Exam P3 Topic 1 Question 180 Discussion

Actual exam question for CIMA's P3 exam
Question #: 180
Topic #: 1

S, a qualified and experienced professional accountant, has been appointed as a non-executive member of the Audit Committee of X X has recently obtained a listing on the second tier of a reputable Stock Exchange B, the Finance Director, is only worried about the maintenance of proper financial controls and is less concerned with operational controls S has asked A.
The Production Director, to produce regular reports for the Audit Committee on production specification compliance and related issues A is concerned that this means S does not think he is doing his job properly and doubts his integrity In relation to this scenario, which of the following statements are valid?
Select ALL that apply.

A. B is correct to be more concerned about the maintenance of financial controls because they are inevitably more important than operational controls.

B. There is no benefit for X of A producing reports for the Audit Committee unless there are some members on the Audit Committee who have expertise in the production area

C. The appointment of an independent professionally qualified and experienced accountant will help strengthen the Audit Committee.

D. The Audit Committee should plan for the receipt of regular reports on production specification compliance and related issues

E. If X is not seen to have an effective Audit Committee it will be exposed to increased market risk

F. A is correct in believing that being asked to report to the Audit Committee in the manner described above suggests a lack of trust in his ability or integrity

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Exam P3 Topic 1 Question 180 Discussion

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