KASNEB CAMS – Foundations of Accounting and Auditing

FOUNDATIONS OF ACCOUNTING AND AUDITING

GENERAL OBJECTIVE

This paper is intended to equip the candidate with the requisite knowledge, skills and attitudes to prepare simple financial statements and apply basic auditing principles for entities in various sectors.

5.0 LEARNING OUTCOMES

A candidate who passes this paper should be able to:

  • Identify various types of assets and liabilities, income and expenditure
  • Apply the double entry aspects of accounting
  • Prepare basic financial statements for sole proprietorships, small and medium size enterprises (SMEs), non-governmental organisations (NGOs) and other entities.
  • Prepare simple tax computations for SMEs
  • Apply basic auditing principles

CONTENT

5.1 Introduction to accounting

  • Definition of terms used in accounting
  • Users of accounting information and their needs
  • Qualities of good accounting information
  • The accounting equation
  • Accounting concepts, principles, standards and their importance
  • Regulatory framework of accounting; the Institute of Certified Public Accountants of Kenya (ICPAK), regional accountancy bodies, professional ethics

5.2 Source documents

  • Meaning of source documents
  • Types of source documents
  • Uses of source documents
  • Relationship between source documents and books of account

5.3 Books of original entry

  • Definition of books of original entry
  • Classification of books of original entry
  • Preparation of books of original entry

5.4 The ledger and the trial balance

  • Definition of a ledger and an account
  • Importance of ledgers
  • Relationship between ledgers and accounts
  • Classification of ledgers
  • Nature of double entry
  • Definition of a trial balance
  • Importance of a trial balance
  • Balancing of ledgers and transferring balances to trial balance

5.5 The cash book

  • Definition of a cash book
  • Types of cash books
  • Types of discount
  • Recording transactions in a cash book

5.6 Petty cash book

  • Definition of petty cash book
  • Imprest system
  • Purpose of petty cash book
  • Preparation of petty cash book

5.7 Accounting for ordinary revenue and expenses, assets and liabilities

  • Accounting for revenue, including accruals and prepayments
  • Accounting for expenses, including accruals and prepayments
  • Accounting for account receivables, bad debts and allowances for doubtful debts
  • Accounting for property, plant and equipment including depreciation, acquisition and disposal
  • Simple bank reconciliation
  • -     Accounting for accounts payable       (excluding       control account)

5.8 Correction of simple accounting errors, the suspense account

5.9 Preparation of basic final accounts

  • Definition of final accounts
  • Types of final accounts
  • Preparation of final accounts from a list of balances (excluding adjustments); sole proprietorships, two-partner firms, corporate entities, NGOs

5.10    Computerised accounting systems

  • Role of computers
  • Application and accounting software
  • Benefits of computerised accounting system
  • -     Challenges of operating computerised accounting   systems

(the candidate is advised and encouraged to develop proficiency in at least one commonly used accounting package)

5.11   Nature, purpose and objectives of an audit

  • Definition of auditing
  • Relationship between auditing and accounting
  • Types of audits; internal versus external audits
  • Objectives of audits

5.12   Internal controls

  • Definition of internal control system
  • Role of internal control systems
  • General controls on sales, purchases, cash and bank, inventory, income and expenditure

5.13   Conducting basic audits

  • Key stages of an audit
  • Preparing simple audit plans
  • Audit evidence; types, approaches to gathering evidence
  • Basic audits on sales, purchases, cash and bank, inventory, income and expenditure
  • Difference between errors and fraud
  • Basic applications of computer assisted audit techniques (CAATs)
  • Elements of an audit report

5.14  General overview of public sector accounting and auditing

  • The financial reporting chain in the public sector
  • Role of the Director General - Accounting Services and Quality Assurance
  • Role of Kenya National Audit Office (KENAO) and other supreme audit institutions in audit of National and County Governments
  • Parliamentary oversight of accounting and auditing processes

5.16 Emerging issues and trends

CAMS Level I, Principles of Entrepreneurship and Management, Introduction to Law and Ethics, Fundamental ICT Skills, Fundamentals of Business Mathematics, CAMS Level II, Foundations of Accounting and Auditing, Elements of Public Finance and Administration, Principles of Marketing and Communication

Download CAMS Past Examination Papers here

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