CIMA Exam CIMAPRA19-P03-1 Topic 4 Question 52 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 52
Topic #: 4

T is an accountant who has been accused of professional incompetence T agreed to advise a client on currency management and the client lost a great deal of money when a large foreign currency trade receivable declined in value without having been hedged.

Which of the following factors strengthens the case that T has been incompetent?

Select ALL that apply

AT had been too busy to stay up to date with continuing professional development requirements

BSince the loss the client's chief executive has spoken to her business contacts m the industry and all had hedged against a decline in this currency

CT had studied all relevant economic forecasts and had concluded that it would be too expensive to hedge this receivable

DT had offered the client two alternatives showing the costs and benefits of hedging the position, but did not strongly recommend either alternative

ET had never offered advice on foreign currency management before

Show Suggested Answer

Suggested Answer: B, C, D

by Angelo at Aug 05, 2024, 08:00 PM

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Verda

1 months ago

I'm just gonna throw this out there - maybe T was too busy playing Fortnite to worry about that pesky 'continuing professional development' stuff. Jokes aside, B and D are the real killers here. Sounds like T needs to brush up on their currency management skills. Or maybe just stick to balancing the books.

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Salome

14 days ago

B) Since the loss the client's chief executive has spoken to her business contacts in the industry and all had hedged against a decline in this currency

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Veda

17 days ago

A) T had been too busy to stay up to date with continuing professional development requirements

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Alyce

1 months ago

Hmm, I'm not so sure about C. If T had done their due diligence and determined hedging was too expensive, that could be a valid defense. But B and D definitely make T look incompetent. Reminds me of the old saying, 'An ounce of prevention is worth a pound of currency losses.'

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Willow

15 days ago

E) T had never offered advice on foreign currency management before

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Rosendo

18 days ago

C) T had studied all relevant economic forecasts and had concluded that it would be too expensive to hedge this receivable

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Judy

1 months ago

A) T had been too busy to stay up to date with continuing professional development requirements

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Daron

2 months ago

I agree, B and D are the key factors here. Not staying up to date with CPD requirements (A) is bad, but the real nail in the coffin is the client's competitors successfully hedging. T really dropped the ball on this one.

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Karrie

1 months ago

D) T had offered the client two alternatives showing the costs and benefits of hedging the position, but did not strongly recommend either alternative

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Mi

1 months ago

B) Since the loss the client's chief executive has spoken to her business contacts in the industry and all had hedged against a decline in this currency

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Helaine

2 months ago

Wow, this is a tough one. I think options B and D are the biggest red flags here. If the client's competitors all hedged successfully, that really highlights T's incompetence. And not strongly recommending either option? Yikes, that's pretty damning.

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