Question Tag: Risk Management

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  • 20 Marks

BO – APRIL 2023 – L3 – Q1 – Functions of Asset-Liability Committee (ALCO)

Identify and explain five functions of the bank's Asset-Liability Committee (ALCO) for ensuring short-term and long-term viability.

a) Your bank’s Asset Liability Committee (ALCO) is a very important committee that ensures the sustainability and viability of the bank both in the short-term and long term. Identify and explain five functions performed by this committee in your bank. [15 marks]

b) Gap analysis is used in Asset and Liability management to measure interest rate risk in a bank’s balance sheet. Explain the phrase ‘Positive Gap’. How is a positive gap affected by rising interest rates? [7.5 marks]

c) Interest rate swaps are often used to manage interest rate risk of an organization. Briefly explain interest rate swaps and the expectation of a buyer of this risk hedging instrument. [7.5 marks]

[Total: 30 marks]

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  • 20 Marks

MFS – APR 2024 – L2 – Q3 – Financial Intermediation and Profitability Enhancement

Describe financial intermediation as a business activity and consider ways to enhance profitability of a financial intermediary with reference to revenue streams and cost components, while maintaining caution.

(a.) How would you describe Financial Intermediation as a form of business activity?                                                                                     (b.) With reference to its revenue streams and cost components, consider how Profitability of a Financial Intermediary could be enhanced within the ambit of caution.

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  • 30 Marks

CML – APR 2024 – L3 – Q4 – Relevance of ESG in Bank Credit Strategy

Discuss the importance of incorporating Environmental, Social, and Governance (ESG) factors into a bank's credit strategy.

Discuss the relevance of ESG considerations in Bank Credit Strategy.

[20 Marks]

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  • 20 Marks

CG – APR 2024 – L4 – Q6 – Role Expansion of Chief Governance Officer in Capital Planning

Discuss whether the evolving role of the Company Secretary to Chief Governance Officer should include capital planning in situations of stressed bank balance sheets.

The changing role of the Company Secretary to become the Chief Governance Officer (CGO) means that in situations of stressed Balance Sheet or Statement of Position of banks, the role of the CGO should be expanded to include Capital Planning. Discuss.

(20 marks)

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  • 20 Marks

SCS – Mar 2025 – L3 – Q2 – Change Management

Explain leadership's role in change management and three of Kanter's skills for AML's diversification strategy.

a) Akosa Minerals Limited (AML) has undergone significant transformations in its operations, particularly with the integration of lithium extraction into its core business. This shift has presented both opportunities and challenges, including regulatory compliance, technological advancements and stakeholder management. Successfully navigating these changes requires effective leadership and change management.

Rosabeth Moss Kanter suggests that managers in change-adept organisations must possess key skills to drive transformation effectively. As AML continues its diversification efforts, the company’s leadership must demonstrate these skills to sustain growth and maintain a competitive edge.

Required:

Identify and explain the critical role of leadership in managing change and THREE out of five key change management skills suggested by Kanter that AML’s leadership should exhibit to effectively manage its diversification and growth strategies.

b) Akosa Minerals Limited (AML) recently engaged a risk consultant from Isodek Consultants to conduct a comprehensive risk assessment and provide recommendations on managing the transformational changes the company is undergoing. The consultant’s report highlights key risks and challenges related to AML’s diversification strategy, operational restructuring, stakeholder engagement and compliance with global sustainability standards.

To navigate these challenges effectively, AML’s leadership needs to apply the Gemini Consultants’ 4Rs model which provides a structured framework for managing large-scale organisational change.

Required:

Using the Gemini Consultants’ 4Rs model, discuss how each component can be applied to address the operational and environmental risks identified in the consultant’s report.

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  • 20 Marks

FM – Mar 2025 – L2 – Q3 – Foreign exchange risk and currency risk management

Determine outcomes of forward contract and money market hedge for GPL's USD payment and recommend the best technique.

a) Gyenyame Pharmaceuticals LTD (GPL), a Ghanaian company, imports raw materials from the United States of America to produce generic drugs for the local market. Due to recent fluctuations in the foreign exchange market, the company’s management is concerned about the impact of exchange rate movements on its costs and profitability.
The company is expected to pay USD750,000 in three months for a shipment of Active Pharmaceutical Ingredients (APIs). GPL also exports locally produced herbal medicine called ‘Koo-pile’ to the Ghanaian community in Oklahoma, USA on credit basis. The company is expecting a receipt of USD250,000 in three months for a consignment exported a month ago.
GPL is considering two hedging strategies to manage the foreign exchange risk: a forward contract and a money market hedge.
The following financial information is available:

  • Current Spot Rate (GHS/USD): 12.00
  • 3-Month Forward Rate (GHS/USD): 12.20
  • 3-Month USD Interest Rate: 3% per annum
  • 3-Month GHS Interest Rate: 14% per annum
  • Expected Future Spot Rate in 3 Months (GHS/USD): 12.50

Required:
i) Determine the outcome of the two hedging techniques and recommend the appropriate technique to GPL based on your computations.
(9 marks)

ii) Explain THREE internal hedging techniques that GPL could use to manage its foreign exchange risk.

b) Technological advancements have significantly transformed financial markets, enhancing the way transactions are conducted, information is accessed and risks are managed. As financial institutions and individual investors increasingly depend on digital tools and innovative technologies, financial markets have become more efficient, accessible and transparent.

Required:
Explain FIVE positive impacts of technological development on financial markets.
(5 marks)

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  • 20 Marks

AA – Mar 2025 – L2 – Q3 – Audit Strategy

Discuss the content and relevance of an audit strategy memorandum in guiding the audit process.

a) The overall audit strategy sets the scope, timing and direction of the audit and guides the development of a more detailed plan. Audit plan converts the audit strategy into a more detailed plan and includes the nature, timing and extent of audit procedures to be performed by the engagement team members in order to obtain sufficient and appropriate audit evidence to reduce audit risk to an acceptable level. Required: Discuss the content of an audit strategy memorandum and its relevance to an audit.

b) Kalomo & Partners, an audit firm, has decided to enhance its audit procedures by integrating Artificial Intelligence (AI) technologies. The firm aims to leverage on AI to audit financial data and transactions more efficiently and effectively. As part of this initiative, the audit team is exploring how AI can be used to analyse large datasets, identify anomalies, and improve the accuracy of their audit findings. The management of Kalomo & Partners is seeking to understand the best practices for using AI in auditing and the potential challenges they may encounter. The firm wants to ensure that the integration of AI aligns with auditing standards and enhances the overall quality of their audit processes.

Required:

i) Explain how AI can be utilised in auditing financial data and transactions.

ii) State TWO potential benefits of using AI in the audit process of Kalomo & Partners.

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  • 10 Marks

AAA – Nov 2024 – L3 – Q5a – Roles of an Audit Committee in Corporate Governance

Explain four roles of an audit committee in compliance with good corporate governance practices.

An Audit Committee is a sub-group of a company’s Board of Directors responsible for the oversight of the financial reporting and disclosure process. The duties and responsibilities of the Audit Committee greatly contribute to good corporate governance practices of a company.

Required:
Explain FOUR roles of an Audit Committee in compliance with good corporate governance practices.

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  • 15 Marks

AA – Nov 2024 – L2 – Q3a – Management’s Expert and Audit Evidence

Explain the term "management’s expert" and four factors to consider before relying on their work as audit evidence.

Question:
ISA 500: Audit Evidence provides guidance for auditors intending to rely on the work of a management’s expert. If the information to be used as audit evidence has been prepared using the work of a management’s expert, the auditor must evaluate the management’s expert.

Required:
i) Explain the term “management’s expert.” 
ii) Explain FOUR factors to consider before relying on the work of a management’s expert as audit evidence.

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  • 5 Marks

AA – Nov 2024 – L2 – Q2b – Advantages of Outsourcing Internal Audit

Explain the advantages and disadvantages of outsourcing the internal audit function.

As organisations look for ways to cut costs, the idea of outsourcing internal audit work goes on the agenda. While outsourcing may be appealing in theory, there are good reasons to keep internal audit in-house.

Required:
i) State TWO advantages of outsourcing the internal audit function. 
ii) State THREE disadvantages of outsourcing the internal audit function.

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  • 15 Marks

AA – Nov 2015 – L2 – Q1b – Internal Control Systems

Identifying internal control weaknesses in a company and recommending audit tests to ensure effectiveness.

Success Nigeria Limited is a company engaged in haulage business. The services provided by the company, which has over 100 trucks in its fleet, include lifting of petroleum products from the depots to the filling stations of its clients spread over many locations.

The Central Store for spare parts for repairs of the trucks is located at the Head Office. The inventory operation is handled by the Personal Assistant to the Managing Director in addition to his normal schedule of duties in the Managing Director’s office. Spare parts supplied are received by the Personal Assistant who keeps them in the Central Store without raising any Goods Received Notes for the items. The invoices and delivery notes brought by vendors are submitted to the accounts department directly for payment. Because of the pressure of work in the Managing Director’s office, the Personal Assistant to the Managing Director does not maintain any inventory records. Whenever there is a need for spare parts required for truck repairs, a pre-printed requisition form is completed by the mechanic in charge of the repair. The form is submitted to the Personal Assistant who supplies the spare parts from the Central Store. The mechanic collects the parts without any acknowledgment of receipt. The requisition forms collected for all the spare parts supplied are kept in one of the cabinets in the Personal Assistant’s office, and they are collated by the Accountant on a monthly basis whenever he is to prepare the management accounts.

At the end of the financial year, December 31, 2014, the Accountant conducted an inventory count of the items in the Central Store for the purpose of using the value for the preparation of the financial statements for the year ended December 31, 2014. The Managing Director observed later while reviewing the financial statements that the repairs and maintenance account did not reflect the true position of the repair works carried out on the trucks during the year.

Required:
i. Describe FIVE Internal Control weaknesses from the above scenario. (5 Marks)
ii. Recommend controls required to address the identified weaknesses in (i). (5 Marks)
iii. Describe the audit tests to be carried out to assess if each of the controls is operating effectively. (5 Marks)

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  • 15 Marks

AA – Nov 2015 – L2 – Q1a – Internal Control Systems

Explanation of internal control, its objectives, and the components that support it.

Knowledge of internal control is a very basic audit skill. While auditors are not responsible for the institution of internal controls, they are responsible for providing management with information about how internal control is operating.

Required:
i. Illustrate what internal control is. (4 Marks)
ii. Describe THREE categories of internal control objectives. (6 Marks)
iii. Describe FIVE components of Internal control. (5 Marks)

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  • 20 Marks

CSME – May 2022 – L2 – SB – Q2 – Risk Management and Corporate Strategy

Advise on risk management for a supermarket chain facing security challenges and new regulations.

A supermarket chain recently established more outlets in the city. Due to increased risk exposure occasioned by heightened insecurity in the country, the company saw the need to implement an effective management strategy aimed at minimizing attendant risks. The need is made even more apparent due to the introduction of more stringent regulatory requirements on handling perishable food items by the National Agency for Food and Drugs Administration and Control (NAFDAC). To this end, you have been engaged to provide advice to the company on risk management.

Required:

a.

  • i. Using the ALARP principle, advise the management on how to effectively manage the company’s risks. (2 Marks)
  • ii. Advise the company on the need to engage a risk manager. (2 Marks)
  • iii. Enumerate the roles of a risk manager. (5 Marks)

b.

  • i. What is a risk audit? Should the firm engage internal or external auditors (or consultants) to conduct a risk audit? Justify your position. (7 Marks)
  • ii. Illustrate to the management of the company the stages involved in conducting a risk audit. (4 Marks)

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  • 15 Marks

CSME – Nov 2016 – L2 – Q4a – Risk Management and Corporate Strategy

Present on ISO 31000 framework and the role of the board in risk management for a newly listed company on the Nigerian Stock Exchange.

The board of directors of a company, recently listed on the Nigerian Stock
Exchange, has just resolved to put in place a robust enterprise-wide risk
management framework to ensure consistency in the approach to risk
management across the firm. This will include introducing the ISO 31000
framework for risk management to ensure international best practices in risk
management.

Required:
Draft a presentation to the board of directors on:

  • i) Key elements of ISO 31000 framework (6 Marks)
  • ii) The role of the board of directors and management in risk management (9 Marks)

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  • 10 Marks

CSME – Nov 2016 – L2 – Q2c – Corporate Governance

Discuss any five corporate governance issues related to corporate responsibility.

Discuss any FIVE corporate governance issues.

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  • 30 Marks

CSME – Nov 2016 – L2 – Q1 – Environmental Analysis

Analyze Pallat Manufacturing's macro-environment using the PESTEL model, discuss limitations, and explain risk audit stages.

Pallat Manufacturing Company Limited was incorporated in Nigeria in 2004 and has made significant progress since its inception. The company manufactures cosmetics which it distributes throughout the country. However, the company is currently experiencing problems arising from major changes in its business environment. To deal with these challenges, the company set up a team of managers drawn from various departments. The team was required to evaluate the company’s current strategies in light of the challenges occurring in its environment.

a. With the aid of the PESTEL model, write a brief to be presented at the next scheduled meeting of the team, highlighting the significant factors in the macro-environment of the firm. (18 Marks)

b. Discuss TWO limitations of using the PESTEL analysis. (7 Marks)

c. As an Accountant, determine the FOUR stages involved in risk audit. (5 Marks)

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  • 10 Marks

CSME – Nov 2019 – L2 – Q5a – Risk Management and Corporate Strategy

Outlines a presentation on the functions and determinants of the efficiency of a risk manager.

(a) You are preparing for a job interview as a risk manager. This requires you to make a ten-minute presentation on the functions and determinants of the efficiency of a risk manager.

Required:
Present an outline of your 10-minute presentation. (10 Marks)

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  • 20 Marks

CSME – Nov 2019 – L2 – Q2 – Corporate Governance

Comparative analysis of the International Corporate Governance Network (ICGN) guidelines and the Financial Reporting Council of Nigeria (FRCN) Code on corporate risk oversight.

As a risk management consultant, you are required to provide a comparative overview of the International Corporate Governance Network (ICGN) guidelines and the Financial Reporting Council of Nigeria (FRCN) Code of Corporate Governance on responsibilities for the oversight and management of corporate risk. (20 Marks)

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  • 15 Marks

MGE – May 2018 – L2 – Q5 – Ethics in Business

Discusses the steps in whistleblowing and the risks involved in reporting fraudulent transactions.

a. i. Identify and explain briefly the technical term to describe the above scenario. (1½ Marks)
ii. Explain the necessary steps Aniko should take before reporting the fraudulent transaction. (9 Marks)

b. Explain the likely risks in exposing such a transaction. (4½ Marks)

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  • 2 Marks

MGE – May 2018 – L2 – Q4c – Risk Management and Corporate Strategy

Discusses the implications of failing to understand relationships among risks.

Explain briefly the implications of failure to understand relationships among risks. (2 Marks)

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