Pass CIMA CIMAPRO19-CS3-1 Exam in First Attempt Guaranteed [Dec-2024]
Exam Sure Pass CIMA Certification with CIMAPRO19-CS3-1 exam questions
CIMA CIMAPRO19-CS3-1 Exam Syllabus Topics:
| Topic | Details |
|---|---|
| Topic 1 |
|
| Topic 2 |
|
| Topic 3 |
|
| Topic 4 |
|
| Topic 5 |
|
NEW QUESTION # 17
Wodd's Chairman enters your office:
"I am glad I caught you, I am looking for some advice, but I do not wish to involve your boss at this stage, or any of the other executive directors.
I have been approached by Darrell's Chairman concerning the possibility of a merger between our two companies. I was a little surprised because it has apparently, according to a press article, been in talks with at least one of our competitors and I suspect that it is keen to merge with any large company that can offer some synergy. I understand that Tabel, another major forestry company, has already rejected its proposal.
I happen to know that Darrell has invested a little too heavily in its new MDF factory. It is state of the art, but it has to operate at close to full capacity in order to be economic and Darrell just hasn't got sufficient forestry resources to keep the factory operating at full volume without destroying its own forests.
We are attractive to merge with because we own large forests that can sustain Darrell's needs. We don't manufacture MDF ourselves, but we have lots of experience of supplying this market with raw material. We would divert lots of this output to Darrell's factory. Darrell believes that it would be possible to dominate the MDF industry if it merged with a company such as ourselves. The fact that we were quite liquid at the end of last year also helps, because I understand that Darrell is having a few cash flow problems.
Its Chairman proposes a full merger. This will be achieved by the creation of a new parent company which will acquire existing equity in both companies through an exchange of shares. He and I will head a special nomination committee to select the most suitable Board for the new company and then I will step down from the Board while he continues as Chairman of the new company.
Needless to say, this is all highly confidential.
Do you think that it sounds as if there are potential and achievable synergies between Wodd and Darrell?
Would you regard it as a gross ethical breach to keep this conversation just between the two of us for the time being, without warning your boss, until I have had the chance to negotiate further with my counterpart at Darrell?" Reference Material:
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 18
The Director of Finance, William Seaton, has stopped you in the corridor:
"Your report was really helpful, but the Board is still considering the implications of that email from Jan Archibald at Fouce Oil. I need to make a more detailed report to the Board and I would like you to draft it for me.
I know that we have owned and operated oil wells in the past, but that has always been with the intention of finding a buyer who is prepared to pay a realistic price. We have chosen never to think about the implications of keeping wells.
I need a report from you that covers the following issues:
* The key political risks of retaining our interest in these oil wells, with particular emphasis on high consequence, high likelihood risks.
* A suitable response to each of your political risks.
* An overview of how changes in the global economy and the demand for oil could affect the decision to proceed.
* The challenges associated with putting together a management team to take charge of the production side of this proposed new strategy.
I realise that this is a lot to ask of you, but I need you to move quickly because of the interest from our biggest shareholder."
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 19
You received a telephone call at home early in the morning, asking you to check your emails. The following email was waiting for you:
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Public relations crisis
Hi,
This email arrived from the Head of our Middle East office just now. They are a few hours ahead of us, so he rang me at home to make sure that I had seen his message.
We have a few hours before the news article will be published, so I need to make the best use of that time in order to limit the damage to Slide. Your priority is to protect our reputation because I have already woken up the engineers and geologists and they are going to deal with the actual oil spillage.
I am not thinking too clearly, so I need you to provide some initial thoughts on the following:
* Should we use our business relationship with Business News to have them withdraw the story? We are a major advertiser and we spend millions with them every month. What are the advantages and disadvantages?
* Should we respond with the facts as we know them? All we know for certain is that there have been reports of oil contamination in an area that has countless oil facilities nearby, and so we could deny all responsibility, at least until our experts have had the chance to get there and to investigate.
* If we do decide to make a public announcement then we will need to have a plan in place. We need to assemble a team to deal with the press. How should we structure our media response team?
* What are the key factors that the Board should consider when communicating with the press? Explain why the factors that you have identified are important.
I realise that it is still very early, but I need your thoughts very quickly.
Thanks
William
The email referred to above can be found by clicking on the Reference Materials button.
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 20
Daily Gazette
Celebrities flock to release tax returns
Comedian Madd Wilkins is the latest celebrity to post his tax returns online. The comedian earned M$1,600,000 from his sell-out tour and from the sale of DVDs. He paid tax of M$608,000 on that income. The comedian quipped, "there's nothing funny about paying tax, but then there's nothing very funny about my act either so it's only fair that I should pay the full whack".
Public concern about the tax benefits enjoyed by wealthy celebrities using artificial schemes such as investing in forestry to minimise their tax bills has led to closing tax loopholes topping the political agend a. Many wealthy individuals have volunteered their tax files in order to reassure the public that they are not benefitting from such schemes.
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 21
It is now three days since the start of the oil spillage crisis.
You have received the following email from William Seaton, Director of Finance:
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Crisis management issues
Hi,
A quick update on the latest developments.
We have brought Block Associates in to lead the operations on dealing with the oil spill. It has assigned one of its leading consultants to take charge of this for us. We have paid Block Associates an annual retainer for many years, but we have never actually had to call on its services because we have been able to contain any environmental problems using our own resources.
Using Block Associates is going to be expensive. It insists on being free to bring in whatever equipment and personnel are required to resolve matters and to charge that on the basis of cost plus 25%. Our annual retainer is simply the cost of ensuring that it will respond on this basis if required.
We have had some murmurings of discontent already because our own engineers and geologists have made significant progress in identifying the cause of the spillage and they believe that they are capable of bringing it to a successful conclusion. They have suggested that it would be both quicker and cheaper to leave them in charge, while retaining the option to bring in Block Associates at a later date if they fail.
* Firstly, what factors should we take into account in deciding whether to leave our own experts in charge of this operation rather than using Block Associates?
* Secondly, how should we manage our relationship with Block Associates if we decide that it should be used?
* Thirdly, two things: The Board is concerned that Slide's engineers and geologists have already become disillusioned by the decision to consider calling in Block Associates. We cannot afford to lose their commitment or to see them decide to leave Slide in the longer term. I need you to provide me with some ideas as to how we can motivate them to give their best performance for the duration of this crisis AND to inspire them to remain in Slide's employment after the crisis has been resolved.
William
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 22
Peter Sorchi, Wodd's Chief Executive has stopped you in the corridor:
"We signed a memorandum of understanding with the Bravadorian Government last night. Effectively, we are now the new owners of a forest in a new continent for us. It has already made it onto the business pages in the press.
Once the formalities are completed, we will be entering into new commercial territory. Our surveyors have looked at the first area that we intend to develop and there is a lot more hardwood than we first expected. That is good news in a way because it can be sold at a premium, but we don't have any experience of selling hardwood and we are hardly going to pulp it for MDF or paper. I need you to identify the changes that we will have to make and to recommend how best to manage them.
The funding arrangements are still being worked out. Bravador's banks are not in a position to fund a transaction of this size and none of the other banks that we have approached are prepared to lend to us. We will need to raise additional equity. I realise that we would normally make a rights issue, but I think that it would be simpler and cheaper to suspend the dividend for a year, which would cover most of the purchase price in itself. Please advise me on the advantages and disadvantages of doing that.
It would be ideal if you could let me have a briefing paper on both of these matters urgently." Reference Material:
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 23
Twelve hours have passed since you received the telephone call concerning the oil spillage.
You receive the following telephone call from William Seaton, Director of Finance:
"The press has got a hold of the story about the oil leak. Our share price has taken a major hit. Indeed, Slide's market capitalisation has fallen by a third since the stock exchange opened for business. There is a lot of loose talk in the press about the knock-on effect of this crisis for Slide. It has not escaped anybody's notice that there are news teams showing injured wildlife. There is also a great deal of footage being broadcast on the other sites around the world where we are revitalising oil wells using the same technology that was in use at AZ40.
Our experts have only just arrived at the spillage site. While they were on the corporate jet they emailed their initial thoughts, based on their understanding of what went wrong. Our engineers anticipate a major operation to block the leak by pumping cement into the bore hole at a low pressure. This will be expensive, but the cost will be less than one tenth of the reduction in our market capitalisation.
I need an email from you:
* Firstly, I need a clear explanation of the key risks that Slide now faces because of this crisis. I am only interested in those with a high risk and high consequence and I need you to justify those classifications because the Board will need to prioritise its responses.
* Secondly, two related issues: I need you to explain why Slide's share price has fallen to such an extent AND to recommend, with reasons, whether we should release our costings of the repair scheme at this time.
It goes without saying that I need this urgently."
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 24
Reference Material:
Wodd's Chief Executive, Peter Sorchi has stopped you in the corridor:
"This weak USD is really causing us some serious problems. I think that it is only a matter of time before the stock market starts to get nervous and I am worried that our share price will fall in the near future. Thank goodness it does not appear to have fallen by much so far.
I would like to brief the Board on two main issues tomorrow. Firstly, what can we do as a Board in order to minimise the negative impact of the weak USD on our share price? Secondly, we know the identities of the key investment analysts who deal with our industry. Would it be a good idea for us to brief them? Please also consider the ethical issues arising from both of these topics as well as the more technical matters.
Please let me have a copy of your briefing notes in advance. I need to be able to sound convincing at the meeting. I'll also have my secretary refer you to a really helpful blog."
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 25
Save North Forest!
North Forest is located in an area of outstanding natural beauty that also includes a number of small towns and villages. Many local residents moved into the area after retiring and were attracted by the opportunity to breathe fresh air and be surrounded by beautiful views. In doing so, we have brought wealth into a local economy that was struggling because there was little employment to encourage younger people born in the area to stay.
Wodd plans to destroy North Forest in order to fuel a power station that will, in itself, spoil the view as well as polluting the atmosphere.
Globally, vast areas of forests are cleared every year for commercial exploitation. This creates untold risks for the planet because trees are responsible for giving us breathable air.
Local residents are working together with Green Marland, Marland's largest environmental campaigner, to draw attention to the damage that Wodd is threatening to inflict on this area.
We ask you to write to the Government planning department to ask it to refuse to issue a permit for this development. We also ask you to sign our online petition and to consider joining us in peaceful and non-violent direct action against the bulldozers in the event that our efforts to block the granting of a Government permit should fail.
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 26
You have received the following email from Marcus Svenson, Finance Director:
From: Marcus Svenson, Finance Director
To: Senior Finance Manager
Subject: News reports
Hi,
I have sent you a link to a news site on the internet. Things are getting complicated in Bravador.
Every Board member has been asked to attend a brainstorming session this afternoon, before the CEO flies out to Bravador this evening. We will be considering the following four matters:
* Is it acceptable for us to develop this forest, given the commitment that we have made with respect to indigenous peoples' rights? They have been quoted at the end of the news article.
* Is it fair for the environmental protestors to complain that our operations are unsustainable?
* Would it be unethical to offer to build a village, with a proper school and medical clinic, for the tribe and to offer them work in our forestry operations?
* Is it really a good idea for the CEO to fly to Bravador just to appear on the television news in his boots and overalls?
Please email me your thoughts on each of these matters before I leave for the meeting this afternoon.
Marcus
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 27
Daily Gazette
Draft story for comment
The singer, the forester and the tax adviser
Popular singer Barry Crauder is regarded as one of our more financially-aware personalities. He works hard, releasing at least one new album every year and serving as a judge on a popular talent show. He has a reputation for investing this income wisely, choosing to save for his future rather than squandering on the trappings of the show business lifestyle.
Crauder's popularity was severely damaged when it emerged that he pays little or no tax on the investment income derived from his portfolio of investments. That is because he has used one of the few remaining tax loopholes, namely investment in forestry. He owns significant areas of forestry in the far North of Marland. We estimate his earnings from those investments to exceed M$800,000 every year and yet he has not paid a single Cent in tax on that income since he first invested in forestry ten years ago. In contrast, a typical fan who earns the national average wage of M$28,000 every year will pay approximately M$7,000 in tax.
So, could we all invest in forestry? Well, not unless we can afford it. I posed as a wealthy business entrepreneur and approached several leading tax advisers. Most were interested in helping me to invest a seven figure sum to avoid tax, but warned that saving tax could be expensive in terms of fees and commissions.
Four firms recommended forestry as the ideal investment. All recommended Wodd, with whom all four claimed to conduct "significant business". They said that a typical client would give Wodd a bank draft and leave the purchase and subsequent management to Wodd in return for a fee. Most clients had never even seen the forests that they own and none ever need to make a management decision concerning the growth or sale of timber.
Sadly, investing in forestry is a rich person's pursuit. I was warned that companies such as Wodd are unlikely to entertain a potential client whose initial investment does not run into the tens of millions of M$.
Please address any response to Sonia Jones, care of the Daily Gazette news desk, as quickly as possible.
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 28
You have received the following email from Marcus Svenson, Finance Director:
From: Marcus Svenson, Finance Director
To: Senior Finance Manager
Subject: Biomass proposal
Hi,
The Board has just heard a presentation by an engineering consultancy concerning a proposal to develop a biomass power station adjacent to our North Forest.
The Board has asked us to put together some thoughts about the merits of this proposal. We would proceed on the basis that we would build the power station and sell the resulting electricity to the national power generator which has a number of coal-fired power stations, each of which is nearing the end of its useful life and the coal has to be shipped in, so we should find it relatively easy to guarantee sales. The power generator has indicated that it would be possible to negotiate a three year contract in the first instance, with the expectation that this would be extended by subsequent three year contracts, subject to price and performance.
We would be responsible for building and operating the power plant and we would also have to pay for 50% of the cost of power lines for connecting to the national electricity grid, with the other 50% being funded by the national power generator.
Please draft a briefing paper that I can present to the Board on the following:
How can we predict whether the share price is likely to increase or decrease if we commit ourselves to this project? You should identify the challenges associated with answering that question and indicate how we might address them.
What are the long-term risks associated with future revenues from the sale of electricity? How might we manage these?
Marcus
Reference Material:
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 29
You have received the following email from Marcus Svenson, Finance Director:
From: Marcus Svenson, Finance Director
To: Senior Finance Manager
Subject: Investment opportunity
Hi,
The Board is considering an investment opportunity to buy a forest in Bravador, a country in South Americ a. This will be a major expansion and will also enable us to diversify into new lines. For example, the forest contains lots of hardwood varieties that we could sell to companies in the double glazing industry or to furniture manufacturers. I downloaded the attached extract from an online encyclopaedia for your information.
The forest that we are planning to buy has not been used for commercial purposes until now. The land belonged to the Government for many years and it has been left to grow naturally. The Government is now keen to sell the land and has agreed that it may be used for commercial forestry purposes.
This investment will enable us to increase our output of softwoods by up to 20% per year, in addition to enabling us to enter the hardwood market.
I need two things from you. I need you to recommend a suitable approach to managing our relationship with the Bravadorian Government. I also need you to identify and explain the political risks that will remain even if we succeed in creating a sound relationship with the Government.
Marcus
Reference Material:
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 30
SIMULATION
A month later, you receive the following email:
Reference Material:
From: Hesham El-Sayed. Independent Non-executive
Director
To: Romuald Marek. Chief Finance Officer
Subject: Collapse of fuel supplier
Hi Romuald
I am writing to give you some advance notice of an internal audit investigation that has been commissioned by the Audit Committee Just over a year ago. Planejoos, a newly formed company, approached the management team at Airfield's Capital City International (CCI) airport and offered to take over refueling operations at Starport Planejoos offered a higher percentage of revenue than the existing supplier was paying CCI's management team agreed and appointed Planejoos rather than renew the existing supplier's contract.
CCI was unable to conduct the usual background and credit checks on Planejoos for two reasons. Firstly, Planejoos was a new company and so did not have an extensive credit history that could be checked Secondly CCI was under time pressure to reach a decision on whether to renew the existing supplier's contract or allow it to expire CCI's management team claimed that it had acted quickly in order to benefit from the additional revenue that could be earned from dealing with Planejoos The management team was acting on the basis that it had an ethical duty to maximise the wealth of Airfield's shareholders and that maximising revenues from fuel sales through this agreement with Planejoos was consistent with that ethical duty.
Unfortunately, as a new company. Planejoos struggled to obtain trade credit and the high demand for fuel put the company's cash flows under extreme pressure Receipts from sales lagged behind payments for inventory Planejoos has now collapsed, leaving a large trade receivable that CCI will have to write off as uncollectable CCI had permitted this receivable to accumulate rather than pressing for payment and so putting Planejoos under further pressure.
Fortunately, the previous fuel supplier was prepared to return to CCI.
Kind regards
Answer:
Explanation:
See the explanation below
Explanation:
Requirement: 1
The acceptance of Planejoos at Capital City International airport with out credit rating check is a sign of poor internal audit practices. The CCI is the biggest airport the Arrfied owned and amongst the world big airports. The Planejoos is a newer and inexperienced company without sound credit and financial history, the collapse of aviation fuel provider at a major airport is credit and reputaional risk The internal audit performance laking in Arrfied which is in the aviation business could put the business in danger and needs to be corrected. The poor performance of internal audit by not inusring compliance could make damage i.e. a terrorist could attack the aircraft and landside if properchecking are not done. The aviation business are vulnerable to hijacking, human trafficking and smuggling. A special attention must be invited to internal audit.
The overall performance of the internal audit and audit committee is questionable here. The audit committee is not formulated correctly. No non-executive director have sound financial expertise. Martin Harris is the only NED with financial expertise and taking him out of audit committee is not sign of good corporate governance. The new leadership at the audit committee with savvy of financial knowledge must be on the board.
Martin Harris should be taken on the board in replacement of Carmelita Tante. Revamp the internal audit department and startup a credit department which is also responsible to rating checking.
Arrfield must also think about to formulate a risk committee to check the risk and ensure that the risks are properly managed.
Requirement : 2
It is the duty of the management to maximize the shareholder's wealth, but a proper care must be taken while making any decision on behalf of the shareholders. It seems due care is not given to the decision and the decision was made in haste.
It is not only duty of the management to maximize wealth of the shareholder, they are supposed to protect the wealth of the shareholders. Any decision no taken within the risk appetite of the company may leads to breach of ethical principles.
The shareholders trust on the management that they will make the decisions in best interest of the company even if this is not is their own interest. Incase of the Planejoos the management has neglected the credit rating check any made the decision solely on the basis of prices that Planejoos quoted. It seems that this decision does not fit in the risk appetite and risk tolerance of the Arrfield.
NEW QUESTION # 31
Six months have passed. Wodd has announced its intention to create a biomass power station in its North Forest, to be fuelled by trees from the North Forest itself and also waste biomass products from other timber land owned by Wodd in that area.
The news has received mixed reactions. Younger residents of the small towns close to North Forest were delighted because their local economy will be boosted. Older residents and those living further afield within the region complain that the power station will pollute the environment and the destruction of the North Forest will blight an area of outstanding beauty. A residents' group has been established online, with support from Marland's largest environmental lobbying group, to block the proposal.
You have received the following email from Marcus Svenson, Finance Director:
From: Marcus Svenson, Finance Director
To: Senior Finance Manager
Subject: Stakeholder issues
Hi,
I have sent you a link to the website created by the protestors against the biomass power station. This is causing serious problems because we still need to gain formal Government approval, although the Government supports biomass as an energy source as it is far cleaner and more sustainable than fossil fuel and far less controversial than nuclear. Needless to say, the press has picked up on this and is starting to run the story.
We had reached agreements in principle with Marland Bank for funding for this project and with a civil engineering contractor for the construction work, but both are now nervous about signing contracts because neither wishes to be associated with an environmental scandal.
I need two things from you.
Please draft the body of a press release that we can issue in response to the claims on the protestors' website. Add a few comments to explain what your arguments are trying to achieve (I don't want us simply to state that we disagree with the protestors, I want us to offer meaningful arguments in response). Just write your draft as part of your reply to this email and I will circulate it to the other Board members for approval before we submit it.
Please suggest some safeguards that we can put in place to enable us to retain the support of the bank and the civil engineer throughout this project.
Marcus
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 32
The following email has been forwarded to you by William Seaton, Director of Finance:
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Email from CFO of Fouce Oil
Hi
This email arrived last night. I need you to help me to think through the various implications of doing what it suggests before I present it to the Board. I need you to focus on the following issues:
* Would this proposal make sense from a strategic point of view?
* If we did decide to go ahead, what would be the issues that we would have to consider with respect to informing the stock market?
Could you please email me your thoughts within the next hour? I have to brief the Board later today.
Thanks
William
The email referred to can be found by clicking on the Reference Materials button.
Answer:
Explanation:
Complete your answer and submit
NEW QUESTION # 33
......
Real CIMA CIMAPRO19-CS3-1 Exam Questions Study Guide: https://torrentlabs.itexamsimulator.com/CIMAPRO19-CS3-1-brain-dumps.html
