CIMAPRO19-P03-1 Exam - Topic 6 Question 41 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 41
Topic #: 6

An oil company has entered into a joint venture with a competing oil company to develop a new oil field. The joint venture arrangement is intended to mitigate the risks associated with developing the oil field.

The following disclosure appears in the oil company's risk report:

"Many of our large projects and operations are conducted through joint ventures. These arrangements involve complex risk allocation and indemnification arrangements and we have less control over these activities than we would have if we had full ownership and control. Our partners may have economic or business interests that are opposed to ours, and may exercise the right to block key decisions or actions.We believe the joint arrangement is in our best interest."

Which of the following statements are correct?

AThe risk report means that the shareholders know exactly how bad the risk is.

BThe risk report says nothing useful about the risk.

CNow the shareholders know the directors are aware of the risk.

DIf the risk report had not reported the risk the shareholders might not have been aware of the risk.

EThe shareholders now have more useful information.

Show Suggested Answer

Suggested Answer: A, B, D

by Merlyn at Nov 16, 2022, 11:51 AM

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Sharika

7 months ago

Not sure this really helps shareholders understand anything better.

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Tracie

7 months ago

I think it’s good they acknowledge the risks, at least.

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Shaun

7 months ago

Wait, so shareholders might not even know the real risks?

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Jovita

7 months ago

Totally agree, it’s still vague on specifics.

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Howard

8 months ago

The risk report doesn't guarantee shareholders know the full extent of the risk.

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Stefany

8 months ago

I feel like option E might be misleading; just because they have more information doesn't mean it's necessarily useful.

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Weldon

8 months ago

I'm a bit confused about option A; it seems too strong to say shareholders know exactly how bad the risk is just from this report.

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Sabra

8 months ago

I remember a practice question about risk disclosures, and I think option D could be correct since it highlights the importance of informing shareholders.

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Rachael

8 months ago

I'm not entirely sure, but I think option C makes sense because it shows the directors are acknowledging the risks involved.

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Antonette

8 months ago

Based on the document options provided, I think the correct answer is B and C. Option A doesn't contain the phrase "fact find", and the query is looking for that exact phrase, not just the individual words.

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Leslee

8 months ago

Hmm, this question seems straightforward, but I want to make sure I understand the concepts correctly before answering.

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Audra

8 months ago

I vaguely remember something about false sole-source schemes that might fit this, but honestly, I'm kind of second-guessing myself here. Which one was it again?

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Cordelia

1 year ago

Ha! If they didn't report the risk, the shareholders would think the directors were living in a dream world. This way, they can't say they weren't warned.

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Edelmira

11 months ago

E) The shareholders now have more useful information.

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Sharika

11 months ago

D) If the risk report had not reported the risk the shareholders might not have been aware of the risk.

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Marsha

12 months ago

A) The risk report means that the shareholders know exactly how bad the risk is.

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Melodie

12 months ago

E) The shareholders now have more useful information.

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Launa

12 months ago

C) Now the shareholders know the directors are aware of the risk.

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Jani

1 year ago

A) The risk report means that the shareholders know exactly how bad the risk is.

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Zachary

1 year ago

At least the directors are being upfront about the risks. That's better than trying to hide it from the shareholders.

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Johna

1 year ago

C) Now the shareholders know the directors are aware of the risk.

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Daniela

1 year ago

A) The risk report means that the shareholders know exactly how bad the risk is.

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Regenia

1 year ago

I agree, the risk report doesn't really provide any useful new information. The shareholders probably already knew about these kinds of risks.

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Katheryn

1 year ago

But does the risk report really provide useful information to the shareholders? I'm not sure about that.

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Nilsa

1 year ago

The risk report definitely doesn't mean the shareholders know exactly how bad the risk is. It's just a general acknowledgment of the risks involved in these joint ventures.

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