CFFE Introduction to Forensic Accounting and Audit Questions and answers April 2022

KASNEB

CFFE MODULE I

PAPER NO. 1: INTRODUCTION TO FORENSIC ACCOUNTING AND AUDIT

EXAMINATION
Answer ALL questions. Time allowed: 3 Hours.

1. Forensic Accounting is usually conducted for which one of the following purposes?

A. Litigation purposes
B. Investigation accounting for acquisition purposes
C. Investigation accounting for IPO (Initial Public Offering) purposes
D. All the above

2. Which of the following is TRUE about Forensic fraud audit and fraud investigation or examination?

A. Both forensic audit and an investigation/ examinations are investigation assignments
B. Their objective of a forensic audit and an investigation is to collect evidence to prove or disapprove an allegation
C. Forensic audit or investigation is a methodology of resolving allegations from inception to disposition
D. All the above

3. In addition to accounting skills and knowledge, a forensic accountant must know the difference between the following items

A. Opinion and conclusion
B. Audit evidence and factual evidence
C. Materiality and risk of fraud in relation to financial reporting
D. All the above

4. Forensic auditors do not necessarily have to be accountants; however, they must be knowledgeable in which of the following areas?

A. Identification of accounting fraud and the need to work with an accountant in accounting related frauds
B. In- depth knowledge of IFRS’s and IAS
C. Knowledge in information system audits
D. None of the above

5. Which of the following is NOT true about GAAP and IFRS’s?

A. Unlike IFRS’s, GAAP does not require disclosures in financial statements
B. IFRS’s leave more room for interpretation
C. IFRS’s require lengthy disclosures on financial statement
D. All the above

6. Failure to apply the respective IFRS in recognizing revenue, improper deferral of costs and expenses, improper asset valuation and inadequate disclosure could result to:

A. Misrepresentation of the financial position
B. Misrepresentation of the financial performance
C. Misleading financial reporting in relation to the going concern concept
D. All the above

7. Kenya has already adopted both the IFRS and IPSAS in financial reporting in the private and public sector respectively

A. True for both IFRS and IPSAS
B. True for IFRS and not IPSAS
C. True for IPSAS and not IFRS
D. False for Both

8. Which of the following is ACCURATE in regard to inventory valuation in financial reporting?

A. IFRS forbid the use of LIFO method of inventory valuation
B. The IAS standard requires inventories to measure at the lower of cost and net realizable value
C. Improper inventory valuation will result to overstated current assets and in return overstated current ratio
D. All the above

9. Which of the following is NOT an item shown in the company’s statement of profit or loss and other comprehensive income?

A. Revenue earned
B. Expenses incurred
C. Receivables and payables
D. Cost of revenue

10. Which of the following statements is NOT true in regard to the statement of financial position?

A. Current assets are generally presented first in order of liquidity on the statement of financial position in order of liquidity.
B. Non- current assets are recorded in the statement of financial position
C. The statement of financial position shows the financial performance of a company over a given financial period
D. None of the above

11. Which of the following is NOT true about Payables, receivables, liabilities, inventory, cash and bank?

A. The above items are recorded in the balance sheet and are used to calculate the current ratio to measure an organization’s liquidity
B. A current ratio that is too favorable is red flag of overstated receivables, inventories or understated current liabilities or both
C. A current ratio that is too favorable is a confirmation that the organization is a going concern at least in the next financial year.
D. A favorable current ratio, could also be a result of improper valuation of current assets and concealment of liabilities

12. Which of the following statement is TRUE about the profit or loss for the year:

A. Transferred to retained earnings in the statement of changes in equity
B. Transferred to share premium in the statement of changes in equity
C. Transferred to revaluation reserve in the statement of changes in equity
D. Transferred to Non-controlling interest in the statement of changes in equity

13. Asset misappropriation of cash can be concealed by fraudulently balancing the equation. Which of the following actions would NOT balance the accounting equation?

A. Reducing an expense
B. Increasing an expense
C. Decreasing a liability
D. All the above

14. If a fraudster wanted to conceal the misappropriation of cash, which of the following actions would help to conceal an asset misappropriation.

A. Reducing revenue
B. Creating an expense
C. Decreasing a liability
D. All the above

15. Making a debit entry in any account would help to conceal an asset misappropriation. Which of the following entries in the following accounts can help to conceal an asset misappropriation?

A. Increasing a liability
B. Reducing an asset
C. Increasing revenue
D. None of the above

16. Which of the following entries would lead to concealing misappropriation of cash

A. Debit Operating expenses and credit payables account
B. Debit Payables account and credit operating expenses
C. Debit Operating expenses and credit cash
D. Debit Payables account and credit cash

17. Richard runs a medium construction company. He got a contract to be performed over a period of three years. Richard signed a contract for the full contract amount with the client. By the end of Year 1 the company had performed and delivered only one third of the contract. Richard recorded the whole contract revenue amount in December of Year1. Which one of the following is TRUE about the recording of that financial transaction?

A. The revenue was not recorded in accordance with the IFRS 15 standard of recognizing revenue.
B. The transaction overstated the revenue earned during that financial year
C. The transaction is an example of a financial statement fraud scheme related to revenue timing differences
D. All of the above

18. ABC company recorded substantial profit in the statement of profit and loss. The statement of cash flow recorded negative balances from the operating activities. Which of the following is a red flag of financial statement fraud?

A. Recording of fictitious revenue
B. Skimming of receivables
C. Overstated revenue
D. All the above

19. Which of the following is the NOT correct about the accounting model?

A. Assets = Liabilities + Owners’ Equity
B. The accounting model is presented in the statement of profit and loss
C. The accounting model is presented in the balance sheet
D. All the above

20. Which of the following could be used to balance the accounting equation to conceal cash misappropriation?

A. Reducing revenue
B. Reducing a liability
C. Increasing another expense
D. All of the above

21. The statement of cash flows is often used in tandem with the statement of profit or loss and other comprehensive income to determine which of the following?

A. The statement of cash flows is often used in tandem with the statement of profit or loss and other comprehensive income to determine a company’s true financial performance.
B. The statement of cash flows is often used in tandem with the statement of profit or loss and other comprehensive income to determine a company’s liquidity
C. The statement of cash flows is often used in tandem with the statement of profit or loss and other comprehensive income to determine a company’s net worth
D. The statement of cash flows shows a company’s financial performance and position at the end of a given period

22. In a scenario where the cash and cash equivalents at the end of the current and comparative year in the statement of cash flows does not agree to the cash and equivalent, in both public and private financial statements, which of the following statements is NOT correct in regard to the above

A. This situation is evidence of cash asset misappropriation
B. This situation is a low risk of cash misappropriation
C. Both the internal and external auditor should only recommend that the organization balance the statement cash flow
D. All the above

23. Which of the following appears on the statement of financial position of an organization?

A. Revenue
B. Expenses
C. Gross profit
D. None of the above

24. Joseph, a Certified Forensic Fraud Examiner, was hired to serve as an expert accounting witness in a case of alleged financial statement fraud. As part of her expert testimony, Joseph explained the requirements under International Financial Reporting Standards related to receivables. Those standards require that the receivables to be recognized at a fair value. During the investigation, the Certified Forensic Fraud Examiner found that some of the overdue receivable accounts with substantial amounts (meaning the amounts were material) were created from fictitious revenue and were still held in the receivables accounts and therefore were part of the end of year balance sheet items. Which of the following financial reporting concept would be fraudulently affected by the above scenario?

A. Relevance
B. Materiality
C. Going concern
D. Consistency

25. XYZ company received an anonymous tip alerting the company that there is a lot of fraud and corruption going on in the company especially in their procurement and finance department. The person receiving the tips is knowledge in fraud issues and confirmed the allegation to be reliable. The company has an Anti- Fraud Policy which requires the company to effectively respond to fraud allegations. Under the circumstances, which of the following assignment should the company commission

A. Forensic accounting
B. Forensic audit
C. Special audit
D. Surprise audit

26. The Benford Law can be useful in detecting financial statement fraud. Which one of the following can the application of Benford Law help to detect?

A. Multiple journal entries just below a limit threshold
B. Numerous journals used to perpetrate financial statement fraud
C. Correlation between Benford law and the first digits of journal entries or a set of data
D. All the above

27. Which of the following statements is TRUE regarding the statement of changes in owners’ equity?

A. It is similar to the statement of retained earnings.
B. It shows how amounts on the statement of profit or loss and other comprehensive income flow through to the statement of financial position.
C. It acts as the connecting link between the statement of financial position and the statement of profit or loss and other comprehensive income.
D. All the above

28. Cost of goods sold or other direct expenses for generating revenue should be recorded the same accounting period. Failure to do so would result to which of the following?

A. Overstated gross profit
B. Overstated revenue
C. Understated net profit
D. None of the above

29. Under the IAS/IFRS, the proper basis for recording a piece of equipment, vehicle, building or land on a company’s books is at

A. Revaluation value
B. Sales value less accumulated depreciation
C. Current market value less accumulated depreciation
D. None of the above

30. If recording of an account does not follow the double entry principle, the accounts will not balance. However, accounts can be recorded using the double entry principle and balance fraudulently

A. True
B. False

31. Which of the following statements is TRUE with regard to gross margin?

A. Gross margin is recorded in the statement of financial position
B. Gross margin is equal to sales less cost of goods sold
C. Gross margin is equal to revenue less operating expenses
D. None of the above

32. A fraudster wanted to conceal the removal of a liability from the books, which of the following actions would NOT balance the accounting equation?

A. Reducing owners’ equity
B. Increasing an expense
C. Increasing an asset
D. All the above

33. The assumption that a business will continue at least in next financial year is reflected in the international accounting standards (IAS) accounting concept of:

A. Consistency
B. Comparability
C. Going concern
D. Liquidity

34. Which of the following is NOT a category of the statement of cash flow?

A. Operating activities
B. Investment activities
C. Strategic activities
D. All the above

35. Assets, liabilities, and revenue are all items that appear on a company’s statement of financial position.

A. True
B. False

36. Which accounting principle requires corresponding expenses and revenue to be recorded in the same accounting period?

A. Relevance
B. Going concern
C. Materiality
D. None of the above

37. Under IFRS 15, recognizing revenue for work that is to be performed in subsequent accounting periods, even though the work has already been contracted would result in

A. Overstated revenue
B. Overstated receivables
C. Overstated current ratio
D. All the above

38. The statement of changes in owners’ equity acts as the connecting link between which two financial statements?

A. Statement of financial position and statement of retained earnings
B. Statement of profit or loss and other comprehensive income and statement of Assets
C. Statement of profit or loss and other comprehensive income and statement of cash flows
D. None of the above

39. Which of the following is NOT true about IFRS’s in regard to financial reporting?

A. IFRS’s enhance transparency and trust in the global market
B. IFRS’s helps to increase the net worth in the statement of financial position
C. IFRS’s financial reporting standards bring efficiency, accuracy and data transparence to serve public interest for growth and trust
D. All the above

40. Which of the following statements is TRUE regarding the statement of cash flows?

A. The statement of cash flows is often used in tandem with the statement of profit or loss and other comprehensive income to determine a company’s true financial performance.
B. The statement of cash flows reports a company’s sources and uses of cash during the accounting period.
C. There are three types of cash flows; cash flows from operating activities, from investing activities and from financing activities.
D. All the above

41. IFRS require that organizations disclose matters related to doubt about a company’s ability to fulfil its financial obligations at least in the next financial year. Company ABC and XYZ were doing had business relationship. The two companies were controlled by the same directors. The directors of both companies did not disclose the business relationship. Which of the following is the type of fraud that was perpetrated by the companies?

A. Financial statement fraud
B. Inadequate disclosure
C. Accounting fraud
D. Related party transactions fraud

42. Which of the following financial ratios can be used to detect fictitious revenues and receivables?

A. Asset turnover ratio
B. Current ratio
C. Receivables turnover ratio
D. None of the above

43. Under IPSAS, MDAs financial statements should include, progress on auditor’s recommendations, pending bills note and analysis, and IFMIS generated reports among others. Which of the following is TRUE in regard to failure to include the above reports?

A. There is red flag of financial statement fraud
B. There is a high risk of financial statement fraud
C. There is a high risk of asset misappropriation
D. All the above

44. Which of the following is TRUE in regard to financial reporting in Kenya?

A. Kenya has adopted IFRS, IAS and IPSAS standards for financial reporting in the private and public sector respectively
B. SME’s are required to uses IFRS for SME’S
C. Nairobi Stock Exchange require companies trading in the stock exchange to use IFRS’s
D. All the above

45. International financial reporting standards(IFRS’s) provides financial reporting standards to prevent misrepresentation of financial statements. Those standards have established guidance in the following areas of reporting

A. Fair value measurement
B. Revenue recognition
C. Assets valuation
D. All the above

46. IPSAS require that ministries include a note and analysis on pending bills in the financial statements and the listing included should agree to the pending bills note in the notes to the financial statements. Which of the following is TRUE about a scenario where the note and analysis on pending bills in the financial statements and the pending bills note in the notes to the financial statements differ.

A. There is a red flag of concealed pending bills
B. There is a red flag of concealment of actuals versus budget
C. There is red flag of cash misappropriation
D. All the above

47. When planning an audit of an entity’s financial statements under IPSAS, the Which of the following is NOT one of the major concerns of the external auditors

A. Acceptable financial and other information systems are in place, along with arrangements to provide annual assurance on the reliability of such systems;
B. That the entity’s finance team are all Certified Public accountant or its equivalent
C. The entity has arrangements in place to produce reliable financial statements, along with adequate supporting working papers, to an acceptable timetable
D. The entity’s finance team has sufficient knowledge and understanding of IPSAS and their applicability to the entity’s Financial Statements

48. Just like any other related professions like the Certified Fraud Examiners, forensic accountants and auditors are expected to observe which one of the following code of ethics?

A. Confidentiality, commitment, diligence and lawfulness
B. Integrity, independence, and objectivity
C. Responsibility to the profession
D. All the above

49. Which one of the following is TRUE about Internal controls environment in regard to accounting?

A. Internal controls environment defines the organizations attitude towards compliance with internal controls.
B. Internal controls environment creates a foundation for all other controls
C. Internal controls environment enforces the basic hard controls
D. All the above

50. Which of the following is TRUE about risk based audit?

A. The auditor should prioritize the audit according to the level of the risk, i.e. high to low approach
B. The auditor should be knowledgeable in fraud risk identification, assessment and response to fraud risks
C. To detect fraud in high risk areas, the auditor use tests and procedures specifically designed to detect fraud
D. All the above

51. Forensic Accounting is always conducted for purposes of investigation and litigation of accounting fraud

A. True
B. False

52. Forensic fraud audit and fraud investigation or examination terminologies can be used interchangeably

A. True
B. False

53. In addition to accounting skills and knowledge, a forensic accountant must be knowledgeable in the following areas:

A. Accounting and financial statement fraud schemes
B. Forensic/Investigation reports
C. Law related to fraud and the rule of evidence
D. All the above

54. Forensic auditors do not necessarily have to be accountants; however, they must be knowledgeable in which of the following areas?

A. Basic accounting concepts
B. Identification of fraudulent financial transactions
C. Financial statement fraud schemes
D. All the above

55. Which of the following is TRUE about GAAP AND IFRS’s?

A. GAAP is rule based while IFRS’s are principle based
B. IFRS’s leave more room for interpretation
C. IFRS’s require lengthy disclosures on financial statement
D. All the above

56. Failure to apply the respective IFRS in recognizing revenue, improper deferral of costs and expenses, improper asset valuation and inadequate disclosure could result to:

A. Misrepresentation of the financial position
B. Misrepresentation of the financial performance
C. Claims of fraudulent financial reporting
D. All the above

57. Generally Accepted Accounting Principles are currently used only in the USA

A. True
B. False

58. ABC Corp. has always used the first-in, first-out (FIFO) inventory valuation method when calculating its cost of goods sold. This is industry standard for inventory valuation method for ABC. If management used another method that will result to reducing the cost of goods, which of the following BEST describes the outcome of this inventory valuation method

A. The gross profit margin would be overstated
B. The net income would be overstated
C. The closing stock would overstated
D. All the above

59. Which of the following is the best description of what is shown on a company’s statement of profit or loss and other comprehensive income?

A. The company’s financial position at a specific point in time
B. The changes in the total owners’ equity amount listed on the statement of financial position
C. How much profit (or loss) the company earned over a particular period of time
D. The company’s sources and uses of cash during a particular period of time

60. Which of the following statements is TRUE regarding the statement of financial position?

A. Assets are generally presented on the statement of financial position in order of liquidity.
B. Statements of financial position are usually manipulated by understating assets and overstating liabilities.
C. The statement of financial position shows the financial performance of a company over a given financial period
D. Revenues and expenses accounts are recorded in statement of financial performance

61. Payables, receivables, retained earnings, and accumulated depreciation are recorded in which of the following financial statement

A. Statement of changes in owners’ equity
B. Statement of financial position
C. Statement of cash flows
D. Statement of profit or loss and other comprehensive income

62. At the end of each financial year, the accounts reflected on the statement of profit or loss and other comprehensive income are reduced to a zero balance.

A. True
B. False

63. If a fraudster wanted to conceal the misappropriation of cash, which of the following actions would NOT result in a balanced accounting equation?

A. Reducing owners’ equity
B. Creating an expense
C. Decreasing a liability
D. Reducing an asset

64. If a fraudster wanted to conceal the misappropriation of cash, which of the following actions would help to conceal an asset misappropriation.

A. Increase an asset
B. Creating an expense
C. Decreasing a liability
D. All the above

65. Making a debit entry in any account would help to conceal an asset misappropriation. Which of the following entries in the following accounts can help to conceal an asset misappropriation?

A. Increasing a liability
B. Reducing an asset
C. Reducing an expense
D. None of the above

66. Recording a credit in any account cannot help in concealing an asset misappropriation because the accounting equation will not balance

A. True
B. False

67. Jonathan runs an IT company. He uses accrual basis of accounting. In December of Year 1, Jonathan signed a contract with a client. The client paid the full amount of the contract in December of Year 1 though the work was to be performed the following year. Jonathan recorded the contract revenue in December of Year1. Which one of the following is TRUE about the recording of that financial transaction?

A. The revenue should be recorded in December when Jonathan received the cash, and the expenses should be recorded the following year when the work is performed.
B. Both the revenue and expenses should be recorded in December.
C. This transaction will not misrepresent the revenue earned during that financial year
D. None of the above

68. ABC company recorded substantial profit in the profit and loss account. The cash flow statement recorded negative balances from the operating activities. This is red flag of which of the following financial statement fraud?

A. Recording of fictitious revenue
B. Skimming of receivables
C. Overstated revenue
D. All the above

69. Which of the following is the correct accounting model?

A. Assets + Liabilities = Owners’ Equity
B. Assets = Liabilities + Owners’ Equity
C. Assets = Liabilities – Owners’ Equity
D. None of the above

70. Which of the following could be used to balance the accounting equation to conceal cash misappropriation?

A. Reducing revenue
B. Reducing a liability
C. Increasing another asset
D. All of the above

71. Which of the following statements is TRUE with regard to the statement of cash flows?

A. The statement of cash flows is often used in tandem with the statement of profit or loss and other comprehensive income to determine a company’s true financial performance.
B. The statement of cash flows is not always necessary because most companies operate under cash-basis accounting rather than accrual accounting.
C. There are four types of cash flows: cash flows from operating activities, from investing activities, from financing activities and from payment activities.
D. The statement of cash flows shows a company’s financial performance and position at the end of a given period

72. In a scenario where the cash and cash equivalents at the end of the current and comparative year in the statement of cash flow does not agree to the cash and cash equivalent, in both public and private financial statements, which of the following statements is CORRECT in regard to the above situation?

A. This situation is a red flag of cash asset misappropriation
B. This situation is a high risk of cash misappropriation
C. Both the internal and external audit should recommend further investigation on possible misappropriation of cash
D. All the above

73. Which of the following appears on the statement of profit and loss?

A. Receivables
B. Revenues
C. Liabilities
D. Expenses

74. Smith, a Certified Forensic Fraud Examiner, was hired to serve as an expert accounting witness in a case of alleged financial statement fraud. As part of her expert testimony, Smith explained the requirements under International Financial Reporting Standards. Those standards require that the financial statements should be complete, neutral, and free from fraud or error. This concept is related to which of the following?

A. Relevance
B. Comparability
C. Faithful representation
D. Consistency

75. A major company in the construction industry wants to purchase another similar company. It would be advisable that the acquiring company conduct which of the following assignments before acquiring the company

A. Forensic accounting
B. Forensic audit
C. Fraud investigation
D. All the above

76. The Benford Law can be useful in detecting financial statement fraud. Which one of the following can the application of Benford Law help to detect?

A. Multiple journal entries just below a limit threshold
B. Numerous journals used to perpetrate financial statement fraud
C. Correlation between Benford law and the first digits of journal entries or a set of data
D. All the above

77. Which of the following statements is NOT true regarding the statement of changes in owners’ equity?

A. Changes in owners’ equity is similar to the statement of retained earnings.
B. It shows how amounts on the statement of profit or loss and other comprehensive income flow through to the statement of financial position.
C. Owners’ equity acts as a link between the statement of financial position and the statement of profit or loss and other comprehensive income.
D. It shows the company’s major liabilities over the financial year.

78. As a sale is made, the appropriate charges for cost of goods sold or other expenses directly corresponding to the sale should be recorded in the same accounting period. This accounting principle is called?

A. Matching Principle
B. Double entry principle
C. Comparability principle
D. None of the above

79. Under the IAS/IFRS The proper basis for recording a piece of equipment, vehicle, building or land on a company’s books is at

A. Historical cost or revaluation amount less accumulated depreciation
B. Sales value less accumulated depreciation
C. Current market value less accumulated depreciation
D. Revaluation value

80. In double-entry accounting, every transaction creates two accounts, where you make a debit entry in one account and a credit in the other

A. True
B. False

81. Which of the following statements is TRUE with regard to gross margin?

A. Gross margin is the difference between cost of sales and operating costs
B. Gross margin is equal to net sales less cost of goods sold
C. Gross margin is equal to revenue less operating expenses
D. None of the above

82. If a fraudster wanted to conceal the removal of a liability from the books, which of the following actions would NOT balance the accounting equation?

A. Increasing owners’ equity
B. Increasing revenue
C. Increasing an asset
D. Increasing a different liability

83. The assumption that a business will continue at least in next financial year is reflected in the international accounting standards (IAS) accounting concept of:

A. Objective evidence
B. Comparability
C. Relevance
D. Going concern

84. Which of the following is a category of the cash flow statement?

A. Operating activities
B. Investment activities
C. Financing activities
D. All the above

85. Assets, liabilities, and owners’ equity are all items that appear on a company’s statement of financial position.

A. True
B. False

86. Which accounting principle requires corresponding expenses and revenue to be recorded in the same accounting period?

A. Comparability
B. Going concern
C. Faithful representation
D. None of the above

87. Under IFRS 15, recognizing revenue for work that is to be performed in subsequent accounting periods, even though the work has already been contracted would result in

A. Fraudulent revenue recognition
B. Erroneous revenue recognition
C. Fraudulent expenses recognition
D. None of the above

88. The statement of changes in owners’ equity acts as the connecting link between which two financial statements?

A. Statement of financial position and statement of retained earnings
B. Statement of profit or loss and other comprehensive income and statement of financial position
C. Statement of profit or loss and other comprehensive income and statement of cash flows
D. Statement of cash flows and statement of financial position

89. Which of the following is TRUE about IFRS’s in regard to financial reporting?

A. IFRS’s enhance transparency and trust in the global market
B. IFRS’s foster sustainability of the world economy
C. IFRS’s financial reporting standards bring efficiency, accuracy and data transparence to serve public interest for growth and trust
D. All the above

90. Which of the following statements is NOT true regarding the statement of cash flows?

A. The statement of cash flows is often used in tandem with the statement of profit or loss and other comprehensive income to determine a company’s true financial performance.
B. The statement of cash flows reports a company’s sources and uses of cash during the accounting period.
C. There are three types of cash flows; cash flows from operating activities, from investing activities and from financing activities.
D. The statement of cash flows shows a company’s financial position and performance at a specific point in time.

91. Failure to disclose matters related to doubt about a company’s ability to fulfil its financial obligations at least in the next financial year is a type of which of the following financial statement fraud

A. Revenue recognition fraud
B. Material misrepresentation fraud
C. Inadequate disclosures
D. None of the above

92. Which of the following financial ratios can be used to measure an organization’s ability to meet its immediate financial obligations?

A. Asset turnover ratio
B. Current ratio
C. Quick/acid ratio
D. None of the above

93. Under IPSAS, MDAs financial statements should include which one of the following disclosures?

A. Progress on auditor’s recommendations
B. Pending bills note and analysis
C. IFMIS generated reports
D. All the above

94. The qualitative financial reporting characteristic of comparability prohibits any change in an accounting principle previously employed.

A. True
B. False

95. Which of the following is TRUE in regard to financial reporting in Kenya?

A. Kenya has adopted IFRS a standard for financial reporting
B. SME’s are required to uses IFRS for SME’S
C. Nairobi Stock Exchange require companies trading in the stock exchange to use IFRS’s
D. All the above

96. International financial reporting standards(IFRS’s) provides financial reporting standards to prevent misrepresentation of financial statements. Those standards have established guidance in the following areas of reporting

A. Fair value measurement
B. Revenue recognition
C. Asset valuation
D. All the above

97. IPSAS require that ministries include a note and analysis on pending bills in the financial statements and the listing included should agree to the pending bills note in the notes to the financial statements.

A. True
B. False

98. When planning an audit of an entity’s financial statements under IPSAS, which of the following is NOT true about the external auditors ‘initial concern?

A. Acceptable financial and other information systems are in place, along with arrangements to provide annual assurance on the reliability of such systems;
B. The entity’s finance team have basic knowledge and understanding of IPSAS and their applicability to the entity’s financial statements
C. The entity has arrangements in place to produce reliable financial statements, along with adequate supporting working papers, to an acceptable timetable
D. All the above

99. According to the institute of certified forensic accountants, the code of conduct for forensic accountants is basically based on three principles. Which of the following is one of those principles?

A. Meeting client’s requirements
B. Integrity, independence, and objectivity
C. Responsibility to the profession
D. All the above

100. Which one of the following is TRUE about Internal controls environment in regard to accounting?

A. Internal controls are the mechanisms, rules and procedures implemented by a company
B. Internal controls ensure the integrity of financial and accounting information
C. Internal controls promote accountability and prevent fraud
D. All the above

mm

Written by 

Leave a Reply

Your email address will not be published.