Question Tag: Risk

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CSME – Nov 2020 – L2 – Q5a – Risk Management and Corporate Strategy

Explain the concept of risk and differentiate between the two broad categories of risk, with examples.

Question

In an effort to increase shareholders’ value, companies are often faced with risks.

Required:
i. Explain the term ‘risk’. (2 Marks)
ii. Differentiate between the two broad categories of risk, with examples. (8 Marks)

Answer

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Tags: Pure Risk, Risk, Speculative Risk
Level: Level 2

Topic: Risk Management and Corporate Strategy
Series: NOV 2020

BL – May 2012 – L1 – SA – Q14 – Sale of Goods

Determine when the risk in goods transfers from seller to buyer in a sale of goods contract.

Question

In an agreement for the sale of goods, the risk remains with the seller until:

A. Sale is completed
B. Goods are inspected to the satisfaction of the buyer
C. Final payment is made by the buyer
D. Cost, insurance, and freight are paid for
E. Bill of lading is signed by the seller

Answer

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Tags: Business Law, Contracts, Risk, Sale of Goods
Level: Level 1

Topic: Sale of Goods
Series: MAY 2012

PSAF – Nov 2021 – L2 – Q1b – Government Accounting Concepts and Principles

Identify risks associated with reliance on MTEF and ways to mitigate them.

Question

Identify FOUR risks associated with reliance on the Medium-Term Expenditure Framework (MTEF) and ways to mitigate these risks.

Answer

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Tags: Mitigation, MTEF, Public Finance, Risk
Level: Level 2

Topic: Government Accounting Concepts and Principles
Series: NOV 2021

PM – Nov 2021 – L2 – Q6 – Decision-Making Techniques

Explain methods to help choose the optimal marketing package under uncertainty and risk for Mr. Alade’s business.

Question

Mr. Alade, the owner of a business, has been attending a course on scenario planning and decision-making. As a result of that advice, he has produced, using cost, volume, and profit analysis, 12 scenarios for a new product that the business will launch in the near future. There are four possible marketing packages (A, B, C, or D), and three possible market conditions (poor, average, or good) that could be encountered. The Net Present Value (NPV) of the cash flows resulting from each of the scenarios is shown in the table below:

Market Package	A	B	C	D
Market Conditions	N’000	N’000	N’000	N’000
Poor	180	230	220	190
Average	190	200	210	275
Good	550	260	210	500

Mr. Alade missed the session on how to deal with risk and uncertainty. He sent this table to the course tutor, who advised him to review the methods under the “Uncertainty” section. If he can estimate the probability of each market condition, he should use “Risk-based methods.” The decision will be influenced by Mr. Alade’s attitude towards risk.

Required:
Explain FOUR methods that could help Mr. Alade decide which marketing package to choose. Include THREE methods to deal with uncertainty and ONE method to deal with risk, explaining the attitude associated with the decision-maker for each method.

Answer

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Tags: Decision Making, Risk, Scenario Planning, Uncertainty
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2021

AA – July 2023 – L2 – Q1b – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Explanation of control weaknesses inherent in Non-Profit Organizations (NFPOs).

Question

b) Understanding the client’s business environment is critical to understanding the client’s business. There is a need for this because the objectives of commercial organizations are different from that of not-for-profit organizations (NFPOs). The inherent control weaknesses for both forms of organizations may not be the same.

Required:
Explain FIVE (5) control weaknesses inherent in NFPOs. (10 marks)

Answer

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Tags: Internal Control, Non-Profit Organizations, Risk, Weaknesses
Level: Level 2

Topic: Audit and Assurance Evidence, Audit and Assurance Risk Environment
Series: JULY 2023

AA – May 2018 – L2 – Q2b – Audit and Assurance Risk Environment

Identifies deficiencies in a company's wages system and provides recommendations to prevent misstatements in financial statements.

Question

Third Floor Ltd is a construction company with many contracts being executed concurrently. A large number of workers are on various construction sites. Third Floor Ltd has an internal audit department, and the team is currently reviewing cash wages systems within the company.

The following information is available concerning the wages systems:

Workers on each site are controlled by a foreman. The foreman has a record of all employee numbers and can issue temporary numbers for new employees.
Any overtime is calculated by the computerised wages system and added to the standard pay.
The two staff in the wages department make amendments to the computerised wages system in respect of employee leave, illness, as well as setting up and maintaining all employee records.
The computerised wages system calculates deductions from gross pay, such as employee taxes (PAYE), and other statutory deductions.
Finally, a list of net cash payments for each employee is produced. Cash is delivered to the wages office by secure courier. The two staff place cash into wages envelopes for each employee along with a handwritten note of gross pay, deductions, and net pay. The envelopes are given to the foreman for distribution to the individual employees.

Required:
Identify and explain FIVE deficiencies in Third Floor Ltd’s system of internal control over the wages system that could lead to misstatements in the financial statements, and, for each deficiency, suggest an internal control to overcome that deficiency. (15 marks)

Answer

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Tags: Deficiencies, Internal Control, Misstatements, Recommendations, Risk, Wages system
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: MAY 2018

AFM – May 2016 – L3 – Q2a – Discounted cash flow techniques, Valuation and use of free cash flows, Theories of capital structure

Compute NPV for two investment projects using WACC and CAPM, and provide recommendations based on risk analysis.

Question

a) Joebel Limited is a diversified company operating in different industries on the African Continent. The shares of the company are widely traded on the stock exchange and currently have a market price of GH¢3.20 per share. The company’s dividend payment over the last five years is as follows:

Year	Dividend Per Share (DPS) (GH¢)
2015	0.35
2014	0.32
2013	0.30
2012	0.29
2011	0.28

The Board of Directors of Joebel Limited is considering two main investment opportunities: one in the Oil and Gas sector and the other in the Hotel and Tourism sector. Both projects have short lives and their associated cash flows are as follows:

Year	Oil & Gas (GH¢’000)	Hotel & Tourism (GH¢’000)
1	85	180
2	175	195
3	160	150

The investment in Oil and Gas would cost GH¢400,000, while the investment in Hotel and Tourism would cost GH¢405,000. The Management of the Company has identified the industry beta for Oil and Gas as 1.2 and for Hotel and Tourism as 1.6. However, Joebel Limited’s company beta is 1.5. The average return on companies listed on the stock exchange is 25%, and the yield on Treasury bills is 20%.

Required:
i) Compute the Net Present Values (NPV) of both projects using the company’s weighted average cost of capital as the discount rate. (5 marks)
ii) Compute the NPV using a discount rate that takes into account the risk associated with the individual projects. (5 marks)
iii) Advise Management regarding the suitability and acceptability of the projects. (1 mark)

Answer

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Tags: Cost of Capital, Hotel & Tourism, Investment Appraisal, Net Present Value (NPV), Oil & Gas, Risk
Level: Level 3

Topic: Discounted cash flow techniques, Valuation and use of free cash flows
Series: MAY 2016

AT – Nov 2017 – L3 – Q2b – Tax administration in Ghana

Identifying circumstances under which tax revenue is at risk.

Question

Identify THREE circumstances under which tax revenue is said to be at risk. (3 marks)

Answer

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Tags: Risk, Tax Administration, Tax Revenue
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2017

CSME – Nov 2020 – L2 – Q5a – Risk Management and Corporate Strategy

Explain the concept of risk and differentiate between the two broad categories of risk, with examples.

Question

In an effort to increase shareholders’ value, companies are often faced with risks.

Required:
i. Explain the term ‘risk’. (2 Marks)
ii. Differentiate between the two broad categories of risk, with examples. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Pure Risk, Risk, Speculative Risk
Level: Level 2

Topic: Risk Management and Corporate Strategy
Series: NOV 2020

BL – May 2012 – L1 – SA – Q14 – Sale of Goods

Determine when the risk in goods transfers from seller to buyer in a sale of goods contract.

Question

In an agreement for the sale of goods, the risk remains with the seller until:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business Law, Contracts, Risk, Sale of Goods
Level: Level 1

Topic: Sale of Goods
Series: MAY 2012

PSAF – Nov 2021 – L2 – Q1b – Government Accounting Concepts and Principles

Identify risks associated with reliance on MTEF and ways to mitigate them.

Question

Identify FOUR risks associated with reliance on the Medium-Term Expenditure Framework (MTEF) and ways to mitigate these risks.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Mitigation, MTEF, Public Finance, Risk
Level: Level 2

Topic: Government Accounting Concepts and Principles
Series: NOV 2021

PM – Nov 2021 – L2 – Q6 – Decision-Making Techniques

Explain methods to help choose the optimal marketing package under uncertainty and risk for Mr. Alade’s business.

Question

Market Package	A	B	C	D
Market Conditions	N’000	N’000	N’000	N’000
Poor	180	230	220	190
Average	190	200	210	275
Good	550	260	210	500

Answer

Find Related Questions by Tags, levels, etc.

Tags: Decision Making, Risk, Scenario Planning, Uncertainty
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2021

AA – July 2023 – L2 – Q1b – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Explanation of control weaknesses inherent in Non-Profit Organizations (NFPOs).

Question

Required:
Explain FIVE (5) control weaknesses inherent in NFPOs. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Internal Control, Non-Profit Organizations, Risk, Weaknesses
Level: Level 2

Topic: Audit and Assurance Evidence, Audit and Assurance Risk Environment
Series: JULY 2023

AA – May 2018 – L2 – Q2b – Audit and Assurance Risk Environment

Identifies deficiencies in a company's wages system and provides recommendations to prevent misstatements in financial statements.

Question

The following information is available concerning the wages systems:

Workers on each site are controlled by a foreman. The foreman has a record of all employee numbers and can issue temporary numbers for new employees.
Any overtime is calculated by the computerised wages system and added to the standard pay.
The two staff in the wages department make amendments to the computerised wages system in respect of employee leave, illness, as well as setting up and maintaining all employee records.
The computerised wages system calculates deductions from gross pay, such as employee taxes (PAYE), and other statutory deductions.
Finally, a list of net cash payments for each employee is produced. Cash is delivered to the wages office by secure courier. The two staff place cash into wages envelopes for each employee along with a handwritten note of gross pay, deductions, and net pay. The envelopes are given to the foreman for distribution to the individual employees.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Deficiencies, Internal Control, Misstatements, Recommendations, Risk, Wages system
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: MAY 2018

AFM – May 2016 – L3 – Q2a – Discounted cash flow techniques, Valuation and use of free cash flows, Theories of capital structure

Compute NPV for two investment projects using WACC and CAPM, and provide recommendations based on risk analysis.

Question

Year	Dividend Per Share (DPS) (GH¢)
2015	0.35
2014	0.32
2013	0.30
2012	0.29
2011	0.28

Year	Oil & Gas (GH¢’000)	Hotel & Tourism (GH¢’000)
1	85	180
2	175	195
3	160	150

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost of Capital, Hotel & Tourism, Investment Appraisal, Net Present Value (NPV), Oil & Gas, Risk
Level: Level 3

Topic: Discounted cash flow techniques, Valuation and use of free cash flows
Series: MAY 2016

AT – Nov 2017 – L3 – Q2b – Tax administration in Ghana

Identifying circumstances under which tax revenue is at risk.

Question

Identify THREE circumstances under which tax revenue is said to be at risk. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Risk, Tax Administration, Tax Revenue
Level: Level 3

Topic: Tax administration in Ghana
Series: NOV 2017

Question Tag: Risk

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CSME – Nov 2020 – L2 – Q5a – Risk Management and Corporate Strategy

Explain the concept of risk and differentiate between the two broad categories of risk, with examples.

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BL – May 2012 – L1 – SA – Q14 – Sale of Goods

Determine when the risk in goods transfers from seller to buyer in a sale of goods contract.

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PSAF – Nov 2021 – L2 – Q1b – Government Accounting Concepts and Principles

Identify risks associated with reliance on MTEF and ways to mitigate them.

You're reporting an error for "PSAF – Nov 2021 – L2 – Q1b – Government Accounting Concepts and Principles"

PM – Nov 2021 – L2 – Q6 – Decision-Making Techniques

Explain methods to help choose the optimal marketing package under uncertainty and risk for Mr. Alade’s business.

You're reporting an error for "PM – Nov 2021 – L2 – Q6 – Decision-Making Techniques"

AA – July 2023 – L2 – Q1b – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Explanation of control weaknesses inherent in Non-Profit Organizations (NFPOs).

You're reporting an error for "AA – July 2023 – L2 – Q1b – Audit and Assurance Risk Environment, Audit and Assurance Evidence"

AA – May 2018 – L2 – Q2b – Audit and Assurance Risk Environment

Identifies deficiencies in a company's wages system and provides recommendations to prevent misstatements in financial statements.

You're reporting an error for "AA – May 2018 – L2 – Q2b – Audit and Assurance Risk Environment"

AFM – May 2016 – L3 – Q2a – Discounted cash flow techniques, Valuation and use of free cash flows, Theories of capital structure

Compute NPV for two investment projects using WACC and CAPM, and provide recommendations based on risk analysis.

You're reporting an error for "AFM – May 2016 – L3 – Q2a – Discounted cash flow techniques, Valuation and use of free cash flows, Theories of capital structure"

AT – Nov 2017 – L3 – Q2b – Tax administration in Ghana

Identifying circumstances under which tax revenue is at risk.

You're reporting an error for "AT – Nov 2017 – L3 – Q2b – Tax administration in Ghana"

CSME – Nov 2020 – L2 – Q5a – Risk Management and Corporate Strategy

Explain the concept of risk and differentiate between the two broad categories of risk, with examples.

You're reporting an error for "CSME – Nov 2020 – L2 – Q5a – Risk Management and Corporate Strategy"

BL – May 2012 – L1 – SA – Q14 – Sale of Goods

Determine when the risk in goods transfers from seller to buyer in a sale of goods contract.

You're reporting an error for "BL – May 2012 – L1 – SA – Q14 – Sale of Goods"

PSAF – Nov 2021 – L2 – Q1b – Government Accounting Concepts and Principles

Identify risks associated with reliance on MTEF and ways to mitigate them.

You're reporting an error for "PSAF – Nov 2021 – L2 – Q1b – Government Accounting Concepts and Principles"

PM – Nov 2021 – L2 – Q6 – Decision-Making Techniques

Explain methods to help choose the optimal marketing package under uncertainty and risk for Mr. Alade’s business.

You're reporting an error for "PM – Nov 2021 – L2 – Q6 – Decision-Making Techniques"

AA – July 2023 – L2 – Q1b – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Explanation of control weaknesses inherent in Non-Profit Organizations (NFPOs).

You're reporting an error for "AA – July 2023 – L2 – Q1b – Audit and Assurance Risk Environment, Audit and Assurance Evidence"

AA – May 2018 – L2 – Q2b – Audit and Assurance Risk Environment

Identifies deficiencies in a company's wages system and provides recommendations to prevent misstatements in financial statements.

You're reporting an error for "AA – May 2018 – L2 – Q2b – Audit and Assurance Risk Environment"

AFM – May 2016 – L3 – Q2a – Discounted cash flow techniques, Valuation and use of free cash flows, Theories of capital structure

Compute NPV for two investment projects using WACC and CAPM, and provide recommendations based on risk analysis.

You're reporting an error for "AFM – May 2016 – L3 – Q2a – Discounted cash flow techniques, Valuation and use of free cash flows, Theories of capital structure"

AT – Nov 2017 – L3 – Q2b – Tax administration in Ghana

Identifying circumstances under which tax revenue is at risk.

You're reporting an error for "AT – Nov 2017 – L3 – Q2b – Tax administration in Ghana"

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