Helping Hand Questions for P3

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Question 16

H Ltd is a company providing postal and courier services to small businesses. Customers pay a monthly or annual subscription fee to use the service, plus a very small fee for each item delivered.

A year ago, H employed a new sales team. Their remuneration is dependent on the number of new customers they sign up. Sales increased dramatically in the first six months, but now difficulties are emerging such as new customers dropping their subscription once the initial period has expired; subscriber direct debits being returned unpaid; subscribers going out of business and other similar issues.

Which of the following would be appropriate to help resolve these problems?

Options:

Alter the pricing structure in order to increase the price for sending each item but decrease the subscription element of the fee.

Ensure that a credit check is carried out before a subscriber is accepted.

Reduce the rate of commission payable to any sales person who fails to sign up at least an agreed minimum number of customers each month.

Alter the commission arrangements so that commission is payable only when the subscriber signs up for a second year.

Preparing a monthly report for sales persons detailing the performance of each new customer they have signed up over the previous year.

Question 17

JKL makes large export sales to customers in country X, whose currency fluctuates significantly against JKL's home currency JKL also makes large purchases from suppliers in countrrOC All of these transactions are in country X's currency

JKL's treasurer does not actively hedge currency risks because there is a natural hedge in place due to the company making both sales and purchases in the same currency

JKL's board has instructed the treasurer to put active hedging measures in place because the risk report would otherwise have to disclose the fact that JKL has a currency risk which is not actively hedged

Which of the following statements are correct? Select ALL that apply.

Options:

Risk reports can change behaviour

Risk reporting is a bad thing

The board may be concerned it will be criticised if it does not hedge

The board does not want to be blamed for ignoring a risk.

Risk reporting drives the whole risk management process

Question 18

SDF is a quoted company that has a large internal audit department.

Which of the following would impair the independence of SDF's internal audit?

Options:

The head of internal audit reports directly to SDF's chief accountant.

Junior internal audit staff are recruited directly from university. They spend two years with the company before moving into other departments within SDF.

Internal audit staff receive a bonus whenever they discover a compliance error.

It is left to the individual members of the internal audit department to report any conflicts of interest associated with a proposed investigation to which they have been assigned.

Internal audit staff salaries are linked to a company-wide salary scheme.

Question 19

A large department store has just discovered that the staff in the store coffee shop have been defrauding the company for the past three years. The six employees who work in the coffee shop have been keeping a proportion of the cash takings, concealing the theft by not recording all sales up in the till They shared the proceeds of this fraud between them The fraud was only uncovered when one of the employees left and his replacement reported the theft to management rather than becoming involved in the crime

Which of the following best describes the role of the store's internal controls in the context of this fraud?