CIMA Exam CIMAPRO19-P03-1 Topic 4 Question 64 Discussion

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

Question #: 64
Topic #: 4

JKL is a retailer with more than 45 shops around the country. The directors suspect that a serious fraud has occurred at one of the branches and a team of internal auditors has been sent to investigate

An analytical review investigation shows that sales revenue is in line with budget, but overtime payments to shop staff exceed budget by 20%.

How should the internal audit team proceed?

AIncrease the evaluation of control risk

BConduct additional detailed testing on overtime payments

CIncrease the evaluation of inherent risk

DConduct additional detailed testing of all figures.

Show Suggested Answer

Suggested Answer: B

by Mirta at Apr 09, 2024, 02:18 PM

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Shantell

5 months ago

I see your point, C. Maybe we should do both detailed testing and increase control risk evaluation.

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Elouise

5 months ago

But shouldn't we also increase the evaluation of control risk to ensure overall integrity?

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Annabelle

5 months ago

I agree, it's important to focus on the area where the budget has been exceeded.

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Serina

6 months ago

I think we should conduct additional detailed testing on overtime payments.

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Carlee

6 months ago

That's a good point. Maybe a combination of both options is needed to ensure a thorough investigation.

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Stanford

6 months ago

But shouldn't they also consider increasing the evaluation of control risk in case there are possible fraud issues?

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Melodie

6 months ago

I agree with Carlee. It's important to further investigate the area where the budget has been exceeded.

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Carlee

6 months ago

I think the internal audit team should conduct additional detailed testing on overtime payments.

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Yolando

6 months ago

I agree, that seems like the best course of action

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Leontine

6 months ago

B) Conduct additional detailed testing on overtime payments

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Evan

7 months ago

Ha, yeah, the employees might try to pull a fast one on the auditors. But I like your thinking, Jaime. We need to be thorough and look at both the overtime specifically and the bigger financial picture. This is no time to cut corners.

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Jaime

7 months ago

You know, I'm just picturing the auditors showing up at this branch, and the employees being like, 'Overtime? What overtime? We've just been, you know, *really* dedicated to our work lately.' (laughs) But in all seriousness, I think a combination of options B and D is the way to go.

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Walton

7 months ago

You make a good point. And let's not forget about inherent risk (option C) - if there's a higher inherent risk of fraud in this particular branch, that's also something we need to dig into. This is a complex issue, we need to consider all the angles.

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Barbra

7 months ago

Hmm, I'm not convinced that's the best approach. Increasing the evaluation of control risk (option A) might be a good place to start. If the controls around overtime are weak, that could explain the high payments without necessarily being fraud.

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Lenna

7 months ago

I agree, the overtime payments are the red flag here. But I'm not sure if just focusing on the overtime is enough. I think we need to do a more comprehensive review, like option D suggests - additional testing on all the figures. That way we can be sure we're not missing anything else suspicious.

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Penney

7 months ago

This is a tricky question. The key seems to be the high overtime payments, which could indicate potential fraud. I'm leaning towards option B, conducting additional detailed testing on the overtime payments. That would help us really understand what's going on and uncover any potential issues.

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