MONDAY: 24 April 2023. Morning Paper. Time Allowed: 3 hours.
Answer ALL questions by indicating the letter (A, B, C or D) that represents the correct answer. This paper is made up of one hundred (100) Multiple Choice Questions. Each question is allocated one (1) mark.
1. Which of the following is NOT true about forensic fraud audit and fraud investigation or examination?
A. Forensic audit and fraud investigation / examination are all investigation assignments
B. The 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 of fraud from inception to
disposition
D. All the above
2. In addition to accounting skills and knowledge, a forensic accountant must know the difference between which of the following EXCEPT?
A. An audit report and forensic audit report
B. Audit evidence and factual evidence
C. Information and evidence
D. None of the above
3. Forensic auditors do not necessarily have to be accountants. However, they must be knowledgeable in each of the following EXCEPT?
A. Identification of accounting fraud and the need to work with an accountant in accounting related frauds assignments
B. Identification and detection of fraud and corruption schemes
C. Basic Knowledge in financial reporting standards in both the private and public sector
D. None of the above
4. Which of the following is NOT accurate about GAAP and IFRS?
A. Both IFRS and GAAP require disclosures in financial statements
B. IFRS’s leave less room for interpretation
C. IFRS’s require lengthy disclosures on financial statement
D. None of the above
5. Applying the respective IFRS in recognising revenue, costs and expenses, proper asset valuation and inadequate disclosure would NOT result in which one of the following?
A. Fair representation of the financial position
B. Misrepresentation of the financial performance
C. Reliable opinion in relation to the going concern concept
D. None of the above
6. 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 be measured at cost value
C. Improper inventory valuation will result to overstated current assets and in return overstated current ratio
D. None of the above
7. 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
D. Cost of revenue
8. 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
B. Non- current assets are recorded in the statement of financial position
C. The statement of owner’s equity is recorded in the statement of financial position
D. None of the above
9. Which of the following is NOT correct about payables, receivables, liabilities, inventory, cash and bank?
A. The above items are recorded in the statement of financial position and are used to calculate the current ratio to measure an organisation’s liquidity
B. A current ratio that is too favourable is a red flag of overstated receivables, inventories or understated
current liabilities or both
C. A current ratio can fraudulently be affected by overstated and understated receivables and payables
respectively
D. None of the above
10. 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
11. If a fraudster wanted to conceal misappropriation of cash, which of the following actions would help to conceal an asset misappropriation?
A. Increasing revenue
B. Reducing an expense
C. Increasing a liability
D. None of the above
12. Making a credit 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
13. Liam runs a medium sized construction company. He got a contract to be performed over a period of five years. Liam signed a contract for the full contract amount with the client. By the end of Year 2 the company had performed and delivered only one third of the contract. Liam recorded the whole contract revenue amount in December of Year 2. Which one of the following is NOT true about the recording of that financial transaction?
A. The revenue was recorded in accordance with the IFRS 15 standard for recognising 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
14. ABC company recorded substantial profits in the statement of profit or loss. The statement of cash flow recorded negative balances from the operating activities. Which of the following would have happened under the circumstances, where the company made profits according to the statement of profit or loss, while cash balances from the operating activities are in the negative?
A. Timing difference
B. Skimming of receivables
C. Overstated revenue
D. All the above
15. Which of the following is NOT correct about the accounting model?
A. Assets = Liabilities + Owners’ Equity
B. Liabilities = Assets + Owners’ Equity
C. The accounting model is presented in the statement of financial position
D. All the above
16. Which of the following CANNOT be used to balance the accounting equation to conceal cash misappropriation?
A. Reducing revenue
B. Reducing a liability
C. Increasing an expense
D. None of the above
17. 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 position.
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. None of the above
18. Which of the following appears on the statement of financial position of an organisation?
A. Non-current assets
B. Expenses
C. Gross profit
D. None of the above
19. Joseph, a Certified Forensic Fraud Examiner, was hired to serve as an accounting expert witness in a trial of alleged financial statement fraud. As part of his expert testimony, Joseph explained the requirements under International Financial Reporting Standards related to receivables. Those standards require that the receivables be recognised at a fair value. During the investigation, Joseph 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 would be fraudulently affected by the above scenario?
A. The receivables will be overstated
B. The current ratio will be inflated
C. Net profit will be overstated
D. All the above
20. ABC Ltd. 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 knowledgeable in fraud issues and confirmed the allegation to be reliable. He also analysed available information in relation to the anonymous tip and found that there was sufficient suspicion of fraudulent activity. 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 NOT conduct?
A. Forensic investigation
B. Forensic audit
C. Fraud audit
D. Fraud examination
21. Which of the following statements is NOT 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. It shows the entity’s financial position and performance
22. Cost of goods sold or other direct expenses for generating revenue should be recorded the same accounting period. Failure to do so would result in which of the following?
A. Understated expenses
B. Overstated revenue
C. Understated net profit
D. None of the above
23. Under the IAS/IFRS, the proper basis for recording a piece of equipment, vehicle or building on a company’s books is at:
A. Revaluation value
B. Cost value less accumulated depreciation
C. Current market value less accumulated depreciation
D. None of the above
24. Which of the following statements is TRUE with regard to net profit?
A. Net profit is recorded in the statement of financial position
B. Net profit is equal to gross profit less operating expenses
C. Gross margin is equal to revenue less cost of goods
D. None of the above
25. A fraudster wanted to conceal the removal of a liability from the books, which of the following actions would balance the accounting equation?
A. Increasing owners’ equity
B. Decreasing an expense
C. Decreasing an asset
D. All the above
26. The assumption that a business will continue at least in the next financial year is reflected in the international accounting standards (IAS) accounting concept of:
A. Consistency
B. Comparability
C. Liquidity
D. None of the above
27. Which of the following is NOT a category of the statement of cash flow?
A. Operating activities
B. Investment activities
C. Control activities
D. All the above
28. Which accounting principle requires corresponding expenses and revenue to be recorded in the same accounting period?
A. Comparability
B. Going concern
C. Materiality
D. None of the above
29. Under IFRS 15, recognising revenue for work that is to be performed in subsequent accounting periods, even though the work has already been contracted, which of the following is NOT true in relation to recognising revenue for work that is to be performed during the following financial year?
A. Revenue will be understated
B. Receivables will be overstated
C. Current ratio will be inflated
D. All the above
30. Which of the following is TRUE about IFRS in regard to financial reporting?
A. IFRS enhance transparency, comparability and trust in the global financial sector
B. IFRS helps to increase the net worth and cash flows in the statement of financial position
C. IFRS are mandatory for financial reporting in all jurisdictions
D. IAS generally replace IFRS
31. 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 assets and uses of cash during the accounting period
C. There are three types of cash flows activities; cash flows from operating activities, investing activities and financing activities
D. All the above
32. IFRS require that organisations disclose matters related to doubt about a company’s ability to fulfil its financial obligations at least in the next financial year, and any other important information that the users of the financial statement would need to know. ABC and XYZ companies are controlled by the same directors. The directors of both companies did not disclose the ownership/control relationship between the two companies. Which of the following financial statement fraud was perpetrated by the company’s directors?
A. Financial statement fraud
B. Inadequate disclosure
C. Accounting fraud
D. Related party transactions fraud
33. Which of the following financial ratios can be used to detect fictitious revenues and receivables?
A. Asset turnover ratio
B. Non-current ratio
C. Receivables collection period
D. None of the above
34. Under IPSAS, Ministries, Departments and Agencies (MDAs) financial statements should include progress on auditor’s recommendations on 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
35. Which of the following is NOT true in regard to financial reporting in Kenya?
A. Kenya has adopted IFRS and IPSAS standards for financial reporting in the private and public sectors
respectively
B. SMEs are required to use IFRS standards for SMEs even though they do not have public accountability
C. Nairobi Securities Exchange requires companies trading in securities to use IFRS
D. None of the above
36. International Financial Reporting Standards (IFRS) provide financial reporting guidelines to prevent
misrepresentation of financial statements. Which of following areas of reporting is NOT one of them?
A. Fair value measurement
B. Revenue recognition
C. Assets measurement
D. None of the above
37. 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 listing 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
38. When planning an audit of an entity’s financial statements under IPSAS, 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 accountants
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
39. Certified Fraud Examiners are guided by code of ethics. In the same way, forensic accountants and auditors are expected to observe which 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
40. Which one of the following is TRUE about internal controls environment in regard to accounting?
A. Internal controls do not protect company assets.
B. There is an accounting standard for internal controls
C. Internal controls help in risk management
D. All the above
41. Which of the following statements is TRUE about risk-based audit?
A. The auditor should prioritise the audit according to the level of the risk, that is, 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 uses tests and procedures specifically designed to detect fraud
D. All the above
42. Which of the following terminologies CANNOT be used interchangeably with fraud investigations?
A. Forensic fraud audit
B. Fraud examination
C. Fraud audit
D. None of the above
43. Forensic auditors do not necessarily have to be accountants; however, they must be knowledgeable in the following areas EXCEPT?
A. Advanced financial reporting
B. Identification of fraudulent financial transactions
C. Financial statement fraud schemes
D. All the above
44. Which of the following is TRUE about IPSAS and IFRS?
A. IPSAS is rule based while IFRS are principle based
B. IFRS leave no room for prior period error corrections
C. IFRS require recognition, measurement, presentation and disclosures
D. All the above
45. Failure to apply the respective IFRS in recognising revenue, improper deferral of costs and expenses, improper asset valuations and inadequate disclosure could result to:
A. Misrepresentation of the statement of financial position
B. Misrepresentation of the financial performance
C. Claims of fraudulent financial reporting
D. All the above
46. Jipe Ltd. 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 Jipe Ltd. If management used another method that will result to reduced 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 be overstated
D. All the above
47. 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
48. Which of the following statements is TRUE regarding the statement of financial position?
A. Non-current assets are generally presented on the statement of financial position in order of maturity.
B. Statements of financial position is usually manipulated by understating assets and overstating liabilities.
C. The statement of financial position shows the net worth of a company at a given financial reporting date
D. Revenues and expenses accounts are recorded in statement of financial performance
49. Payables, receivables, retained earnings, and deferred tax 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
50. 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
51. 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
52. Making a debit entry in any account would help to conceal an asset misappropriation. Which of the following entries in the following accounts CANNOT help to conceal an asset misappropriation?
A. Increasing a liability
B. Increasing an asset
C. Increasing an expense
D. None of the above
53. 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 NOT accurate 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
54. ABC company recorded substantial profit in the profit and loss account. The statement of cash flows recorded negative balances from the operating activities. Which of the following is NOT a red flag of financial statement fraud?
A. Recording of fictitious revenue
B. Skimming of receivables
C. Overstated revenue
D. None of the above
55. 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
56. Which of the following can help conceal cash misappropriation by balancing the accounting equation?
A. Increasing revenue
B. Increasing a liability
C. Reducing an expenditure
D. None of the above
57. Which of the following statements is TRUE with regard to the statement of cash flows?
A. The statement of cash flows is one of the five financial statements in financial reporting
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
58. Which of the following appears on the statement of profit or loss?
A. Receivables
B. Value Added Tax (VAT)
C. Liabilities
D. None of the above
59. Jonathan, a Certified Forensic Fraud Examiner, was hired to serve as an accounting expert witness in a case of alleged financial statement fraud. As part of his expert testimony, Jonathan 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
60. A major company in the construction industry wants to acquire another company. It would be advisable that the acquiring company conduct which of the following assignments before the acquisition to establish the real financial performance and position of the organisation?
A. Forensic accounting
B. Forensic audit
C. Fraud investigation
D. All the above
61. The Benford’s Law can be useful in detecting fraudulent financial transactions. Which of the following statements is NOT true in regard to Benford’s Law?
A. Benford’s Law can be help to identify patterns that indicative of fraud
B. Benford’s Law can only work with natural numbers
C. Benford’s Law can work with both natural and unnatural numbers
D. None of the above
62. Which of the following statements is NOT true regarding the statement of changes in owners’ equity?
A. Changes in owners’ equity is similar in certain circumstances 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 cash flows.
C. Owners’ equity acts as a link between the statement of financial position, the statement of profit or loss and other comprehensive income and non-current liabilities.
D. It shows the company’s major liabilities over the financial year.
63. 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. Corresponding principle
B. Double entry principle
C. Comparability principle
D. None of the above
64. Under the IAS 16, the proper basis for recording a piece of equipment, vehicle or building 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 less costs to sell
65. 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
66. To conceal the removal of a liability from the books, which of the following actions would NOT balance the accounting equation and therefore not conceal the fraud?
A. Increasing owners’ equity
B. Increasing revenue
C. Increasing an expenditure
D. Increasing a different liability
67. The assumption that a business will continue at least in the next financial year is reflected in the accounting concept of:
A. Profitability
B. Comparability
C. Liquidity
D. None of the above
68. Which of the following is the most important category of the statement of cash flows in measuring a company’s financial performance?
A. Operating activities
B. Investment activities
C. Financing activities
D. All the above
69. Which of the following statements is CORRECT in regard to improper disclosures?
A. Disclosures amounts are financial statements items
B. Disclosures amounts are not financial statements items
C. Disclosures should not be part of financial reporting
D. Failure to include disclosures would not fraudulently affect the financial reporting
70. Which of the following, would fraudulently affect the current ratio and therefore misleading decision makers?
A. Accrual of expenses
B. Proper valuation of inventory
C. Inadequate provision for bad doubtful debts
D. None of the above
71. Under IPSAS, MDAs financial statements should NOT include which one of the following disclosures?
A. Progress on auditor’s recommendations
B. Pending bills note and analysis
C. IFMIS generated reports
D. None of the above
72. Which of the following is NOT true in regard to financial reporting in Kenya?
A. Kenya has adopted IFRS for financial reporting
B. Kenya has adopted IPSAS for financial reporting for MDAs
C. IPSAS financial reporting require that MDAs uses the accrual basis of accounting
D. None of the above
73. International Financial Reporting Standards (IFRS) provides financial reporting standards to prevent misrepresentation of financial statements. Those standards have established guidance on several reporting areas.
Which of the following is NOT one of those reporting areas?
A. Revenue recognition
B. Asset valuation
C. Disclosures
D. None of the above
74. 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 advanced 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. None of the above
75. According to the Association of certified Fraud Examiners, the code of conduct for fraud examiners is basically based on several principles. Which of the following is NOT one of those principles?
A. Confidentiality
B. Integrity and objectivity
C. Independence
D. None of the above
76. Which one of the following statements is NOT correct in regard to Internal control environment in regard to accounting?
A. Internal controls are the mechanisms, rules and procedures designed and implemented by the internal audit functions
B. Internal controls ensure the integrity of financial and accounting information
C. Internal controls environment enforces all other controls
D. All the above
77. Which of the following is a type of financial statement fraud?
A. Omission of unearned revenue
B. Adequate provision for bad and doubtful debts
C. Failure to write off obsolete inventory
D. All the above
78. Which of the following is NOT a type of financial statement fraud?
A. Writing off bad debts
B. Concealed expenditure
C. Capitalisation of expenditure
D. None of the above
79. Procurement fraud is a high risk in the public sector. Which of the following exercise should auditors perform when auditing procurement for purposes of evaluating economy, efficiency and effectiveness?
A. Forensic audit
B. Fraud audit
C. Value for money audit
D. None of the above
80. Which of the following scenarios would NOT require a forensic accountant?
A. Special audit
B. Calculation in lawsuits
C. Business valuation
D. Business combination
81. Under the IAS/IFRS, the proper basis for recording a piece of equipment, vehicle, building or land on a company’s books is at which of the following?
A. Revaluation value less cost to sell
B. Sales value less accumulated depreciation
C. Cost value plus accumulated depreciation
D. None of the above
82. Esso Limited seeks to invite potential investors into the company. The managing director instructed the accountant to artificially increase the value of non-current assets so as to increase the company’s net worth. What type of financial statement fraud was management perpetrating?
A. Improper assets valuation
B. Improper assets impairment
C. Improper asset revaluation
D. Improper assets net adjustment
83. Which of the following statements is NOT correct in regard to recording of fictitious sales?
A. Fictitious sales will result in overstated receivables
B. Fictitious sales will result in inflated profits
C. Fictitious sales will result in understated current ratio
D. None of the above
84. Which of the following is NOT a root cause of financial statements fraud?
A. Rationalisation
B. Situational pressure
C. Low perception of detection
D. None of the above
85. Cost of goods sold and corresponding sales should be recorded in the same accounting period. This accounting principle is called?
A. Measuring concept
B. Double entry principle
C. Materiality principle
D. Matching principle
86. Which of the following statement of cash flows activities is NOT a type of cash flows from operating activities?
A. Investment dividends
B. Share capital
C. Cash from a loan
D. All of the above
87. Which of the following financial ratios can be used to measure an organisation’s ability to meet its immediate daily financial operations?
A. Asset turnover ratio
B. Current liability ratio
C. Cost of sales ratio
D. None of the above
88. Which of the following is NOT true in regard to financial reporting in Kenya?
A. Kenya has adopted IFRS and IPSAS standards for financial reporting in the private and mining sector
respectively
B. SMEs are not allowed to use IFRS standard for SME’S if they have public accountability
C. Nairobi Securities Exchange require companies trading in the Securities exchange with public
accountability to use IFRS
D. All the above
89. Which of the following statements is NOT accurate regarding the statement of financial position?
A. Liabilities are generally presented on the statement of financial position in order of maturity.
B. Statements of financial position is usually manipulated by understating assets and overstating liabilities.
C. The statement of financial position shows the net worth of a company at a given financial reporting date
D. Revenues and goodwill accounts are recorded in statement of financial comprehensive income
90. Owners’ equity can be affected by which of the following:
A. Shareholders’ funds, dividends and liabilities
B. Shareholders’ funds, net income and loans
C. Net income, working capital and loans
D. None of the above
91. Which of the following is the most common type of financial statements fraud?
A. Overstated revenue and concealment of expenditure
B. Overstated liabilities and expenses
C. Understated working capital
D. Understated non – current assets
92. Which of the following is NOT true in regard to recording of current liabilities?
A. Failure to record payables would inflate the current ratio
B. Failure to record payables would inflate the profit
C. Failure to accrual expenses would overstate the current assets
D. None of the above
93. Which of the following statements is NOT accurate in regard to forensic audit?
A. The assumption of a forensic audit is that it might end up in litigation
B. The forensic audit should be conducted only on sufficient predication
C. The scope of a forensic audit should be specific to the facts in issue
D. None of the above
94. Which of the following is NOT a characteristic of a good Fraud examiner?
A. A good interviewer
B. Compassionate
C. People’s person
D. None of the above
95. Which of the following is NOT correct in regard to forensic audit and audit reports?
A. The conclusion of an audit report is an opinion
B. The conclusion of a forensic audit report is a summary of the findings
C. The conclusion of a forensic audit report is recommendations on action to be taken based on evidence
collected
D. None of the above
96. Which of the following is NOT true about Forensic auditors?
A. A well trained and experienced accountant/auditor can also conduct effective forensic audits
B. Forensic auditor should be knowledgeable in fraud Identification and detection
C. Basic Knowledge in financial reporting standards in both the private and public sector
D. All the above
97. Which of the following is NOT true in regard to IFRS?
A. Disclosures in financial statements is one of the IFRSs
B. IFRSs do not leave room for interpretation
C. IFRSs leave room for interpretation
D. IFRSs require lengthy disclosures on financial statement
98. Which of the following is NOT true in regard to IFRS and financial reporting?
A. Strict adherence to IFRS would result in fair representation of the financial performance of an organisation
B. Strict adherence to IFRS would result in an understated performance of an organisation
C. Strict adherence to IFRS would result in fair representation of the financial position of an organisation
D. None of the above
99. Which of the following is NOT an item shown in the company’s statement of profit or loss and other comprehensive income?
A. Revenue
B. Bad debts
C. Expenditure
D. None of the above
100. Which of the following is an item shown in the statement of owners’ equity?
A. Current liabilities
B. Expenditure
C. Retained earnings
D. None of the above
