CERTIFIED FORENSIC FRAUD EXAMINER (CFFE) MODULE ONE
INTRODUCTION TO FORENSIC ACCOUNTING AND AUDIT
MONDAY: 19 August 2024. Morning Paper. Time Allowed: 3 hours.
This paper consists of one hundred (100) Multiple Choice Questions. Answer all questions indicating the letter (A, B, C or D) that represents the correct Answer. Each question is allocated one (1) mark.
1. Which one of the following statements BEST describes the difference between fraud audit and forensic fraud audit?
A. Forensic fraud audit is a methodology of resolving fraud allegations while fraud audit is a proactive activity aimed at detecting fraud
B. The objective of a forensic audit is to collect evidence to prove or disapprove an allegation while the objective of a fraud audit is to express an opinion whether fraud has occurred or not
C. Both forensic fraud audit and fraud audit are reactive audit assignments
D. Both forensic fraud audit and fraud audit are proactive assignments (1 mark)
2. Which one of the following statements is ACCURATE in regard to forensic audit?
A. A forensic audit should be conducted once red flags of fraud are identified
B. A forensic audit should be conducted once an area has been evaluated as a high fraud risk
C. A forensic audit should be conducted only when there is sufficient suspicion of fraud
D. A forensic audit should be conducted only on a recommendation the auditor (1 mark)
3. Which one of the following statements is NOT accurate in regard to the essential skills of a forensic auditor?
A. The forensic auditor must have good interviewing skills
B. The forensic auditor must have good experience and skills in audit process and procedures
C. The forensic auditor must have good knowledge of the basic principles of evidence
D. The forensic auditor must have good knowledge of laws related to fraud and corruption (1 mark)
4. Which one of the following statements CORRECTLY describes how an expense incurred but not paid for should be recorded in the books of account?
A. The unpaid expenses should not be recorded during the accounting period
B. The unpaid expenses should be disclosured during the accounting period
C. The unpaid expenses should be recorded during the period when the payment is done
D. The unpaid expenses should be recorded during the accounting period (1 mark)
5. Which one of the following statements BEST describes why current ratio is a very important financial ratio?
A. The current ratio helps to determine if the organisation has made profits
B. The current ratio helps to determine if the organisation has overstated the current assets
C. The current ratio helps to determine if the organisation is able to liquidate the current liabilities during the financial year
D. The current ratio helps to determine if the organisation has understated current liabilities (1 mark)
6. A too favourable current ratio is a red flag of schemes.
A. overstated current assets and understated liabilities
B. understated current assets and overstated liabilities
C. overstated current assets and overstated liabilities
D. understated current assets and understated liabilities (1 mark)
7. decrease an asset.
A. Making a debit entry in the assets account
B. Making a debit and credit entry in the assets account
C. Making a credit entry in the cash account
D. Making a credit entry in the assets account (1 mark)
8. Which one of the following statements is ACCURATE in regard to reducing an expense and concealing an asset misappropriation?
A. Reducing an expense would balance the equation because the entry is a credit and the cash account the entry is a credit
B. Reducing an expense would not balance the equation because the entry is a credit, and the cash account the entry is also credit
C. Reducing an expense would balance the equation because the entry is a debit, and the cash account entry is also a debit
D. Reducing an expense would not balance the equation because the entry is a debit, and the cash account entry is also debit (1 mark)
9. Which one of the following statements is ACCURATE in regard to increasing a liability and concealing an asset misappropriation?
A. The entry to increase a liability is a credit and therefore cannot balance the equation
B. The entry to increase a liability is a debit and therefore cannot balance the equation
C. The entry to increase a liability is a credit and therefore can balance the equation
D. The entry to increase a liability is a debit and therefore can balance the equation (1 mark)
10. Which one of the following statements is ACCURATE in regard to recording revenue in accordance with IFRS?
A. IFRS require that revenue should be recognised once a contract or sale agreement is complete
B. IFRS require that revenue should be recognised once part delivery is made
C. IFRS require that revenue should be recognised when goods or services are delivered
D. IFRS require that revenue should be recognised only when revenue has been received (1 mark)
11. Negative cash flow balances from the operating activities and substantial profits during a financial year is a red flag of .
A. overstated receivables
B. overstated revenue
C. understated expenses
D. understated payables (1 mark)
12. Bad and doubtful debts are red flags of .
A. fictitious revenue scheme
B. fraudulent revenue
C. fictitious receivable
D. overstated receivables (1 mark)
13. Payables and expenses are recorded in .
A. Statement of cash flows and profit and loss
B. Statement of financial position and profit and loss
C. Statement of owner’s equity and financial position
D. Statement of cash flows and financial position (1 mark)
14. Which one of the following ledger entry can be a red flag of concealment of expenses?
A. Credit entry in the expenses account
B. Credit entry in the revenue account
C. Credit entry in the liabilities account
D. Debit entry in the expenses account (1 mark)
15. Which one of the following statements is NOT accurate in regard to special audits and fraud audits?
A. Special audits are conducted to confirm if there is sufficient predication
B. The objective of a fraud is to determine if fraud has occurred
C. The objective of special audits and fraud audits is not the same
D. Fraud audits are conducted to prove if fraud has occurred (1 mark)
16. The following statements are accurate in regard to statement of retained earnings, EXCEPT .
A. the term statement of retained earnings can be used interchangeably with statement of changes in owner’s equity
B. statement of retained earnings, acts as the connecting link between the statement of financial position and the statement of profit or loss and other comprehensive income
C. the term statement of retained earnings cannot be used interchangeably with statement of changes in owner’s equity
D. the term statement of retained earnings cannot be used interchangeably with term net worth (1 mark)
17. Which one of the following statements describes how gross profit can be inflated?
A. Gross profit can be inflated failure to record the cost of goods or services in the same period the revenue is earned
B. Gross profit can be inflated failure to record operations cost in the same period the revenue is earned
C. Gross profit can be inflated recording the cost of goods or services in the same period the revenue is earned
D. Gross profit can be understated failure to record the cost of goods or services in the same period the revenue is earned (1 mark)
18. Which one of the following statements describes how net profit can be inflated?
A. Net profit can be inflated recording unpaid expenses
B. Net profit can be inflated recording revenue not received
C. Net profit can be inflated failure to record revenue not received
D. Net profit can be inflated failure to record incurred unpaid expenses (1 mark)
19. Which one of the statements is ACCURATE in regard to comparability qualitative characteristic?
A. Comparability is the qualitative characteristic that can be used to identify risks of fraudulent financial reporting
B. Comparability is the qualitative characteristic that can be used to identify red flags of fraudulent financial reporting
C. Comparability is the qualitative characteristic that can be used to detect red flags of fraudulent financial reporting
D. Comparability is the qualitative characteristic that can be used to detect risks of fraudulent financial reporting (1 mark)
20. Which one of the following knowledge must forensic accountants have in addition to the accounting knowledge?
A. Good knowledge in auditing
B. Law related to fraud and the rules of evidence
C. Good knowledge of all the IFRS
D. Good knowledge of all the IPSAS (1 mark)
21. Which of the following type of financial statement fraud scheme is management likely to engage in to impress the shareholders and investors?
A. Understatement of revenue
B. Overstatement of expenditure
C. Concealment of expenditure
D. Inadequate disclosures (1 mark)
22. Which one of the following is NOT a purpose of conducting a forensic accounting assignment?
A. Forensic accounting can be conducted to resolve allegations of fraudulent financial reporting
B. Forensic accounting can be conducted to establish the exact financial performance and position of an organisation
C. Forensic accounting can be conducted for purposes of acquisition or mergers
D. Forensic accounting can be conducted to collect audit evidence and express an opinion (1 mark)
23. Which one of the following statements is NOT accurate in regard to presentation of liabilities in the statement of financial position?
A. Liabilities are presented in the statement of financial position in order of liquidity
B. Liabilities are presented after assets in the statement of financial position
C. Liabilities are presented in order of maturity
D. Current liabilities are presented first, followed long term liabilities (1 mark)
24. Which one of the following statements is ACCURATE in regard to adjusting journal entries posted in the ledger accounts?
A. Adjusting journal entries posted in the ledger accounts at the end of the financial year is a red flag of fraud
B. Adjusting journal entries posted in the ledger accounts at the end of the financial year are evidence of fraudulent financial transactions
C. Adjusting journal entries posted at the end of the financial year are all fraudulent
D. Adjusting journals do not require authorisation like payments a senior accounting staff (1 mark)
25. Statement of cash flows from operating activities can be read together with the statement of profit or loss to detect fraudulent financial reporting. Which of the following financial statement fraud scheme can be detected comparing the two financial statements?
A. Overstatement of revenue scheme
B. Understatement of revenue scheme
C. Overstatement of expenses scheme
D. Inadequate disclosures (1 mark)
26. Which of the following are financial items of the statement of owner’s equity?
A. Owner’s equity and the retained earnings during the financial year
B. Owner’s equity and net profit realised during the financial year
C. Owner’s equity and the revenue earned during the financial year
D. Owner’s equity and the gross profit earned during the financial year (1 mark)
27. Departure from IFRS in recognising revenue can result in misrepresentation of the financial statements. Which one of the following statements is NOT accurate in regard to departure from IFRS?
A. Departure from IFRS in recognising revenue would result in inflated net profit
B. Departure from IFRS in recognising revenue would result in overstated receivables
C. Departure from IFRS in recognising revenue would result in understated current ratio
D. Departure from IFRS in recognising revenue would result in inflated current ratio (1 mark)
28. Which one of the following statements is ACCURATE in regard to investment activities of the statements of cash flow?
A. Investment activities of the statements of cash flow shows cash in from interest received
B. Investment activities of the statements of cash flow shows cash in from sale of assets
C. Investment activities of the statements of cash flow shows cash in from financing
D. Investment activities of the statements of cash flow shows cash in from revenue Investment activities of the statements of cash flow shows cash in from interest received (1 mark)
29. Which one of the following statements is ACCURATE in regard to the matching principle?
A. The matching principle requires that revenue and expenses be recorded during the same accounting period
B. According to the matching principle assets and liabilities should be recorded during the same accounting period
C. The matching principle requires that revenue and expenses should be matched with those of the previous accounting period
D. According to the matching principle, assets and liabilities should be matched with those of the previous accounting period (1 mark)
30. Which one of the following statements is ACCURATE in relation to current ratio?
A. Overstatement of revenue would result to understated current ratio
B. Understated revenue would result to overstated current ratio
C. Overstatement of revenue would result to overstated current ratio
D. Understatement of revenue would not have any effect on the current ratio (1 mark)
31. Which one of the following is the first item on the statement of profit or loss?
A. Net revenue
B. Net profit
C. Gross profit
D. Gross revenue (1 mark)
32. Which one of the following are the first items on the statement of financial position?
A. Current liabilities
B. Non- current assets
C. Current assets
D. Liabilities (1 mark)
33. Which of the following statements BEST explains the type of information that must be disclosed in the financial statements?
A. All information related to the reporting period
B. All material information related to the reporting period
C. All relevant information related to the reporting period
D. All audit evidence related to the reporting period (1 mark)
34. Receivables turnover ratio can help to detect .
A. overstated revenue scheme
B. understated revenue schemes
C. understated receivables
D. fictitious revenue scheme (1 mark)
35. Progress on auditor’s recommendations, pending bills note and analysis and IFMIS generated reports should be disclosed in which one of the following entities financial statements?
A. MDAs
B. Public Companies
C. Private companies
D. Government ministries (1 mark)
36. Which one of the following statement refers to an objective of a forensic fraud audit?
A. To prove the allegations of fraud
B. To disapprove the allegations of fraud
C. To prove or disapprove the allegations of fraud
D. To express an opinion whether fraud has occurred or not (1 mark)
37. Which one of the following statements is NOT accurate in regard to auditor’s skills and knowledge of auditing for fraud in an audit engagement?
A. The auditor should have knowledge in fraud and corruption schemes
B. The auditor should be knowledgeable in fraud risk identification, assessment and mitigation
C. The auditor should have skills and knowledge in tests and procedures specifically designed to detect fraud
D. The auditor should have fraud investigative skills (1 mark)
38. Which one of the following assignment is NOT an investigation engagement?
A. Forensic fraud audit
B. Special audit
C. Fraud examination
D. Fraud investigation (1 mark)
39. Fraud examiners do not have to be accountants but they must be knowledgeable in .
A. financial accounting
B. management accounts
C. financial statement fraud schemes
D. auditing skills (1 mark)
40. transaction would result to misrepresentation of the statement of financial position.
A. Inadequate disclosures
B. Fictitious revenue
C. Related party’s transactions
D. Earned revenue (1 mark)
41. Which one of the following transactions would result to misrepresentation of the statement of financial performance?
A. Inadequate disclosures
B. Reporting entities
C. Related party’s transactions
D. Capitalisation of expenditure (1 mark)
42. Non-current assets are presented on the statement of financial position in .
A. maturity
B. amount value
C. liquidity
D. realisable value (1 mark)
43. Which one of the following transactions would balance an accounting equation?
A. Increasing owners’ equity
B. Increasing an expense
C. Increasing a liability
D. Reducing an expense (1 mark)
44. If a fraudster wanted to conceal the misappropriation of cash, which of the following entry would help to conceal an asset misappropriation?
A. Decreasing an asset
B. Decreasing an expense
C. Decreasing a liability
D. Decreasing an expenditure (1 mark)
45. Which one of the following statements is NOT accurate in regard to recording of revenue?
A. Revenue should be recorded when it is earned
B. Revenue should only be recorded when it is received
C. Revenue recorded should be net
D. Only revenue for services or goods delivered should be recorded (1 mark)
46. If a statement of cash flows recorded negative balances from the operating activities, such situation is indicative of which one of the following financial statement fraud?
A. Fictitious revenue scheme
B. Skimming of receivables
C. Overstated payables
D. Skimming of cash (1 mark)
47. Which one of the following is a type of financial statement fraud related to inadequate allowance for bad and doubtful debts?
A. Overstated receivables
B. Understated receivable
C. Inadequate disclosure
D. Overstated expenses (1 mark)
48. Which one of the following statements is NOT accurate in regard to financial items?
A. Inadequate disclosures are financial statements items
B. Unpaid expenses are financial statement items
C. Unearned revenue is not a financial item
D. Unearned revenue is not a disclosure item (1 mark)
49. Which one of the following activities should management proactively conduct to detect fraudulent activities in procurement processes?
A. Fraud audit
B. Fraud investigation
C. Value for money audit
D. Fraud investigation (1 mark)
50. Which one of the following engagements would NOT strictly require a forensic accountant?
A. Fraud forensic audit
B. Calculation in lawsuits
C. Business mergers
D. Business acquisitions (1 mark)
51. Valentine Limited management want to inflate the company’s financial performance. Which one of the following fraud scheme would help them to achieve their objective?
A. Inadequate disclosure
B. Overstating expenditure
C. Recognising long term contract revenue in year 1 of performance
D. Proportioning revenue based on completed work (1 mark)
52. Which one of the following statements is ACCURATE in regard to fictitious revenue?
A. Fictitious revenue will result to overstated receivables
B. Fictitious revenue will result to understated revenue
C. Fictitious revenue will result in understated current ratio
D. Fictitious revenue will result in understated receivables (1 mark)
53. Lack of adequate oversight board of directors is a risk factor related to .
A. financial statement fraud
B. asset misappropriation
C. corruption
D. fraudulent disbursements (1 mark)
54. Which one of the following statements is NOT accurate in regard to double entry concept?
A. In every transaction there are two accounts; a debit and credit
B. A fraudster can apply double entry and fraudulently conceal fraud
C. A fraudulent transaction has double fraudulent effect
D. A fraudulent transaction has a single fraudulent effect on the account being concealed (1 mark)
55. Which one of the following is a cash flow activity from financing activities?
A. Cash in from Investment dividends
B. Cash out for purchase of an asset
C. Cash from revenues
D. Cash from receivables (1 mark)
56. Which one of the following financial ratios can be used to measure an organisation’s ability to meet its immediate financial obligations?
A. Asset turnover ratio
B. Current liability ratio
C. Cost of sales ratio
D. Quick ratio (1 mark)
57. Which one of the following is the most common methods of misrepresenting financial statements in a public company?
A. Overstating revenue and understating expenses
B. Understating revenue and overstating expenses
C. Overstating revenue and expenses
D. Understating revenue and expenses (1 mark)
58. Which one of the following transactions will result to understated liabilities?
A. Omission of expenses
B. Omission of revenue
C. Recording prepaid expenses as expenses
D. Accrued expenses (1 mark)
59. Which one of the following transactions will NOT result to overstated receivables?
A. Recognising long term revenue
B. Fictitious revenue
C. Writing off bad debts
D. Failure to write off bad debts (1 mark)
60. Which one of the following statements is ACCURATE in regard to recording of current liabilities?
A. Failure to record current liabilities will understate the current ratio
B. Failure to record current liabilities will understate the profit
C. Failure to accrual expenses will understate the current liabilities
D. Failure to record current liabilities will inflate the current ratio (1 mark)
61. The management of Apple Ltd. wants to demonstrate to the board of directors and shareholders that the company’s financial performance and position are doing well. Which of the following financial statement fraud schemes is management likely to engage in?
A. Overstatement of revenue and concealment of expenditure
B. Improper disclosures
C. Improper asset valuation
D. Understated revenue and overstated expenditure (1 mark)
62. Which one of the following statements is ACCURATE in regard to forensic accounting?
A. All forensic accounting engagements might end up in court
B. All forensic accounting engagements should be conducted only on sufficient suspicion of fraud
C. The scope of investigative forensic accounting must cover every misconducts discovered during the engagement
D. Forensic accounting engagement can be conducted for many purposes other than for investigative accounting (1 mark)
63. Which one of the following is NOT a characteristic of a fraud examiner?
A. Patience
B. Partial
C. Impartial
D. Informal but firm (1 mark)
64. Bad debts are recorded in the .
A. statement of financial statement
B. statement of profit and loss account
C. statement of cash flows
D. statement of owner’s equity (1 mark)
65. Which one of the following is a statement of profit or loss item?
A. Unpaid expenditure
B. Unearned revenue
C. Prepaid expenditure
D. Capital expenditure (1 mark)
66. Which one of the following statement is ACCURATE in regard to the introduction section of a forensic audit?
A. The introduction section of a forensic audit report includes a summary of the findings
B. The introduction section of the forensic audit report includes all the terms of reference of the forensic audit
C. The introduction section of the forensic audit report includes the source of the allegation
D. The introduction section of the forensic audit report includes the scope of the investigation (1 mark)
67. Which one of the following statements is ACCURATE in regard to the scope section of a forensic audit?
A. The scope of a forensic audit report includes, a summary of the findings
B. The scope section of the forensic audit report includes all the terms of reference of the forensic audit
C. The scope section of the forensic audit report includes all the allegations and the period of investigation
D. The scope section of the forensic audit report includes the specific allegations and the period of investigation (1 mark)
68. Which one of the following statements is ACCURATE in regard to the recommendation section of a forensic audit?
A. The recommendation section of a forensic audit report includes the conclusion of the findings
B. The recommendation section of the forensic audit report includes the auditor’s recommendation, to consider conducting, investigations on other areas of concern and the fraud related controls to be put in place
C. The recommendation section of the forensic audit report includes the forensic auditor’s recommendations on what action should be taken against the suspect
D. The recommendation section of the forensic audit report includes the forensic auditor’s opinion
(1 mark)
69. Which one of the following statements is ACCURATE in regard to the essential skills and knowledge for conducting a forensic audit?
A. Good knowledge and skills in basic rules of evidence
B. Good knowledge and skills in accounting
C. Good knowledge and skills in auditing
D. Good knowledge and skills in financial management (1 mark)
70. Which one of the following statements is ACCURATE in regard to IFRS and financial reporting?
A. Strict adherence to IFRS would result to unfair representation of the financial performance of an organisation
B. Strict adherence to IFRS would result to understated performance of an organisation
C. Strict adherence to IFRS would result to fair representation of the financial performance and position of an organisation
D. There is no provision for departure from strict adherence to IFRS under any circumstances (1 mark)
71. Which one of the following statements is ACCURATE with regard to the statement of cash flows?
A. The statement of cash flows read together, with the statement of profit and loss, can help to detect financial statement fraud related to financial performance
B. The statement of cash flows is necessary for those companies that use cash-basis accounting rather than accrual accounting
C. There are four types of cash flows; cash flows from operating activities, from investing activities, from financing activities and from payment activities
D. The statement of cash flows shows a company’s financial performance during an accounting period
(1 mark)
72. Which one of the following financial items should be recorded in the statement of profit or loss?
A. Receivables
B. Current assets
C. Incurred expenses not paid
D. Capital expenditure (1 mark)
73. Those standards that require financial statements to include all material information that would affect the financial position of the organisation, at least in the next accounting period is referred as .
A. materiality
B. comparability
C. adequate disclosures
D. inadequate disclosures (1 mark)
74. Which one of the following assignment can be conducted before the acquisition of a business, to establish the real financial performance and position of the organisation?
A. A special financial statement audit
B. Forensic accounting
C. Forensic audit
D. Fraud audit (1 mark)
75. Which one of the following statements is ACCURATE in regard to Benford Law?
A. Benford’s Law can identify a pattern of anomolies
B. Benford’s Law can only work with unnatural numbers
C. Benford’s Law can work with both natural and unnatural numbers
D. Benford’s Law is function incorporated in most data analysis tools (1 mark)
76. Which one of the following statements is ACCURATE in regard to changes in owners’ equity?
A. Changes in owners’ equity can also be referred to 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 net worth (1 mark)
77. Which one of the following statements is ACCURATE in regard to statement of profit or loss?
A. The statement of profit and loss amounts are carried forward to next financial year profit and loss account
B. The statement of profit and loss amounts are not carried forward to next financial year
C. The net profit is carried forward to the next financial year profit and loss account
D. The retained earnings are carried forward to the following accounting period (1 mark)
78. Which one of the following is the recommended basis for recording a piece of equipment, vehicle or building in the company’s books of account?
A. Historical cost
B. Sales value
C. Current market value
D. Valuation value (1 mark)
79. Which one of the following statements is ACCURATE in regard to gross profit?
A. Gross profit is the difference between cost revenue and operating costs
B. Gross profit is equal to net revenue less cost of revenue
C. Gross profit is equal to revenue less operating expenses
D. Gross profit is equal to net revenue less cost of and operating cost (1 mark)
80. Which one of the following transaction would NOT help to conceal the removal of a liability?
A. Increasing owners’ equity
B. Increasing revenue
C. Adding an asset
D. Increasing a different liability (1 mark)
81. Which one of the following statement of cash flows category can help in measuring a company’s financial performance?
A. Operating activities
B. Investment and financing activities
C. Financing activities
D. Operating and financing activities (1 mark)
82. Which one of the following statements is ACCURATE in regard to disclosures?
A. Disclosures are financial statements items
B. Disclosures are not financial statements items
C. Disclosures should not be part of financial reporting
D. Failure to include disclosures would not affect the financial statements (1 mark)
83. Which one of the following would fraudulently affect the profit of an organisation and therefore mislead decision makers in regard to the performance of the organisation?
A. Failure to accrual expenses
B. Proper valuation of inventory
C. Adequate allowance for bad doubtful debts
D. Accrual of expenses (1 mark)
84. Which one of the following is NOT a Kenya Public sector type of financial statement disclosure?
A. Progress on auditor’s recommendations
B. Pending bills note and analysis
C. IFMIS generated reports
D. Owner’s equity (1 mark)
85. Which one of the following statements is NOT accurate in regard to financial reporting in the Kenyan public sector?
A. Kenya has not yet adopted accrual basis of accounting in the public sector
B. Unpaid bills in the public sector are reported as disclosures of pending bills
C. IPSAS financial reporting require that MDAs, accrual pending bills as expenses
D. IPSAS financial reporting require that MDAs use the cash basis of accounting (1 mark)
86. Which one of the following statements is NOT accurate in regard to International Financial Reporting Standards?
A. IFRS provides guidance on revenue recognition to avoid overstatement of revenue
B. IFRS provides guidance on asset valuation to avoid overvaluation of assets
C. IFRS provides guidance on expenses recognition to avoid understatement of expenses
D. IFRS provides guidance on expenses recognition to avoid overstatement of expenses (1 mark)
87. Which one of the following statements is ACCURATE in regard to IPSAS and the external auditors ‘initial concern?
A. Acceptable financial and other information systems are in place, along with arrangements to provide annual assurance on the reliability of such systems;
B. The entity’s finance team must have advanced skills and experience in IPSAS and their applicability to the entity’s financial statements
C. The entity has arrangements in place to produce financial statements, along with supporting working papers, to an acceptable timetable
D. Financial and other information systems are in place (1 mark)
88. Which one of the following terms is NOT one of the principles of fraud examiners code of ethics?
A. Honesty
B. Integrity
C. Transparency
D. Partiality (1 mark)
89. Which of the following assignment can be conducted to proactively detect fraud in financial statement?
A. A special financial statement audit
B. Forensic accounting
C. Forensic audit
D. Fraud audit (1 mark)
90. Which one of the following engagements can be conducted to prove or disapprove allegation of financial statement fraud?
A. Special financial statement audit
B. Forensic accounting
C. Forensic audit
D. Fraud audit (1 mark)
91. 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. Objective evidence
B. Comparability
C. Relevance
D. Going concern (1 mark)
92. Which of the following financial items should NOT be recorded in the statement of profit or loss?
A. Revenue earned
B. Receivable and payables
C. Incurred expenses not paid
D. Cost of revenue (1 mark)
93. Which one of the following BEST describe statement of financial position?
A. Statement of financial position shows an organisation net worth
B. Statement of financial position shows, an organisation financial performance
C. Statement of financial position shows sources of and application of funds
D. Statement of financial position shows an organisation net asset (1 mark)
94. Which one of the following BEST describe statement of cash flows?
A. Statement of cash flow shows an organisation net worth
B. Statement of cash flow shows an organisation financial performance
C. Statement of cash flows shows sources and application of funds
D. Statement of cash flow shows an organisation liquidity (1 mark)
95. Which one of the following statements ACCURATE in regard to the difference between a forensic fraud auditor and a forensic accountant?
A. The difference between a forensic fraud auditor and a forensic accountant, is that forensic auditor does not have to be an accountant
B. The difference between a forensic fraud auditor and a forensic accountant, is that forensic accountant is not required to have investigative skills
C. The difference between a forensic fraud auditor and a forensic accountant, is that forensic accountant is not required to have basic knowledge of law
D. The difference between a forensic fraud auditor and a forensic accountant is that forensic auditor is not required to have knowledge in fraud prevention (1 mark)
96. Which one of the following statements is ACCURATE in regard to fraud audit?
A. Fraud audit is conducted to respond to assessed high fraud risk
B. Fraud audit is the same as fraud investigation engagement
C. Fraud audit is the same as a forensic audit engagement
D. Fraud audit is the same as a special audit engagement (1 mark)
97. Which one of the following financial statements would you find notes payable, current assets, retained earnings and accumulated depreciation?
A. Statement of changes in owners’ equity
B. Statement of financial position
C. Statement of cash flows
D. Statement of profit or loss and other comprehensive income (1 mark)
98. Which one of the following are elements of the statement of financial position?
A. Current assets
B. Revenues
C. Cost of revenue
D. Expenses (1 mark)
99. Financial statements that are complete, neutral and free from error, refers to .
A. comparability
B. consistency
C. faithful representation
D. accuracy (1 mark)
100. Which one of the following statements is NOT true regarding the statement of changes in owners’ equity?
A. It serves a similar purpose to the statement of retained earnings
B. It shows how amounts on the statement of profit or loss and other comprehensive income flow through to the statement of financial position
C. It acts as the connecting link between the statement of financial position and the statement of profit or loss and other comprehensive income
D. It lists the major company shareholders and the change in their ownership equity over the Financial year
(1 mark)
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