CIMA Exam CIMAPRO19-P03-1 Topic 7 Question 52 Discussion

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

Question #: 52
Topic #: 7

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: A, B, D

by Junita at Jul 27, 2023, 07:27 PM

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Cyril

9 days ago

E is the funniest one. It's like T was just winging it and said, 'Sure, I can help you with that. How hard can currency hedging be?' Spoiler alert: pretty darn hard.

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Bernardine

16 days ago

I can't believe T had never handled foreign currency management before. That's like an accountant saying, 'I've never done taxes before.' Might as well just hand in a blank exam sheet.

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Stevie

17 days ago

Wow, T is really in hot water. Choosing C as the correct answer would be like saying, 'Yeah, I did a terrible job, but at least I was too cheap to hedge!' Not a great defense.

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Justine

18 days ago

I see both sides, but I think all factors should be considered before making a final judgment.

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Florencia

18 days ago

A, B, and D are clear signs of incompetence. T should have been on top of CPD, clearly communicated the risks, and made a strong recommendation to the client. Dropping the ball on all of these is just poor professionalism.

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Ronnie

22 days ago

I disagree, I believe factors C and E are more relevant in this situation.

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Bobbye

25 days ago

I think factors B and D strengthen the case against T.

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