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Appendix 2

45 A, B,

By paying poorly they are creating motive and by taking little action against their
employees they encouraging dishonesty. It is well known they pay poorly it is
likely that more dishonest individuals will apply thinking they could attempt to
supplement their income fraudulently.

In theory the opportunity is limited by the strong internal controls, so this is not
correct.

Options C, D & E are not pre-requisites of fraud.

46 B

The CIMA guidance for ethical conflict resolution is:

1)Check facts, 2)Escalate internally, 3)Escalate externally, 4)Remove yourself

As a CIMA member it would be ok for her to contact them for advice so option 2
represents the best order.

47 395,000

 10 Months  Now

 Receive $800,000  Create $ liability today  Borrow in $ enough to
–> pay off the liability in
10 months.
 $800,000/(1.10) =
$727,273
 Translate into GBP at
the spot rate
 727,273/1.9310 =
£376,630
 Receive interest for  Deposit in the UK
 £395,462 10 months at 6% per
annum
 £376,630 × (1.05)
 <–

Interest rates used:

10%

We use the US Loan rate of 12%, but for 10 month: 12% × (10/12) = 10%

5%
We use the UK deposit rate of 6% for 10 months: 6% × (10/12) = 5%

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