Free P3 Risk Management Exam CIMAPRO19-P03-1 Exam Practice Test

M built a large factory last year and it has just been completed. The initial outflows on this project have a present value of $400 million and the entire project has a net present value of $30 million.The initial phase of the project caused problems and there was an overspend of $35 million as there was unstable soil. The foundations had to be underpinned with large steel bars to ensure the building would be safe. There was no other suitable site for the project.Theconstruction could not be abandoned as the site would have hadvery little commercial value.The Internal Audit department has been asked to carry out a post completion audit. What issues should it concentrate on?

• The audit should consider the initial survey report when the land was purchased to see if the survey mentioned the unstable soil.
• The audit should look at documentation to ensure proper procedures were followed at all stages of the project.
• The audit should consider what lessons could be learned for future projects.
• The audit should find out who was to blame for the project being over budget.
• The audit should consider whether it should have built the factory without underpinning and sold it on quickly.

JHU has recently completed an eight year project. The project was evaluated at a discount rate of 10% and was accepted because the net present value was $18 million.In year 3 of the project there was a significant unexpected repair arising because of the implementation stage of the project was rushed and some checks on equipment were skipped to save time. The cost of this was $8 million.In year 8 of the project the costs of dismantling the project were $11 million more than anticipated because of unexpected changes to the law concerning disposal of industrial scrap.How should these findings be reflected in the post completion audit?

• Poor project management cost the entity $6 million, to the nearest million.
• Poor project management cost the entity $11 million, to the nearest million.
• Poor project management cost the entity $5 million, to the nearest million.
• Poor project management cost the entity $16 million, to the nearest million.

Which of the following statements are correct?

• It is always possible to remove all risks when undertaking large projects.
• If a project has high risks it should always be accepted as the rewards will always be high.
• If a project has low risks it will usually have relatively low returns.
• Risk can always be transferred to someone else.
• Risk should be carefully considered when evaluating possible future projects.

Which TWO of the following are reasons for a company to comply with the Committee of Sponsoring Organisations of the Treadway Commission 2017 Enterprise Risk Management Framework (COSO Framework)?

• Complying with the COSO Framework will mean all employees of a company will comply with internal controls
• Complying with the COSO Framework will mean that a company's internal controls will work properly
• Complying with the COSO Framework will mean there is a good structure to a company's risk management system
• Complying with the COSO Framework will mean that all staff will understand a company's risk management system
• Complying with the COSO Framework will improve a company's reputation

Which of the following statements concerning the use of balanced scorecards to measure divisional performance is correct?

• Dysfunctional behaviour is more difficult than under traditional reporting because a wide range of factors will be measured and reported.
• Dysfunctional behaviour is impossible because divisional managers are evaluated on so many different decisions.
• Contradictory and inconsistent targets prevent balanced scorecards being a useful tool for performance evaluation.
• The input for balanced scorecard reports comes from many sources so it is not possible to misrepresent performance.

RFD, a listed company, is considering making an investment in a risky new venture. RFD has a substantial cash surplus that will be used to acquire the necessary resources. It is unlikely that RFD would have been able to raise finance for this investment because the company is already highly geared.Which of the following statements about stakeholders' conflicting interests are true?

• RFD's shareholders are exposed to the systematic risk from this project and the directors are exposed to total risk.
• RFD's lenders are likely to suffer a greater risk than RFD's equity investors.
• Neither RFD's shareholders or lenders are likely to have the means to prevent the directors from making this investment.
• RFD's existing employees are likely to enjoy a significant upside risk from this project.
• The diversification of RFD's interests will reduce the risks for all stakeholders.

You have been assigned the role of lead internal auditor. Your task is to carryout the annual assessment of the production line maintenance department.When planning for this audit, which of the following must be completed?

• Prepare the report.
• Establish whether the controls are adequate or not.
• Decide how the controls will be tested.
• Learn all about the systems and controls in the department.
• Carefully consider any control weaknesses that are reported.
• Review previous audit findings for the department.

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 ofpolitical risk?

• Forthcoming elections in the subsidiary's host country.
• The subsidiary's host country requires the active participation of local partners before the subsidiary can operate.
• Company law in the subsidiary host country is lax.
• The subsidiary islocated a considerable distance from FGT's home country.
• Thesubsidiary employs a large number of nationals from the host country.

The acronym VPN stands for.

• Verified Private Network
• Virtual Private Network
• Very Personal Network
• Virtual Personal Network

A US company has to pay 500,000 for a new machine.You have the following information on currencies.EUR1 = 1.2300EUR 1= USD1.6200What is the cost of the machine in USD?Give your answer to the nearest $.