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NEW QUESTION 30
Match the descriptions shown in the boxes below with the method of quantifying risk exposure it best describes.

Answer:

Explanation:

 

NEW QUESTION 31
You are the Management Accountant for P, a food manufacturing company with an annual sales revenue of $5 million.
You discover that the Production Manager's records are inconsistent. Raw materials purchased do not agree to the total recorded for transfers to production plus wastage. There is an average shortfall of 2% of purchases.
You investigated and discovered that there are often mistakes made during manufacturing that results in food that is safe to eat, but cannot be sold because of visual flaws. The Production Manager is supposed to scrap all such damaged product and write all such losses off as waste, but you discovered that he has been giving the damaged food to a charity that assists homeless people. No records are made of such gifts in order to conceal the losses due to manufacturing errors.
What should you do?

A. Instigate a review of the production process to potentially reduce the amount of wastage.B. Do nothing, this is a good cause and the amount is insignificant.C. Instigate disciplinary action, this is both theft and poor management.D. Instigate a process whereby edible but unsellable items can be given to the charity officially.E. Instigate a confidential, but documented, review with the Production Manager and tell him to stop.

Answer: A,D,E

 

NEW QUESTION 32
The management of U is reviewing internal controls throughout the company. It has noted the following:-
1. In the trade receivables section, journal adjustments are made by the clerks, without any reference to their supervisor. Journal adjustments may relate to sales returns, discounts allowed, or transfers between accounts.
2. In the purchasing department, the purchasing manager selects and approves all suppliers, as they are the only person with sufficient experience to do so. They use a very limited number of suppliers because they can rely on these suppliers to provide goods of the quality required at a competitive price. They do not keep any documents in relation to negotiations with other potential suppliers or other quotes obtained.
In relation to the above, which of the following statements are valid?

A. The fact that the purchasing manager does not keep documentation relating to negotiations with suppliers, or potential suppliers, is evidence that they are involved in fraudulent activity.B. It is acceptable for clerks in the trade receivables section to make journal adjustments without authorisation provided the amounts involved are not material to U's financial statements.C. The fact that the purchasing manager uses a very small number of suppliers is, in itself, a sign of poor internal controls.D. Clerks making journal adjustments without reference to their supervisor is evidence of inadequate separation of duties.E. It is acceptable for clerks in the trade receivable section to make journal adjustments without authorisation, provided they have no access to cash receipts.F. The way the role of purchasing manager is carried out in U increases the chance that the company will fall victim to fraudulent activity.

Answer: D,F

 

NEW QUESTION 33
When a new computer system is being implemented there are several possible methods for managing the changeover from the old system to the new system.
Which THREE of the following are true?

A. Phased changeover is the safest and slowest method of changeover.B. Parallel running involves keeping the old system running, normally until certain data retention criteria are met or confidence is gained, while the new system deals with the new workload. Data input is usually carried out on both systems.C. All methods of changeover carry high risk and it is the preparation, consideration of data compatibility and data cleansing before the changeover which has the biggest impact on the smoothness of the transition.D. Phased changeover moves individual portions of the business to the new system one at a time.E. Direct changeover, or Big Bang is only used when the systems are significantly different such that comparing the outputs of the two systems is largely irrelevant.F. Pilot changeover moves the simplest part of the business to the new system first.

Answer: B,C,D

 

NEW QUESTION 34
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