached?

  1. Integrity
  2. Objectivity
  3. Professional competence and due care
  4. Confidentiality
  5. Professional behaviour

Answer(s): A,B,E






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