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CIMA CIMAPRO19-P03-1 Exam
P3 Risk Management (Page 8 )

Updated On: 12-Feb-2026
Page 8 of 56
PDF with 276 Questions

HJK is a retailer, with more than 40 shops around the country. The directors suspect that a serious fraud has occurred at one of the branches and a team of internal auditors has been sent to investigate.
An analytical review investigation shows that sales revenue is in line with budget, but overtime payments to shop staff exceed budget by 20%.
How should the internal audit team proceed?

  1. Conduct additional detailed testing on overtime payments.
  2. Conduct additional detailed testing of all figures.
  3. Increase the evaluation of inherent risk.
  4. Increase the evaluation of control risk.

Answer(s): A



With regard to the internal audit department, which TWO of the following statements are correct?

  1. The internal audit department should co-opt a manager from the department it is auditing onto the team in order to ensure it can follow the processes applied in that department.
  2. The internal audit department should report directly to the board of directors, especially if it suspects a director has circumvented any internal controls.
  3. The internal audit department should make recommendations on actions to be taken following any engagement within a department.
  4. The internal audit department should make recommendations on how to improve the control systems within a department following any engagement within that department.
  5. The internal audit department should follow a planned work schedule which is reviewed at least annually.

Answer(s): C,E



DRAG DROP
The internal audit department should always give a report at the end of its audit. This report is intended to be useful and help the company going forward. The report should always include any recommendations for improvements. Which of the following statements are true and which are false?

  1. See Explanation section for answer.

Answer(s): A

Explanation:



The interest rate on EUR deposits is 7%. The interest rate on GBP deposits is 5%. The spot rate is EUR/GBP0.8500. What is the one year forward rate predicted to be assuming interest rate parity holds true?

  1. 0.8662
  2. 0.8341
  3. 0.7500
  4. 0.9633

Answer(s): B



FGT is evaluating the political risks associated with its operations around the world. Which of the following would indicate that a particular subsidiary has a high level of political risk?

  1. Forthcoming elections in the subsidiary's host country.
  2. The subsidiary's host country requires the active participation of local partners before the subsidiary can operate.
  3. Company law in the subsidiary host country is lax.
  4. The subsidiary is located a considerable distance from FGT's home country.
  5. The subsidiary employs a large number of nationals from the host country.

Answer(s): A,B,C






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