January 2024

MONDAY: 4 December 2023. Afternoon 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 an objective of a risk assessment process related to computers and computer systems? A. Investigate the risks that make an organisation vulnerable to fraud B. Quantify the impact if the risk materialised C. Establish an economic balance between the impact if the risk materialised and the cost of resources required D. None of the above (1 mark) 2. Which of the following statement is ACCURATE in regard to fraudulent financial reporting? A. Failure to write off bad debts would cause overstatement of receivables B. Failure to write off bad debts would cause understatement of the current ratio C. Failure to accrual expenses would cause understatement of liabilities (1 mark) D. None of the above 3. Which of the following method of bribery payment BEST describes how large amounts of bribes are disbursed and are hard to detect? A. Entertainment B. Expensive vacations C. Property sold below the market value D. None of the above (1 mark) 4. Healthcare providers defraud insurance companies and government health programmes through intentional separation of one procedure into two procedures. Which of the following BEST describes the healthcare providers’ fraud scheme? A. Up-coding scheme B. Fictitious services C. Fictitious procedures D. None of the above (1 mark) 5. There are several financial statement fraud schemes that are perpetrated by management to inflate the organisation’s liquidity ratio. Which of the following BEST describes the fraud scheme? A. Overstatement of current liabilities B. Overstatement of revenue/ receivables C. Overstatement of non-current assets D. Understatement of non-current assets (1 mark) 6. Which of the following would result in an improper valuation of inventory? A. Writing off obsolete inventory B. Recording perpetual inventory balance which is higher than the physical balance C. Recording physical inventory balance which is lower than the perpetual inventory D. None of the above (1 mark) 7. Which of the following statements is NOT accurate in regard to steps of risk assessment related to computers and computer systems? A. Identifying the risks and threats of each asset and calculating the probability of each risk materialising, is the third step of a risk assessment B. Determining the value of each asset of a risk assessment related to computers and computer systems is the second step C. Recommending the counter-measures and other remedial activities is the fifth step of a risk assessment related to computers and computer systems D. None of the above (1 mark) 8. Which of the following is NOT a red flag of financial statement fraud? A. Normal revenue growth B. Unrealistic targets C. Negative cash flow balances while reporting profits D. None of the above (1 mark) 9. Conrad received a voice mail saying that somebody is trying to use his account fraudulently through Internet banking. Which of the following BEST describes this social engineering scheme? A. Phishing B. Smishing C. Pharming D. None of the above (1 mark) 10. Separation of duties is fundamental to data security. Which of the following is NOT a recommended practice in relation to separation of duties? A. Application system users should only be granted access to those functions and data required for their job duties B. System users should not have direct access to program source code C. System users cannot have direct access to program source code D. None of the above (1 mark) 11. Procurement fraud is perpetrated in the cause of a procurement process. Which of the following is NOT a procurement fraud scheme committed during the submission of bids? A. Bid rotation B. Splitting of bids C. Complementary bids D. Bid suppression (1 mark) 12. XYZ government agency planned and budgeted for one hundred vehicles. The procurement department developed the specifications for the vehicles and their accessories, but they were developed as separate specifications and therefore increasing the total cost of the motor vehicles. Which of the following BEST describes this type of procurement fraud scheme? A. Bid specification scheme B. Bid manipulation scheme C. Bid splitting scheme D. None of the above (1 mark) 13. Which of the following statements is NOT a red flag of bid splitting? A. Similar or identical procurements from the same supplier in amounts just slightly over the competitive bidding limits B. Consecutive related procurements from several contractors that are within the competitive-bidding or upper-level review limits C. Justifiable split purchases that fall under the competitive-bidding or upper-level review limits D. None of the above (1 mark) 14. Which of the following statement is ACCURATE in regard to Business email compromise schemes identified by FBI? A. BEC (Business email compromise) is a type of vishing phishing B. BEC (Business email compromise) is a type of malware C. BEC (Business email compromise) is a type of spear engineering D. None of the above (1 mark) 15. Which of the following statement is ACCURATE in regard to red flags of bid tailoring scheme? A. Explained changes in contract specifications from previous proposals or similar items B. Good number of competitive bids or awards to several bidders C. Specifications developed by or in consultation with a contractor who is permitted to compete in the procurement D. None of the above (1 mark) 16. Which of the following is NOT a red flag of bid rigging by contractors? A. Competent bidders refrain from bidding B. Vendors submit complementary bids C. There is noticeable pattern of winning bids D. None of the above (1 mark) 17. Which of the following is NOT a type of administrative security and controls? A. Data classification B. Incidence response plans C. Computer security audits and tests D. None of the above (1 mark) 18. Which of the following technique BEST describes an attempt to exploit the system security for purposes of

WEDNESDAY: 6 December 2023. Afternoon 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. Courts require an expert witness to give an expert opinion. Which of the following statement is NOT accurate in regard to an expert witness in a fraud criminal proceeding in Kenya jurisdiction? A. The court does not retain its own expert witnesses to assist the court in interpreting the technical facts of the issue in fact B. The expert witnesses owe a duty to the court during the civil proceedings C. The expert witnesses owe a duty to the parties that retained them for purposes of civil litigation D. None of the above (1 mark) 2. Which of the following statements is NOT accurate in regard to a criminal fraud trial in the common law jurisdictions? A. The prosecution must serve the defendant with both exculpatory and inculpatory evidence B. The main objective of the prosecution in a fraud criminal judicial proceedings is to ensure that the criminal defendant is convicted C. The main objective of the prosecution in a fraud criminal court proceeding is ensure justice D. The prosecution has the burden of proof (1 mark) 3. Which of the following statements is NOT accurate in regard to documentary evidence? A. All documents related to the facts in issue are exhibits B. Financial statements are hearsay evidence and cannot be introduced as an exhibit to prove misrepresentation of financial position C. Bank statements of a suspect accused of bribery that show that the suspect deposited substantial amounts of money in his account just around the same time of the alleged bribery is not an exhibit D. None of the above (1 mark) 4. Which of the following statements is ACCURATE in regard to documents which can be introduced in court as exhibits to prove a fraud case? A. Documents that can be introduced as exhibits to prove a fraud case are those that are relevant to the facts in issue and were in existence before litigation was anticipated B. Documents that can be introduced as exhibits to prove a fraud case are those related to the facts in issue C. Documents that can be introduced as exhibits to prove a fraud case are only those that were prepared for litigation purposes D. None of the above (1 mark) 5. Which of the following statements is NOT accurate in regard to evidence? A. The rules of evidence under the evidence Act is relevance and admissibility B. Civil law legal systems do not have a separate law of evidence C. The law of evidence governs the admissibility of evidence in legal proceedings D. None of the above (1 mark) 6. Jelly, a fraud suspect, enters into a plea agreement with the prosecution in the common law jurisdiction. Which of the following statements is ACCURATE in regard to a guilty plea? A. Jelly’s guilty plea can be entered as evidence B. Jelly’s guilty plea is real evidence C. Jelly’s guilty plea is oral direct evidence D. None of the above (1 mark) 7. Which of the following statements is NOT accurate in regard to testimonial evidence in Kenya? A. There are only two types of testimonial evidence, which are oral direct testimony and expert witness testimony B. A corroborative witness cannot give oral direct evidence C. Several witnesses can give oral direct evidence D. None of the above (1 mark) 8. In Kenya, expert witnesses are allowed to draw conclusions and express opinions. Which of the following statements is NOT accurate in regard to expert opinion testimony? A. An expert opinion is a direct testimonial evidence B. The expert opinion must be based on specialised knowledge on the facts in issue C. The expert witness does not have firsthand information of the facts in issue D. None of the above (1 mark) 9. Brown, a fraud suspect, in the inquisitorial jurisdiction provides a written confession statement in a fraud case. Which of the following statements is ACCURATE in relation to prosecution evidence? A. Brown’s confession is real evidence B. Brown’s confession is circumstantial evidence C. Brown’s confession is a direct evidence D. None of the above (1 mark) 10. Which of the following statements in regard to questioning of expert witness in Kenyan courts is NOT accurate? A. The questioning of the expert witness is conducted by the parties to the litigations B. The questioning of the expert witness is conducted during examination in chief and cross examination C. The questioning of the expert witnesses is conducted only during cross examination by the defence counsel D. None of the above (1 mark) 11. Which of the following statements is NOT accurate in regard to an eye witness testimony? A. The eye witness testimony must be oral direct evidence B. The eye witness testimony must be based on personal knowledge of the facts being litigated C. The eye witness testimony can be based on information provided by another person who has personal knowledge of the facts in issue D. None of the above (1 mark) 12. Which of the following statements concerning criminal bargaining agreements is NOT accurate? A. Bargaining agreement has gained popularity in the adversarial jurisdictions in the recent years B. Bargaining agreement is practiced more in the adversarial jurisdictions than in the civil law jurisdictions C. Bargaining agreement is part of the criminal justice system D. None of the above (1 mark) 13. Which of the following statements is NOT accurate in regard to the expert witness report or statement? A. The expert witness report is protected by professional legal privileges B. The expert witness report is not protected by professional legal privileges C. The expert witness report must include the basis of the expert witness conclusion D. None of the above (1 mark) 14. Which of the following is one of

THURSDAY: 7 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. Capability of conducting an effective interview for investigation purposes is a must. The introduction phase of an interview during information or admission seeking interview is very important. Which of the following statement is NOT accurate? A. The introduction phase sets the tone of the interview which can be positive or negative B. The investigator should establish the purpose of the interview during the introduction phase C. During the introduction phase of an admission seeking interview, the investigator should ask open ended questions D. None of the above (1 mark) 2. Professional interviews for purposes of investigations are useful in eliciting information as well as obtaining admissions from suspects. Which of the following is NOT accurate in regard to professional interviewing? A. Professional interviewing is a structured conversation with answer and question session B. The interviewer must observe the elements of conversation, avoid inhibitors of conversation and apply facilitators of communication to enable a successful interview C. The interviewer must observe verbal and non-verbal sign of deception from the interviewee so that she can indicate the interviewees veracity in the memorandum of interviews D. The interviewer must be informal to avoid intimidating the interviewee (1 mark) 3. Which of the following is a method of tracing illicit funds by comparing major expenditure with the suspect’s known legitimate income? A. Bank deposit analysis method B. Net worth analysis method C. Asset method D. None of the above (1 mark) 4. Which of the following is NOT a recommended mechanic of interviewing? A. Conducting one on one interview B. Recording the interview without the interviewees consent C. Displaying interest by maintaining eye contact D. None of the above (1 mark) 5. Which of the following is an important element of conversation that is essential in conducting interviews to ensure that the respondent appreciates that the interviewer needs his/her help? A. Persuasion B. Ritualistic C. Recognition D. Information exchange (1 mark) 6. Which of the following is a recommended method of identifying a confidential source? A. The fraud examiner should identify the source by his or her full name B. The fraud examiner should not identify the source using his or her initials C. The fraud examiner should use symbols to denote the source’s identity D. None of the above (1 mark) 7. Which of the following statement is ACCURATE in regard to seizing computers for investigation? A. When a forensic investigator is seizing a running computer for examination, he can retrieve data from the computer directly via its normal interface if the evidence needed is volatile B. When a forensic investigator is seizing a running computer, he should do a graceful shut down C. When a forensic investigator is seizing a computer that is shut down, they should open and review files needed D. All the above (1 mark) 8. When a suspect is confronted with questions of excess funds that the suspect cannot account for from legitimate known sources of funds, which of the following is NOT a defense that the suspect is likely to give? A. The suspect claims that the extra funds are inheritance from his grandfather B. The suspect claims that the extra funds are from an insurance compensation C. The suspect claims that the extra funds are gifts from suppliers D. The suspect claims that the extra funds are from his savings over a period of time (1 mark) 9. Which of the following statements is ACCURATE in regard to an intelligent suspect’s interview? A. The intelligence level of an interview subject rarely has no effect on an investigator’s ability to accurately observe behavioral clues during an interview B. An intelligent suspect will usually not show any stress when being deceptive C. The intelligence level of an interview subject has an effect on an investigator’s ability to accurately observe behavioral clues during an interview D. None of the above (1 mark) 10. Circumstantial proof that would yield the best results when the suspect is using illicit funds to accumulate wealth and acquire assets, thus causing his net worth to decrease is referred to as: A. The expenditures method B. The asset method C. Net worth analysis method D. None of the above (1 mark) 11. The CEO of ABC company is alleged to have committed financial statement fraud. During an admission-seeking interview with Alex, the interviewer states: “I know the employee’s job security depends on the company’s good performance. I am sure you did this to help the employees retain their jobs, isn’t that right?” This interviewing technique is known as: A. Depersonalisation B. Sympathetic understanding C. Altruistic appeals D. Calibration (1 mark) 12. Which of the following should NOT be done when preparing an organisation for a formal fraud investigation? A. Inform the managers of the employees who will be involved in the investigation B. Inform the organisation’s legal counsel when the investigation is about to commence C. Inform management that the investigation is about to begin D. Inform the whole organisation to ensure you get cooperation from everyone whose assistance may be required (1 mark) 13. Which of the following is NOT accurate in regard to limitation of conducting a public database search online? A. Information from online databases is always accurate, current and up to date B. Online public records searches are limited in the area they cover, often requiring fraud examiners to search multiple jurisdictions C. Online coverage of public records varies widely from jurisdiction to jurisdiction D. All of the above (1 mark) 14. Charles, a Certified Fraud Examiner, is conducting an admission-seeking interview of Caroline, a fraud suspect. Charles asks Caroline: “Did you take the organisation’s money for luxury, or you had an emergency?” Which of the following BEST describes the response Charles is

TUESDAY: 5 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. Which of the following statement is NOT accurate in regard to civil prosecution in the adversarial jurisdictions? A. In a civil trial, the plaintiff has the burden of proof B. In a civil trial, the defendant has the burden of proof C. In a civil trial, the standard of proof is balance of probability D. None of the above (1 mark) 2. Which of the following is NOT accurate in regard to tribunals? A. Tribunals are subordinate courts within the judicial system B. Tribunals are specialised quasi-judicial bodies C. Tribunals are not governed by strict rules of evidence D. None of the above (1 mark) 3. Which of the following statements is ACCURATE in relation to burden of proof in civil law legal systems? A. In inquisitorial jurisdictions, the burden of proof for criminal trials, rests with the party that brought the case to court B. In inquisitorial jurisdictions the burden of proof for civil trials rests with the parties to the litigation C. The burden of proof for a civil trial, in the civil law jurisdictions rests with the plaintiff D. The burden of proof for a civil trial in the civil law jurisdictions rests with the defense (1 mark) 4. Which of the following statement is NOT accurate under the United Nations’ International Covenant on Civil and Political Rights (ICCPR) for those accused of crimes, in regard to presumption of innocence? A. An accused person is presumed innocent even when there is sufficient evidence to prove the accused individual committed the alleged crime B. A person accused of a crime is a criminal defendant C. A person accused of a crime must be proven guilty by a court of law D. None of the above (1 mark) 5. Which of the following statement is ACCURATE in regard to the standard of proof in a criminal trial in inquisitorial jurisdictions? A. The standard of proof is beyond reasonable doubt B. The standard of proof is balance of probability C. The standard of proof Preponderance of evidence D. Inner conviction of the judge (1 mark) 6. Common law jurisdictions conduct sworn testimony given by a party or witness upon questioning by counsel for one of the parties. Which of the following BEST describes the type of examination? A. Examination in chief B. Direct examination C. Re-examination D. None of the above (1 mark) 7. In most adversarial jurisdictions, which of the following documents is used as a charging document in serious criminal cases? A. Application B. Information C. Petition D. None of the above (1 mark) ANSWER: D 8. Which of the following statement is ACCURATE in regard to questioning of witnesses in adversarial jurisdictions like Kenya? A. In adversarial jurisdictions, the questioning is done by both parties to the litigation B. In adversarial jurisdictions, the judges conduct the questioning C. In adversarial jurisdictions, the questioning is conducted by the prosecution only D. None of the above (1 mark) 9. Which of the following statements is NOT accurate about prosecution bargaining agreements? A. Bargaining agreements are more commonly used in adversarial jurisdictions B. The prosecution has the discretion to enter into bargaining agreement with the criminal defendant C. Bargaining agreements are not used in inquisitorial jurisdictions D. All the above (1 mark) 10. Which of the following is NOT accurate in regard to closing arguments in a criminal case in an adversarial jurisdiction? A. Closing arguments are not additional evidence to strengthen each party’s side of the case B. The defense presents their closing arguments first C. The closing points are made by both the prosecution and the defense to convince the judge or jury to convict and acquit respectively D. None of the above (1 mark) 11. Which of the following is NOT accurate in regard to the burden of proof in inquisitorial jurisdictions? A. In inquisitorial jurisdictions, the presiding judge has the burden to prove each sides case B. In inquisitorial jurisdictions, the trial judge determines whether the evidence meet the standard of proof C. In inquisitorial jurisdictions, both the prosecution and the defence have strict burden of proof D. None of the above (1 mark) 12. Which of the following statement is NOT most accurate in regard to jurisdiction to hear a case in the common law jurisdictions? A. Jurisdiction to hear a case is determined by where the claim arose B. Jurisdiction to hear a case is determined by where the defendant resides C. Jurisdiction is determined by where the prosecution and defendant resides D. None of the above (1 mark) 13. Which of the following statements is MOST accurate in regard to the sources of law in common law jurisdictions? A. The sources of law in common law jurisdictions is the statutes and common law B. The sources of law in common law jurisdictions is the common law C. The sources of law in common law jurisdictions is the codified principles D. None of the above (1 mark) 14. Which of the following statements is ACCURATE in regard to sources of law in inquisitorial jurisdictions in criminal trial, like corruption? A. In inquisitorial jurisdictions, judges can only apply codified principles in criminal cases B. In inquisitorial jurisdiction judges are bound by the court decision in determining cases C. Judges in civil law legal systems cannot use court precedent to interpret codified statutes D. None of the above (1 mark) 15. Which of the following statement is NOT accurate in regard to alternative dispute resolution? A. An arbitrator acts as judge B. Mediation is binding C. Arbitration can be binding or non- binding D. Arbitration and mediation is not a recommended method of resolving fraud disputes (1 mark) 16. Which of the following statement is ACCURATE in regard

WEDNESDAY: 6 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. Which one of the following statements related to criminal activities intended to enable bribery is NOT accurate? A. Any person who knowingly assists a person or a private entity to give or receive a bribe by obtaining property intended for use in bribery B. Any person who knowingly assists a person or a private entity to give or receive a bribe by obtaining property intended for use in bribery by using, having possession of or transferring as a result or connection with bribery C. Any person who unknowingly assists a person or a private entity to give or receive a bribe by recording property which was obtained as a result of or in connection with bribery D. All the above (1 mark) 2. Which of the following statements under the Bribery Act 2016 is ACCURATE? A. Under the Bribery Act, only private entities are now required to put in place procedures for the prevention of bribery and corruption appropriate to their size and scale and nature of their operations B. Under the Bribery Act, only public entities are now required to put in place procedures for the prevention of bribery and corruption appropriate to the size, scale and nature of their operations C. Failure of private entities to put in place such procedures is an offense on part of director or a senior officer D. None of the above (1 mark) 3. Which of the following statements is NOT accurate in regard to penalty under the Bribery Act 2016? A. Imprisonment (maximum of ten years); and Imposition of a fine (not exceeding KES 5,000,000/- plus any other penalty or punishment B. Where the person received a quantifiable benefit or any other person suffered a quantifiable loss, imposition of additional mandatory fine (five times the amount of the benefit and/or loss) but in addition to imprisonment C. Where the person received a quantifiable benefit and any other person suffered a quantifiable loss, imposition of additional mandatory fine (five times the amount of the benefit and five times amount quantifiable loss in addition to the initial fine and imprisonment D. None of the above (1 mark) 4. Which of the following statements is NOT accurate in regard to the Bribery Act 2016? A. A person convicted for bribery and given penalties of a fine and imprisonment is required to pay the benefit received to the Government in addition B. Under the Bribery Act, confiscation of property would be in addition to penalties of a fine and imprisonment C. Under the Bribery Act, disqualification from serving as a director or partner would not be in addition to penalties of a fine and imprisonment D. Under the Bribery Act, being barred from holding public office would be in addition to penalties of a fine and imprisonment (1 mark) 5. Which of the following is NOT a type of procurement offence under the Public Procurement and Assets Disposal Act? A. A fraudulent act B. Knowingly lie to or mislead a person carrying out a duty or function or exercising a power under this Act C. Sign a contract contrary to the requirements of this Act D. None of the above (1 mark) 6. Which of the following is NOT accurate in regard to the Bribery Act 2016? A. The Bribery Act 2016 does not have wide implications for an entity operating into Kenya from abroad B. Because of the hefty penalties, the implications should be factored into all business activities, and businesses need to establish an effective bribery and corruption prevention policy C. The Bribery Act has far-reaching implications for those doing business in Kenya or with Kenyan entities, alongside other extra-territorial statues on bribery D. All the above (1 mark) 7. Harold is an agent of ABC government agency. Harold makes a statement to the principal indicating that the agency requires a computer system with a higher capacity than the one it had. During budgeting, the agent budgeted for the computer system and a budget of two billion was approved. It was common knowledge that the entity does not need such a big computer system. The current system was still working effectively and efficiently. The agent received an award from the vendor for influencing the procurement. Which of the following is NOT an offence committed by the agent? A. Abuse of office B. Deceiving principle C. Bribery D. None of the above (1 mark) 8. Which of the following statements is NOT accurate in regard to the law of Breach of Trust or fiduciary duty? A. Employees who can commit an offence of breach of trust are, officers, directors and executives only B. Employees entrusted with receiving organisation’s funds and making payments can be liable of breach of trust, if they embezzled the funds C. Employees who are in position of trust owe the principal a duty of loyalty and care D. Offences of breach of trust are usually brought to court as civil cases, for damages remedy (1 mark) 9. Which of the following statements is ACCURATE in regard to forgery? A. A fraudulent invoice presented to a procuring entity is a forgery committed by the contractor or vendor B. A fraudulent invoice presented to a procuring entity is misrepresentation of facts C. A fraudulent invoice presented to a procuring entity is misappropriation of assets D. None of the above (1 mark) 10. Which of the following is a method used for sending money to a co-conspirator in a foreign country without sending funds through a financial institution? The party pays Broker A, the funds, and Broker A then directs Broker B, who lives in the foreign country, to pay the co-conspirator. Later, Broker A offsets his debt to Broker B by paying someone at

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

MONDAY: 4 December 2023. Afternoon 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. Culture Quotient fraud index is a macro assessment of how an the organisation and its people behave. Which of the following is NOT an element of quotient fraud index? A. Fraud tolerance risk index B. Entitlement risk index C. Notification risk index D. Prevent and detect risk index (1 mark) 2. Which of the following statements in regard to culture quotient is NOT accurate? A. Fraud tolerance risk index should be low B. Entitlement risk index should be low C. Notification risk index should be high D. None of the above (1 mark) 3. Which of the following is NOT an area, factor or consideration related to fraud risk governance principle? A. Organisational commitment to fraud risk governance B. Fraud risk governance support by the board of directors C. Designing and implementing a comprehensive fraud risk policy D. None of the above (1 mark) 4. Which of the following is NOT an area, factor or consideration related to fraud risk assessment principle? A. Involving appropriate levels of management in the fraud risk assessment B. Analysing internal and external factors C. Identifying management override of controls as a risk D. Organisational commitment to fraud risk governance (1 mark) 5. Which of the following is NOT accurate in regard to a fraud risk assessment process? A. The assessment team must be perceived as independent and subjective by the organisation for the process to be effective B. Management and auditors should share ownership of the process and accountability for its success C. Conducting an effective fraud risk assessment requires thinking like a fraudster D. All of the above (1 mark) 6. Which of the following statements is ACCURATE? A. The auditor should incorporate the results of a fraud risk assessment into the annual audit plan B. The auditor should conduct an independent risk assessment and incorporate his own results in the audit plan C. The auditor should conduct a comprehensive fraud risk assessment before conducting an audit D. None of the above (1 mark) 7. A well-designed and effective system of internal controls can: A. Reduce the risk of fraud B. Mitigate risks of fraud to a zero level C. Eliminate fraud D. All the above (1 mark) 8. Which of the following statements is ACCURATE in regard to Fraud Risk Assessment Frameworks? A. Fraud risk assessment frameworks are valuable because they have been developed to fit any organisation B. Fraud risk assessment frameworks are not valuable because they cannot fit every organisation C. Fraud risk assessment frameworks can either be simple frameworks or macro assessment frameworks D. None of the above (1 mark) 9. The fraud risk assessment team should NOT consider which of the following fraud risks in addition to the specific risks related to each of the three categories of occupational fraud? A. Reputation risk B. Law and regulatory risk C. Information and technology risk D. None of the above (1 mark) 10. Fraudulent customer payments, corporate espionage and hacking schemes are all fraud risks pertaining to which of the following categories? A. External Fraud risk B. Internal fraud C. Information technology D. None of the above (1 mark) 11. A fraud risk assessment report should reflect the assessment team’s opinion formed during the assessment engagement. Which one is it? A. Professional subjective opinion B. Expert opinion C. Qualified opinion D. None of the above (1 mark) 12. An assessment team can evaluate an area as high risk only if the assessment has found which of the following? A. Fraud has previously occurred in that area B. Employees in the area are very corrupt C. Red flags have been identified in the area D. None of the above (1 mark) 13. Which of the following is NOT accurate about an effective internal control system? A. It can be effective in mitigation of fraud risks B. It increases the perception of detection C. It balances preventive and detective controls D. None of the above (1 mark) 14. If management chooses to accept a risk, rather than mitigate it, this response is known as: A. Mitigating the risk B. Transferring the risk C. Avoiding the risk D. None of the above (1 mark) 15. If management decides to implement appropriate prevention and detection controls to treat an identified fraud risk, this response is known as: A. Transferring the risk B. Mitigating the risk C. Assuming the risk D. None of the above (1 mark) 16. There are various factors that influence the level of fraud risk faced by an organisation. Which of the following is NOT one of them? A. The effectiveness of its internal controls B. The nature of the business C. The ethics of its leadership team D. None of the above (1 mark) 17. Fraud risks that exist before management has put in place fraud-related controls are referred to as: A. Residual risks B. Fraud risks C. Material risks D. None of the above (1 mark) 18. Fraud risks that remain after management has put in place fraud-related controls are referred to as: A. Inherent risk B. Residual risks C. Material risks D. None of the above (1 mark) 19. In identifying fraud risks that pertain to an organisation, the fraud risk assessment team should specifically NOT discuss which of the following as potential fraud risks? A. Management override of controls B. Collusion C. Low perception of detection D. Employees’ override of controls (1 mark) 20. Which of the following is NOT accurate in regard to ensuring the objectivity of the fraud risk assessment team? A. The assessment should be conducted by a consultant B. The assessment should be conducted by management with the assistance of a consultant C. The assessment should be conducted by the risk department D. None of

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. Anti-fraud/corruption professionals believe that, increasing the perception of detection is the most effective method of fraud/corruption prevention. Which of the following statement is NOT accurate in regard to increasing perception of detection? A. To increase the perception of detection, parties in the organisation should not be made aware that the organisation would conduct surprise audits B. To increase the perception of detection, parties in the organisation should be made aware that the organisation could conduct surprise audits C. A surprise audit is a proactive fraud prevention activity that helps to increase the perception of detection D. A surprise audit is a positive reinforcement measure, that helps to increase the perception of detection (1 mark) 2. Fraud prevention health check–up is an inexpensive tool that can be used to evaluate an organisation’s fraud prevention health. Which of the following BEST describes the component that creates a foundation for the internal control system? A. Proactive detection B. Risk ownership C. Fraud risk tolerance and risk management D. None of the above (1 mark) 3. According to BF Skinner, positive reinforcement measures are the most effective measures of modifying behavior. Which of the following BEST describes positive reinforcement measure? A. Positive reinforcement measures help to enhance the internal controls B. Segregation of duties are examples of positive reinforcement measures C. Positive reinforcement measures are examples of strong controls D. None of the above (1 mark) 4. Which of the following should management NOT do to create an anti-fraud culture? A. Develop a comprehensive compliance program B. Demonstrate zero tolerance for fraud and unethical behavior C. Create an open-door policy environment D. Define zero appetite for fraud risks (1 mark) 5. Which of the following is NOT accurate in regard to assignments and Certified Fraud Examiners? A. A Certified Fraud Examiner cannot accept an assignment where he/she has a major interest B. A Certified Fraud Examiner must be an accountant to conduct a forensic audit assignment C. A Certified Fraud Examiner can accept an assignment where he/she has a major interest D. None of the above (1 mark) 6. Which of the following statements is NOT accurate in regard to the external auditor’s responsibility for fraud? A. International Standard on Auditing (ISA 240) has put express responsibility on the auditor to detect fraud in the course of auditing financial statements B. Auditors have a responsibility for identify fraud risks in all the processes C. Auditors have a responsibility for detecting risks and red flags of fraud D. None of the above (1 mark) 7. Which of the following does NOT describe the pressure leg of the fraud triangle? A. “I am in a financial crisis” B. “I need money to repay my debts” C. “Possibility of detection is very high” D. “I have an emergency; I have no other way to solve the problem” (1 mark) 8. According to International Standard on Auditing (ISA 240), the auditor is only concerned with fraud that. A. Is perpetrated by management and not employees B. Perpetrated through collusion C. Causes misstatement in the financial statements D. None of the above (1 mark) 9. Silk and Vogel found that businesses justify illegal or noncompliant conduct. Which of the following statements is NOT a justification made by the businesses for their behavior? A. The purpose for violations is to secure employees’ jobs B. Compliance with government regulations is too expensive C. The damage is shared among a large number of consumers D. None of the above (1 mark) 10. According to COSO, an internal control system should be designed to provide reasonable assurance in the achievement of the organisation’s objectives. Which of the following is NOT one of the objectives? A. The effectiveness and efficiency of the organisation’s operations B. To maximise profits C. The organisation’s compliance with the laws and regulations D. None of the above (1 mark) 11. Which of the following is NOT a core principle of sound corporate governance? A. Responsibility B. Integrity C. Accountability D. None of the above (1 mark) 12. Which of the following parties, is responsible for providing oversight over the design and implementation of the organisation’s fraud prevention program? A. The management B. Internal auditors C. External auditors D. None of the above (1 mark) 13. Which of the following party, has responsibility for the design, implementation and monitoring of the effectiveness of the fraud risk management program? A. Risk officer B. External audit C. Compliance officer D. None of the above (1 mark) 14. Which of the following statements is ACCURATE in regard to internal control system? A. An effective internal control system can mitigate fraud risks to a tolerance level B. Absence of internal controls is the major root cause of fraud C. Red flags and risks of fraud are evidence of fraud D. None of the above (1 mark) 15. Which of the following is NOT accurate in regard to white collar offenders? A. White collar offenders are less likely to plead guilty B. White collar offenders are more likely to plead guilty C. White collar offenders are more likely to be jailed D. All the above (1 mark) 16. Which of the following theories BEST describes the use of threat of criminal sanctions? A. Prevention B. Deterrence C. Compliance D. None of the above (1 mark) 17. Which of the following parties in an organisation, has responsibility for providing the first line of defense against fraud and corruption? A. Internal auditor B. Risk manager C. Compliance manager D. Heads of departments (1 mark) 18. Organisations should make efforts to control corporate crime. Which of the following is an example of an approach that they should include? A. Internal audit B. Fraud hotlines C. Voluntary changes in corporate attitudes

FRAUD PREVENTION AND DETECTION DECEMBER 2023 PAST PAPER – Click to view FRAUD RISK MANAGEMENT DECEMBER 2023 PAST PAPER – Click to view INTRODUCTION TO FORENSIC ACCOUNTING AND AUDIT DECEMBER 2023 PAST PAPER – Click to view LAW RELATED TO FRAUD DECEMBER 2023 PAST PAPER – Click to view OVERVIEW OF THE LEGAL AND JUSTICE SYSTEM DECEMBER 2023 PAST PAPER – Click to view PLANNING AND CONDUCTING FORMAL INVESTIGATIONS SOLUTIONS DECEMBER 2023 PAST PAPER – Click to view PRINCIPLES OF LAW OF EVIDENCE AND THE TRIAL PROCESS DECEMBER 2023 PAPER – Click to view FRAUD AND CORRUPTION SCHEMES DECEMBER 2023 PAST PAPER – Click to view

TUESDAY: 5 December 2023. Afternoon Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper. QUESTION ONE 1. With reference to Corporate Insolvency Act, explain the following terms: Fraudulent trading. (2 marks) Wrongful trading. (2 marks) 2. Assess FOUR benefits of filing bankruptcy proceedings in the insolvency of natural persons. (8 marks) 3. Summarise EIGHT steps of the liquidation of a company by court. (8 marks) (Total: 20 marks)   QUESTION TWO 1.  With reference to cross-border insolvencies as provided for under the United Nations Commission on International Trade Law (UNCITRAL): Explain the “Hotchpot rule”. (2 marks) Describe FOUR functions of the UNCITRAL Model Law on Cross-Border Insolvency. (4 marks) 2. Maji Mazuri Enterprises, a Limited Liability Partnership has hired a new administration manager who is urgently required to file annual returns with the Registrar of Companies. Required: Advise Maji Mazuri on the SIX contents of an annual return. (6 marks) 3. Examine FOUR provisions governing termination of an arbitrator on account of failure or impossibility to act upon his appointment. (8 marks) (Total: 20 marks)   QUESTION THREE 1.  State FOUR parties who can petition for a compulsory liquidation. (4 marks) 2. Describe THREE jurisdictions of magistrate with regard to the Debt (Summary recovery) Act, Cap 42. (6 marks) 3. Describe THREE types of liquidation. (6 marks) 4. With reference to the Auctioneers Act, outline FOUR responsibilities of an auctioneer on the seized goods. (4 marks) (Total: 20 marks)   QUESTION FOUR 1. Enumerate FIVE contents of the bankrupt’s statement of financial position lodged with the official receiver. (5 marks) 2. Explain the SEVEN steps procedure for creditors’ voluntary liquidation. (7 marks) 3.  Propose FOUR ways of releasing a liquidator from liquidator’s obligations. (8 marks) (Total: 20 marks)   QUESTION FIVE 1. Outline FOUR criteria for entry to the no-asset procedure with regard to the Insolvency Act, 2015. (4 marks) 2. State FOUR forms of arbitration agreement. (4 marks) 3. On commencement of liquidation of a limited liability partnership, custody and control of partnership property rests in the liquidator. Summarise SIX powers conferred upon the liquidator to facilitate an effective liquidation process. (6 marks) 4.  Assess SIX properties not liable to attachment by the auctioneer during the auction process. (6 marks) (Total: 20 marks)

TUESDAY: 5 December 2023. Morning Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper. QUESTION ONE 1. Outline SIX options available to the defendant upon being served with a claim. (6 marks) 2. Describe THREE risks excluded in a trade credit insurance policy. (6 marks) 3. Evaluate FOUR strategies banks could undertake to address the problem of non-performing assets. (8 marks) (Total: 20 marks)   QUESTION TWO 1. State SIX best practices in dispute management. (6 marks) 2. Assess THREE parameters used to segment customers for purposes of debt collection. (6 marks) 3. Identify FOUR strategies managers use to motivate their debt collection teams. (8 marks) (Total: 20 marks)   QUESTION THREE 1.  Summarise THREE limitations of exercising retention of title rights. (6 marks) 2. Examine THREE indicators that could point a problem with company’s collection practices. (6 marks) 3. Discuss FOUR clauses of a debt collection contract. (8 marks) (Total: 20 marks)   QUESTION FOUR 1. Enumerate FOUR objectives of prudential guidelines in debt classification. (4 marks) \ 2.Analyse FOUR types of costs incurred in the management of bad debts. (8 marks) 3. Distinguish between the following legal terms as used in debt recovery suits: “Pleadings” and “Locus standi”. (4 marks) Explain TWO ingredients of Locus standi. (4 marks) (Total: 20 marks)   QUESTION FIVE 1. Identify SIX areas in which credit staff could enhance their relationships with sales department. (6 marks) 2. Discuss THREE benefits of aged receivables report. (6 marks) 3. The following information was extracted from the statements of Wendo Ltd. for the month of April 2023: Balances and activities for April: • Debtor balance on March 31 Sh.1,000,000 • April credit sales Sh.250,000 • Payments received on April debtors Sh.200,000 • Payments received for outstanding receivables Sh.500,000 Required: Calculate the collection effectiveness index (CEI). (8 marks) (Total: 20 marks)

MONDAY: 4 December 2023. Afternoon Paper. Time Allowed: 3 hours. Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper. QUESTION ONE ZAKA PLC – COMPANY INSOLVENCIES AND CREDIT RISK There are many big firms mentioned as facing financial difficulties. It is claimed that many companies should not even be trading. It is a known fact that if a company is unable to pay its debts and therefore insolvent, then the company may either be voluntarily or involuntarily liquidated without first being placed under administration. It is reported that the number of Kenyan firms facing liquidation have more than doubled in the last seven years, highlighting weaknesses in the legal regime on insolvency. Restaurants have not been spared, the latest research analysis by BWK LLP- Accountancy firm shows that at least five restaurants are closing daily in the region. The deterioration in the payment behavior of customers can be part of the pandemic’s collateral damage given that we have not yet overcome the effects of COVID 19 pandemic, and it has brought along a crippling ripple effect on business’s cash flow. Notwithstanding the current international wars and fluctuating foreign exchange rates that have had a severe effect on the supply side of the economy. The challenge therefore is how to minimise such risks, so as to optimise portfolio and limit credit losses as much as possible. Zaka Plc being a financial institution in competitive economic environment which is constantly subject to multiple risks and therefore requires the application of rigorous principles for their management, have decided to hire BWK LLP to carry out research on the current economic trends and its impact on firms’ solvencies. Report of the Findings by BWK LLP BWK LLP found out that more and more companies had financial difficulties. The difficulties were caused by both faulty managerial decisions and fiscal pressure or competition increases leading businesses to the verge of insolvencies. In addition, changes in the business environment as a result of entering new markets or restructuring the economy can lead to corporate insolvency. Also, loss of capital, inability to secure new capital and high debt or disputes with a particular creditor can be causes of insolvency. Risk forecasting can economically recover a business whose continuity is threatened. The risk of insolvency occurs when a company cannot pay its debts based on both internal factors and external factors. However, it is not possible to talk about the existence of an insolvency risk of a business in the absence of a financial accounting diagnosis to determine the state of insolvency, recognised as that state of the patrimony of an entity characterised by insufficient funds for the payment of determined, liquid and matured debts. Indicators specific to liquidity and financial solvency are essential elements in identifying financial problems at the level of the economic entity, providing clues about the ability of the company to pay due tax obligations, the extent to which equity can cover long-term debt, but also the financial resources currently available. The risk of insolvency cannot be eliminated but it can be identified before it occurs. The causes that lead companies to insolvency are numerous, with negative effects in terms of ability to pay. Thus, there was a major interest in predicting insolvency several years before it manifested itself. The accounting methods to identify the risk of insolvency offer the possibility of a limited interpretation in time and space. Banking methods are the most widely used because they allow the identification of the vulnerabilities of a business based on the use of score-type function. These methods makes it possible to predict the instability of a business and classify it according to the risk area in which it is located. The most famous insolvency risk-scoring method was developed by Altman (1968). Altman determined a set of observations for solvent and insolvent companies, but also a series of financial rates. The model was appreciated because it predicted insolvencies with an accuracy of 72% two years before their occurrence, being further developed. The objectives of the research were application of various techniques and methods for a period of four years, to measure the failure or financial health; verification of the robustness of the model through sensitivity analysis and multiple discriminant analysis. The companies were classified into financially stable and financially unstable. Conclusions by BWK LLP Financial management plays an important role in terms of its applicability within a company. This provides relevant information regarding the risk exposure, the longer and more relevant the predictability period, the better the risks related to the insolvency of a company or in the worst case the appearance of the state of insolvency can be enriched. The development of an insolvency risk forecasting model has become a widely debated topic in the field of credit risk management. This was also due to the financial instruments used which require a complex calculation analysis to determine the exposure to several risks, from operational risk to reputational risk. Incorporating the most relevant information obtained from the analysis of economic-financial indicators and developing a model for assessing the risk of insolvency of companies can be considered the easiest way to predict future financial statements. The reason why insolvency forecasting is very important is given by the interdependence between the two financial statements of a company. When a company is in a state of insolvency, the possibility of it going bankrupt due to the inability to comply with the financial recovery plan is extremely high. The specificity of national legislation, as well as other aspects related to the market in which a company operates, can influence the probability of predicting the risk of insolvency. Required: 1. Identify FIVE types of risks mentioned in the case study. (5 marks) 2. Explain the “Altman’s Z Score Model”. (2 marks) Enumerate FIVE limitations of the Altman’s Z Score Model. (5 marks) 3. Propose FIVE techniques that Zaka PLC could consider in order to address reputation risk.