Question 1

You are theManagementAccountant for a company which supplies baked food to a string of retail outlets; biscuits, cakes, savoury snacks etc.You discover that a trainee employee, who is responsible for cleaning out the delivery vans has been taking damaged goods and packets which have reached their sales expiry date and has been selling them to friends. These products would otherwise have been discarded as waste.The trainee in question is the nephew of one of the senior managers.What is the correct course of action?

Options :

A : Have a quiet word with the trainee and ask him to stop.

B : Have a quiet word with the senior manager, the trainee-s relative and askthem to deal with it.

C : Document the facts and escalate to the trainee-s manager.

D : Do nothing, the product was designated as waste anyway.

Answer: C

Question 2

Which TWO of the following scenarios should be considered in strategic scenario planning by a publishing company that specialises in academic textbooks?

Options :

A : There could be a change in the technology used by consumers, such as smaller mobile phones with smaller screens

B : Budget changes could have an impact on the funding available to college and university libraries

C : The terms offered by media companies for film rights for books could change

D : The quality of output from printing presses might improve

E : Environmental concerns could lead to a decrease in the availability of trees to make paper

Answer: B,C

Question 3

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

Options :

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

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

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

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

Answer: A,B,C

Question 4

M, a manufacturing company, has had some problems with defects in one of the main productsitproduces. This product has been made by the company for many years and is very profitable. Last monthithad over 300 defects reported by customers which is more than 15% of products sold. This is a reputation risk for M and is also affecting profitability
Which of the following controls could M introduce to reduce defects and also increase profitability?

Options :

A : M could increase the number of quality control staff.

B : M could introduce a procedure where quality control staff sign a form at the end of each dayto say they have examined 1 in 10 products for defects and they are satisfied with the quality.

C : The production director could examine one in every 10 products and sign a form to say they are satisfactory.

D : M could service machinery at least once a month as recommended by the machinery supplier.

E : M could check all employees qualifications to ensure they are qualified for their jobs.

Answer: A,B,D

Question 5

MNBis a multinational IT company with headquarters in Asia and with operations in all continents.MNBisattempting toexpand its operations in Europe. This is seen as a major challenge as the European market is very well developedand highly competitive.MNBdevelopsandmanufacturesits own products. Parts and assemblies aresourced across Asia, America and Europe. These are sometimes purchased locally as a condition of a contract, but MNB aims to include as much of its own equipmentas possible. Transfer pricesbetween MNB's subsidiariescan be set in YEN, USD, EURO, GBP. Transfer prices are revised every month in line with production times as most goods are made on short order with sales cycles running at 3-4 months.What types of risk are being presented here?

Options :

A : Political risk

B : Currency risk

C : Economic risk

D : Environmental risk

E : Fraud risk

F : Legal risk

Answer: A,B,C

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