CIMAPRA19-P03-1 Exam - Topic 3 Question 57 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 57
Topic #: 3

CW is a large company in the food production industry. It has grown over the years by the acquisition of several smaller rivals CW has ten branches located in its home country and has just opened a foreign branch for the first time It has recently made some changes to the structure and implementation of its control system.

Which TWO of the following changes would be most likely to improve the overall control system?

ACW has just opened a bank account in the currency in which the newly opened branch is now operating

BEstablishing an internal audit department

CExcess funds are now invested, by the finance director, in short-term securities The finance director initiates buy and sell transactions and she also receives and retains all correspondence relating to the investments

DPurchase invoices are now approved for payment at branches and a list of approved invoices are sent to head office for payment The invoices, supporting documentation and suppliers' statements are retained at the branches

EA policy has been initiated to complete a physical inventory of all non-current assets at least annually This is then reconciled with the non-current asset register

Show Suggested Answer

Suggested Answer: B, D

by Vincenza at Sep 14, 2024, 09:31 AM

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Quinn

3 months ago

I like D, but it could lead to delays in payments if not managed well.

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Kathrine

3 months ago

Option C sounds risky, too much power in one person's hands!

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Dustin

3 months ago

Wait, how does opening a bank account (A) really improve control? Seems basic.

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Herman

4 months ago

Definitely agree with option E, annual inventory checks are crucial!

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Cecily

4 months ago

I think establishing an internal audit department (B) is a solid move.

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Cathrine

4 months ago

I recall a case study where approving invoices at branches led to better control. So, I think option D could be a strong choice for improving their overall system.

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Sabina

4 months ago

I keep thinking about the question on cash management we practiced. Opening a bank account in the local currency might help, but I'm not convinced it's the best option here.

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Salome

4 months ago

I'm not entirely sure, but I feel like having a physical inventory policy could also strengthen their asset management. It seems like a good practice.

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Myra

5 months ago

I remember discussing the importance of internal controls in class, so I think establishing an internal audit department could really help improve CW's control system.

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Mitsue

5 months ago

This is a good test of my understanding of internal control principles. I'll focus on identifying the options that enhance control, segregation of duties, and oversight - things like the internal audit department and the physical inventory policy seem like strong choices.

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King

5 months ago

I'm a little confused by the options involving the finance director's role in investment decisions and the decentralized invoice approval process. I'll need to think through how those changes could impact segregation of duties and overall control.

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Paulina

5 months ago

Okay, let's see. Opening a bank account in the new branch's currency seems like a good idea to manage foreign exchange risk. And establishing an internal audit department could definitely strengthen oversight and controls. Those would be my top two picks.

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Weldon

5 months ago

This seems like a straightforward question about internal controls. I'll need to carefully analyze each option and think about how they could impact the overall control system.

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Selma

5 months ago

Hmm, I'm a bit unsure about this one. There are a lot of details to consider, and I want to make sure I understand the implications of each change before selecting the two most likely to improve the control system.

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Sage

1 year ago

Haha, did someone say 'short-term securities'? I'll take 'ways to embezzle money' for $500, Alex. Definitely go with the audit team on that one.

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Katina

1 year ago

Approving invoices at the branch level and sending a list to head office? That's just asking for trouble. I'd rather see stronger centralized controls and oversight.

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Mari

1 year ago

D) Purchase invoices are now approved for payment at branches and a list of approved invoices are sent to head office for payment The invoices, supporting documentation and suppliers' statements are retained at the branches

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Veta

1 year ago

C) Excess funds are now invested, by the finance director, in short-term securities The finance director initiates buy and sell transactions and she also receives and retains all correspondence relating to the investments

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Linn

1 year ago

B) Establishing an internal audit department

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Loren

1 year ago

A) CW has just opened a bank account in the currency in which the newly opened branch is now operating

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Lorrine

1 year ago

Investing excess funds without proper segregation of duties is a recipe for disaster. I'd steer clear of that option and go with the audit team and physical inventory instead.

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Kimi

1 year ago

Yeah, investing excess funds without proper segregation of duties is risky. It's better to focus on the audit team and physical inventory.

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Pearly

1 year ago

I think completing a physical inventory of non-current assets annually is a good idea for better control.

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Beata

1 year ago

I agree, having an internal audit department would definitely help improve control.

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Julian

1 year ago

I believe completing a physical inventory of non-current assets annually would also be beneficial. It would ensure accuracy and help prevent any potential misstatements.

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Marguerita

1 year ago

I agree with you, Sol. Having an internal audit department would provide independent oversight and help identify any control weaknesses.

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Eliseo

1 year ago

I agree, those two changes seem like the most logical choices. The internal audit department will provide independent oversight, and the annual inventory reconciliation will keep the asset records up-to-date.

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Domonique

1 year ago

E) A policy has been initiated to complete a physical inventory of all non-current assets at least annually This is then reconciled with the non-current asset register

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Talia

1 year ago

I think having an internal audit department is crucial for oversight.

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Verdell

1 year ago

B) Establishing an internal audit department

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Angella

1 year ago

A) CW has just opened a bank account in the currency in which the newly opened branch is now operating

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Sol

1 year ago

I think establishing an internal audit department would really improve the control system.

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Justine

1 year ago

Establishing an internal audit department and completing an annual physical inventory of non-current assets sounds like a great way to improve the control system. This will help ensure accuracy and catch any discrepancies.

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Alline

1 year ago

I agree, completing an annual physical inventory of non-current assets will also help in maintaining accurate records and identifying any discrepancies.

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Lettie

1 year ago

Yes, having an internal audit department will definitely help with ensuring compliance and detecting any irregularities.

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