MONDAY: 4 December 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. In addition to accounting skills and knowledge, a forensic accountant must have good knowledge of which of the following areas EXCEPT?
A. Writing a forensic report
B. Testifying in court as an expert witness
C. Basic principles of evidence
D. None of the above (1 mark)
2. Forensic auditors do not necessarily have to be accountants. However, they must be knowledgeable in the following EXCEPT?
A. Identification of red flags and risks of fraud
B. Detection of fraud and corruption schemes
C. Advanced knowledge in financial reporting standards in both the private and public sector
D. None of the above (1 mark)
3. Departure from the respective IFRS in recognising revenue, costs and expenses, proper asset valuation and inadequate disclosure would result in which one of the following?
A. Fair representation of the financial position and performance of the entity
B. Misrepresentation of both the financial performance and position of the entity
C. Reliable opinion in relation to the going concern
D. None of the above (1 mark)
4. 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. Liabilities
D. Cost of revenue (1 mark)
5. Which of the following statements is NOT accurate in regard to the statement of financial position?
A. Current assets are generally presented in order of liquidity on the statement of financial position
B. Non- current assets are recorded first 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 (1 mark)
6. Which of the following is NOT accurate in regard to 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 profit
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 (1 mark)
7. Asset misappropriation of cash can be concealed by fraudulently balancing the equation. Which of the following actions would balance the accounting equation?
A. Reducing an expense
B. Increasing an expense
C. Increasing a liability
D. Reducing an asset (1 mark)
8. If a fraudster wanted to conceal misappropriation of cash, which of the following actions would help to conceal an asset misappropriation?
A. Reducing revenue
B. Reducing an expense
C. Reducing an asset
D. None of the above (1 mark)
9. Making a debit entry in any account would help to conceal an asset misappropriation, after making a credit entry in the misappropriated account.
Which of the following entries in the following accounts can help to conceal an asset misappropriation?
A. Increasing a liability
B. Reducing an expense
C. Increasing revenue
D. None of the above (1 mark)
10. Janet runs a medium construction company. She got a contract to be performed over a period of five years. Janet 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 fifth of the contract. Janet 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 transaction understated the revenue earned during that financial year
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 (1 mark)
11. Which of the following is ACCURATE in regard to the accounting model?
A. Assets = Liabilities – Owners’ Equity
B. Liabilities = Assets + Owners’ Equity
C. The accounting model is presented in the statement of profit or loss
D. None of the above (1 mark)
12. Which of the following CANNOT be used to balance the accounting equation to conceal cash misappropriation?
A. Reducing revenue
B. Increasing a liability
C. Increasing an expense
D. None of the above (1 mark)
13. The statement of cash flows is often used together 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 read together 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 read together 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 read together with the statement of profit or loss and other
comprehensive income to determine a company’s performance
D. None of the above (1 mark)
14. Which of the following appears on the statement of financial position of an organisation?
A. Owner equity
B. Expenses
C. Gross profit
D. None of the above (1 mark)
15. Joe, 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, Joe explained the requirements under International Financial Reporting Standards related to recording of receivables. Those standards require that the receivables be recognised at a fair value. During the investigation, Joe found that some of the overdue receivable accounts with substantial amounts were created from fictitious invoices 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 NOT be fraudulently affected by the above transaction?
A. The receivables
B. The current ratio
C. Net profit
D. None of the above (1 mark)
16. 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 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 conduct?
A. Forensic accounting
B. Forensic audit
C. Fraud audit
D. Surprise audit (1 mark)
17. Which of the following statements is ACCURATE regarding the statement of changes in owners’ equity?
A. It is not the same as 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 performance
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. None of the above (1 mark)
18. 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. Overstated expenses
B. Overstated revenue
C. Understated net profit
D. None of the above (1 mark)
19. Which of the following statements is ACCURATE with regard to net profit?
A. Net profit is recorded in the statement of financial performance
B. Net profit is equal to gross profit less cost of goods
C. Gross margin is equal to revenue less cost of goods
D. None of the above (1 mark)
20. To conceal the removal of a liability from the books, which of the following actions would balance the accounting equation?
A. Reducing owners’ equity
B. Decreasing an expense
C. Increasing an asset
D. All the above (1 mark)
21. 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. Continuity
C. Going concern
D. None of the above (1 mark)
22. Which of the following is NOT a category of the statement of cash flow?
A. Operating activities
B. Investment activities
C. Financing activities
D. None of the above (1 mark)
23. Which accounting principle requires corresponding expenses and revenue to be recorded in the same accounting period?
A. Double entry principle
B. Accrual principle
C. Materiality principle
D. None of the above (1 mark)
24. 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 ACCURATE in relation to recognising revenue for work that is to be performed during the following financial year?
A. Revenue will be overstated
B. Receivables will be overstated
C. Current ratio will be inflated
D. None of the above (1 mark)
25. Which of the following is ACCURATE in regard to 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 financial reporting standards are mandatory for financial reporting in all jurisdictions
D. IAS generally replace IFRS (1 mark)
26. Which of the following statement is ACCURATE in 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 position
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 revenue activities
D. None of the above (1 mark)
27. 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 (1 mark)
28. 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 turnover ratio
D. None of the above (1 mark)
29. 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 NOT accurate 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. None of the above (1 mark)
30. Which of the following is ACCURATE 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 not required to use IFRS standards for SMEs because they do not have public accountability
C. Nairobi Securities Exchange does not require companies trading in securities to use IFRS
D. None of the above (1 mark)
31. 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 (1 mark)
32. 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 NOT 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. None of the above (1 mark)
33. 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 qualified 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 (1 mark)
34. Certified Fraud Examiners are guided by code of ethics. In the same way, forensic accountants and auditors are expected to observe the following code of ethics EXCEPT?
A. Confidentiality, commitment, diligence and lawfulness
B. Integrity, independence and objectivity
C. Responsibility to the profession
D. None of the above (1 mark)
35. Which of the following statements is NOT 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. None of the above (1 mark)
36. Which of the following terminologies CANNOT be used interchangeably with fraud investigations?
A. Forensic fraud audit
B. Fraud examination
C. Fraud audit
D. Forensic accounting (1 mark)
37. Forensic auditors do not necessarily have to be accountants; however, they must be knowledgeable in the following areas EXCEPT?
A. Advanced management accounts
B. Identification of fraudulent financial transactions
C. Financial statement fraud schemes
D. None of the above (1 mark)
38. Failure to apply the respective IFRS in recognising revenue, improper deferral of costs and expenses, improper asset valuations and inadequate disclosure could result all of the following EXCEPT?
A. Misrepresentation of the statement of financial position
B. Misrepresentation of the financial performance
C. Claims of fraudulent financial reporting
D. None of the above (1 mark)
39. Blue 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 Blue Corp. If management used another method that will result to reduced cost of goods.
Which of the following does NOT 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. None of the above (1 mark)
40. 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 (1 mark)
41. Which of the following statements is ACCURATE in regard to 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 (1 mark)
42. 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. None of the above (1 mark)
43. 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. Reducing an expense
C. Decreasing a liability
D. Increasing an asset (1 mark)
44. Which of the following actions would NOT help to conceal an asset misappropriation?
A. Increase an asset
B. Creating an expense
C. Decreasing a liability
D. None of the above (1 mark)
45. 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 (1 mark)
46. Jonah runs an IT company. He uses accrual basis of accounting. In December of Year 1, Jonah 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. Jonah recorded the contract revenue in December of Year1.
Which one of the following is statement is ACCURATE in regard to 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 (1 mark)
47. Red Corp 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 (1 mark)
48. 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 (1 mark)
49. 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 (1 mark)
50. Which of the following statements is TRUE with regard to the statement of cash flows?
A. The statement of cash flows is not always necessary because most companies operate under cash-basis
accounting rather than accrual accounting
B. There are four types of cash flows: cash flows from operating activities, from investing activities, from
financing activities and from payment activities
C. The statement of cash flows shows a company’s financial performance and position at the end of a given period
D. None of the above (1 mark)
51. Which of the following appears on the statement of profit and loss?
A. Current liabilities
B. Deferred tax
C. Liabilities
D. None of the above (1 mark)
52. Steve, 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 her expert testimony, Steve 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 (1 mark)
53. A major company in the construction industry wants to purchase 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 (1 mark)
54. 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 (1 mark)
55. Which of the following statements is ACCURATE regarding the statement of changes in owners’ equity?
A. Changes in owners’ equity is similar in certain circumstance 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 (1 mark)
56. 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. Consistency principle
B. Double entry principle
C. Comparability principle
D. None of the above (1 mark)
57. 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 (1 mark)
58. 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 (1 mark)
59. 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 (1 mark)
60. 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 (1 mark)
61. 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 (1 mark)
62. Which of the following statement is ACCURATE 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 (1 mark)
63. 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. Failure to write off bad debts
D. None of the above (1 mark)
64. 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 (1 mark)
65. 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 (1 mark)
66. 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 (1 mark)
67. When planning an audit of an entity’s financial statement under IPSAS, which of the following is NOT true about the external auditor’s 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 (1 mark)
68. 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. Competence
B. Objectivity
C. Continuous learning
D. None of the above (1 mark)
69. Which of the following is NOT a financial statement fraud scheme?
A. Recognising long term contract revenue in the first year of performance
B. Inadequate allowance for bad and doubtful debts
C. Capitalising expenditure
D. Accruing expenses (1 mark)
70. Which of the following is NOT a financial statement fraud scheme?
A. Adequate disclosures
B. Concealed expenditure
C. Capitalisation of expenditure
D. None of the above (1 mark)
71. 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. Special audits
B. Fraud audit
C. Surprise audit
D. None of the above (1 mark)
72. Which of the following assignments would NOT require a forensic accountant?
A. Calculation in lawsuits
B. Business valuation
C. Business combination
D. None of the above (1 mark)
73. 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 less depreciation
D. None of the above (1 mark)
74. Rainbow Limited directors are planning to sell the company. The management and board of directors when preparing the financial statements, deliberately failed to write off a substantial number of bad debts.
What type of financial statement fraud was management perpetrating?
A. Improper liabilities valuation
B. Improper current assets valuations
C. Improper non-current asset valuation
D. Improper assets net adjustment (1 mark)
75. Which of the following statements is NOT accurate 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 overstated current ratio
D. None of the above (1 mark)
76. Which of the following is NOT a root causes of financial statements fraud?
A. Weak controls
B. Situational pressure
C. Inadequate oversight by the board
D. None of the above (1 mark)
77. Cost of revenue and corresponding revenue should be recorded in the same accounting period. This accounting principle is called?
A. Accounting principle
B. Double entry principle
C. Materiality principle
D. None of the above (1 mark)
78. Which of the following is an item of statement of cash flows activities from operating activities?
A. Investment dividends
B. Share capital
C. Cash from a loan
D. None of the above (1 mark)
79. Which of the following financial ratio can be used to measure an organisation’s ability to meet its immediate financial obligations?
A. Current ratio
B. Quick ratio
C. Receivable turnover ratio
D. Liquidity ratio (1 mark)
80. Which of the following is NOT accurate in regard to financial reporting in Kenya?
A. Kenya has adopted IFRS and IPSAS standards for financial reporting in the private and public sector
respectively
B. Nairobi Securities Exchange require companies trading in the Securities exchange with public
accountability to use IFRS
C. Public sector is also required to use IFRS in financial reporting
D. None of the above (1 mark)
81. 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 overstating assets and understating liabilities
C. The statement of financial position shows the net worth of a company at a given financial year
D. None of the above (1 mark)
82. Which of the following is the most common financial statements fraud scheme?
A. Overstated income and understated expenses
B. Overstated liabilities and expenses
C. Understated working capital
D. Understated current assets (1 mark)
83. Which of the following is ACCURATE in regard to recording of current liabilities?
A. Failure to record payables would inflate the current ratio
B. Failure to record payables would understate the profit
C. Failure to accrual expenses would overstate the current liabilities
D. None of the above (1 mark)
84. Which of the following statements is NOT accurate in regard to forensic audit?
A. The forensic auditor should assume that a forensic audit will end up in litigation
B. The forensic audit should be conducted only on sufficient predication
C. The scope of a forensic audit should be wide enough to uncover all the fraudulent evidence
D. None of the above (1 mark)
85. Which of the following is NOT a characteristic of a good forensic auditor?
A. A friendly person
B. Patient
C. Very formal in all his/her dealings
D. None of the above (1 mark)
86. Which of the following is NOT accurate in regard to forensic audit and audit reports?
A. The conclusion of an audit report is to express an opinion
B. The conclusion of a forensic audit report is a summary of the findings
C. Conclusion and recommendations in a forensic report are the same and the terms can be used
interchangeably
D. None of the above (1 mark)
87. Which of the following is NOT accurate in regard to a forensic auditor?
A. A forensic auditor should have good knowledge of rules of evidence
B. A forensic auditor should have good knowledge of laws related to fraud
C. A forensic auditor should have good interviewing skills
D. None of the above (1 mark)
88. Which of the following is NOT accurate in regard to IFRS?
A. Disclosures in financial statements is one of the IFRS
B. IFRS’s leave room for interpretation
C. IFRS’s does not require lengthy disclosures on financial statement
D. All the above (1 mark)
89. Which of the following is NOT accurate in regard to IFRS and financial reporting?
A. Strict adherence to IFRS would result in fair recognition of revenue
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 (1 mark)
90. 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. Capital expenditure (1 mark)
91. Which of the following is NOT an item shown in the statement of owners’ equity?
A. Current liabilities
B. Revenue
C. Current Assets
D. None of the above (1 mark)
92. Which of the following is an item of statement of cash flows activities from investment activities?
A. Dividends
B. Sale of public shares
C. Cash from sale of an asset
D. None of the above (1 mark)
93. Which of the following is ACCURATE in regard to forensic audit and fraud investigation?
A. Forensic audit and fraud investigation are both investigation engagements
B. The objective of a forensic audit and an investigation is to collect evidence to prove an allegation
C. Forensic audit or investigation is a methodology of resolving fraud issues from inception to disposition
D. None of the above (1 mark)
94. Which of the following is an item of statement of cash flows activities from financing activities?
A. Revenue
B. Funds from a loan
C. Cash from sale of an asset
D. None of the above (1 mark)
95. Which of the following statements is NOT accurate in regard to unpaid expenditure?
A. Unpaid expenditure are financial statements items
B. Unpaid expenditure are not financial statements items
C. Unpaid expenditure are items of statement of profit and loss
D. None of the above (1 mark)
96. Which of the following statement is ACCURATE in regard to related party’s transaction?
A. Related party’s transactions are not disclosure items
B. All related party’s transactions are fraudulent
C. Not all related party’s transactions are fraudulent
D. None of the above (1 mark)
97. Which of the following financial statement fraud involves recording expense as assets?
A. Capitalising expenses
B. Omission of expenses
C. Overstating of assets
D. None of the above (1 mark)
98. Which of the following financial statement fraud involves failure to record incurred expenses?
A. Understatement of expenses
B. Overstatement of expenses
C. Overstating of assets
D. None of the above (1 mark)
99. Which of the following financial statement fraud involves recording revenue that has not been earned?
A. Overstatement of revenue
B. Understatement of revenue
C. Understatement of receivables
D. None of the above (1 mark)
100. Which of the following financial statement fraud involves failure to write off dead inventory?
A. Capitalising expenses
B. Improper asset valuation
C. Overstating of assets
D. None of the above (1 mark)
