NO.58 TRF is conducting a post completion audit on an investment in a pollution control machine that has reached the end of its five year useful life.
TRF could have been heavily fined if the machine had failed to keep pace with the output of emissions, measured in units. TRF’s cost of capital is 10%. When the machine was purchased, there was a choice of three machines on the market:
TRF purchased the Big machine, but annual requirements only exceeded 600,000 once, in year 3, when
720,000 units of emissions were emitted.
Calculate the amount that the post completion audit shows TRF overpaid for the ownership costs associated with this machine.
Give your answer to the nearest whole $ (in $’000s).

NO.59 HJK is a retailer, with more than 40 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?

NO.60 In terms of Cyber Security, which THREE of the following represent Personally Identifiable Information (Pll)?

NO.61 Match the descriptions shown in the boxes below with the method of quantifying risk exposure it best describes.

NO.62 DFR is an online retailer that sells picture frames The software running on DFR’s website enables customers to log in and make purchases by inputting an email address as a user name and a password that must contain at least eight characters, including upper and lower case letters, numbers and punctuation marks (e.g. £, $ or!) Once logged in, customers can check previous orders that they have placed.
Customers can also use DFR’s website to change personal details, including credit card numbers and delivery addresses Whenever they wish to use those facilities, the software sends a text message containing a six-digit number to their mobile phones They must input that number before the system will accept changes to their personal details Which TWO of the following statements are correct?

NO.63 H sells machinery and also associated services, such as advice and repairs. H’s industry is going through considerable transformation.
Classify each of the examples of information available to H’s management as strategic, operational or of having little value.

NO.64 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?

NO.65 RFG is considering a major expansion that will result in a more diversified business model.
At present, RFG’s market capitalisation is $240 million. This is based on a beta of 1.6. The risk free rate is 4% and the market rate of return is 9%. RFG is financed entirely by equity. The company generates an annual cash surplus of $28.8 million.
The expansion will cost $50 million and will generate future cash flows of $12 million in perpetuity. This new business will reduce RFG’s beta to 1.4.
Calculate the adjusted present value of the expansion.

NO.66 The board of OKN is considering an investment opportunity that will require the company to borrow a large amount in month 10 of the current financial year and to invest it immediately in property, plant and equipment.
This investment has a positive net present value that justifies the risk, but the directors are reluctant to invest in the project.
Why might the directors be reluctant?

NO.67 YHU manufactures flour from wheal (hat it purchases from wheat wholesalers who buy the gram in bulk from farmers around the world and import it to YHU’s home country.
YHU sells its flour as “organic and free from genetically modified grain” It is difficult to test wheat to ensure that it is organic and impossible to prove that it has not been obtained from genetically modified crops YHU must trust its wholesalers to check the provenance of the wheat that they buy for resale to YHU.
Without YHU’s knowledge, a consignment of wheat that it has used to make flour was purchased from a farmer who used genetically modified seed. The wholesaler made an error in tracking this consignment through its inventory system and sold it to YHU as organic and free from genetically modified gram Which TWO of the following are correct?

NO.68 Which of the following are true of interest rate swaps?

NO.69 As part of risk assessment exercise for a low-cost airline you are requested to match the risks listed below with the most approriate method of minimising or dealing with each risk.

NO.70 A project has a net present value of $2 million.
Total cash outflows of this project have a present value of $14 million, which includes staff costs of $10 million.
What is the project’s sensitivity to staff costs?

NO.71 Which method of quantifying risk exposure can be used to calculate the maximum loss on a portfolio occurring within a period of time with a given probability?

NO.72 Which THREE of the following are true with regard to managing the changeover from an old to a new computer system?

NO.73 IOP manufactures aircraft engines. The company is presently engaged in a scenario planning exercise to consider the implications of a possible ban on the use of fossil fuels by the year 2040.
Which TWO of the following would be realistic responses to the scenario?

NO.74 V buys vegetables and fruit from three farms located in a different part of V’s country and sells them to large supermarket chains.
A recent newspaper magazine had an article on these farms showing that the farms employ illegal immigrants whose status was used by the factory’s owners to force them to work for low wages and in unpleasant conditions. They are forced to live in small overcrowded caravans with no running water. They are also given meals which are cold and poor quality. These farms are located in a developed country with strong labour laws.
Classify each of the following statements as true or false.

NO.75 C Ltd is a private, family-owned company which is hoping to become listed on a recognised Stock Exchange within the next two years. At the moment, the Board of Directors comprises five directors; four of whom are from the founding family and all of whom are involved in the day-to-day running of the business. The remaining director obtained a seat on the Board three years ago as a condition of an investment by a venture capital fund.
The Board meets in half-day sessions once a fortnight and the Board meetings are reasonably well run. All decisions are taken by the Board as a whole. There are no sub-committees.
Which of the following steps would it be appropriate for C Ltd to take in the light of the proposed listing?

NO.76 H sells machinery and also associated services, such as advice and repairs. H’s industry is going through considerable transformation.
Classify each of the examples of information available to H’s management as strategic, operational or of having little value.