PART
II
SECTION
3
PAPER
NO.7 COMPANY LAW
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with
knowledge, skills and attitudes that will enable him/her to apply the
provisions of company law in the formation, composition, operation and distribution
of a company
7.0
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
·
Apply legal principles relating to
formation of companies
·
Evaluate the rights and obligations of
members and shareholders
·
Comply with the legal principles governing
corporate insolvency and restructuring
·
Comply with the legal principles
relating to companies incorporated outside Kenya
·
Ensure books of accounts are prepared in
compliance with the law
CONTENT
7.1
Nature and classification of companies
-
Types of companies
-
Nature and characteristics of a company
-
Classification of companies
-
Principle of legal personality and veil
of incorporation
-
Distinction between companies and other
forms of business associations
7.2
Formation of companies
-
Promoters and pre-incorporation
contracts
-
Process of forming a company
-
Memorandum and articles of association
-
Certificate of incorporations
-
Legal consequences of
incorporation
7.3
Membership of a company
-
Rights and liabilities of members
-
Cessation of members
7.4
Shares
-
Classes of shares
-
Variation of class rights
-
Share warrants and certificates
-
Issue and allotment
-
Transfer and transmission
-
Mortgaging and charging of shares
7.5
share capital
-
Meaning and types of share capital
-
Raising of share capital
-
Prospectus/Information memorandum
-
Maintenance and Alteration of capital
-
The purchase by a company of its own
shares
-
Financial assistance by a company for
purchase of its shares
-
Dividends
7.6
Debt Capital
-
Borrowing powers of a company
-
Debentures
-
Charges
-
Registration of charges
-
Remedies for debenture holders
7.7
Company meetings
-
Nature and classification of company
meetings
-
Essentials of meetings
-
Proceedings at meetings
-
Voting
-
Resolutions
-
Minutes
7.8
Directors
-
Qualification and disqualification
-
Appointment of directors
-
Powers and duties of directors
-
Removal and vacation of office
-
Register of directors
-
Loan to directors
-
Compensation for loss of office
-
Disclosure of director’s interest in
contracts
-
The rule in Turquand’s case/indoor
management rule
-
Insider trading
7.9
The company secretary
-
Qualification, appointment and removal
-
Powers and duties of the company
secretary
-
Liability of the company secretary
-
Register of secretaries
7.10
Auditors
-
Qualification, appointment and removal
-
Remuneration of Auditors
-
Powers and duties
-
Rights and liabilities
7.11
Company accounts, audit and inspection
-
Books of accounts
-
Form and content of accounts
-
Group accounts
-
Director’s report
-
Auditor’s report
-
Investigation of company affairs
-
Appointment and powers of inspectors
-
Inspector’s report
-
Annual returns
7.12
corporate Restructuring
-
Need for restructuring
-
Mergers, Take-Over’s and acquisition
-
Post Merger reorganization
-
Schemes of arrangement and comproises
-
Restruction
7.13
Corporate Insolvency
-
Meaning of insolvency
-
Types of winding up
-
Appointment, powers and duties of
liquidators
-
Release of liquidators
-
Rights of parties in winding up
-
Distribution of assets
-
Offences relating to liquidation
7.14
companies incorporated outside Kenya
-
Process of registering a company in
Kenya
-
Certificate of registration
-
Power to hold land
-
Registration of charges
-
Accounts of foreign companies
-
Service of process and notices on
foreign companies
-
Returns
-
Cessation of business
-
Penalties
7.15
Emerging Issues and trends
PAPER
NO. 8 FINANCIAL MANAGEMENT
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with
the knowledge, skills and attitudes that will enable him/her to apply financial
management techniques in business.
6.0
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
·
Analyse
the source of finance for an organization
·
Evaluate
various investment decision scenarios available to an organization
·
Appraise
the performance of a business using financial tools
·
Evaluate
the current developments in business financing strategies
·
Formulate
the capital structure for a firm
·
Determine
the future value of a firm
CONTENT
8.1
Overview of financial management
-
Nature and scope of finance
-
Role of finance manager
-
Finance functions
-
Goals of a firm
-
Agency theory concept, conflict and
resolutions
-
Measuring managerial performance,
compensation and incentives
8.2
sources of funds
-
Factors to consider when selecting
source of finance
-
Long term and short term source of funds
-
External and internal sources of funds
-
Sources of funds for small business
enterprises
8.3
Financial markets
-
Nature and role of financial markets
-
Classification of financial markets:
primary markets and secondary markets; money markets and capital markets
-
The stock exchange listing and cross
listing
-
Market efficiency: efficient market
hypothesis
-
Stock market indices
-
The financial institutions and
intermediaries
-
The role of capital market authority
-
The central depository system (CDS)
8.4
The value of money
-
Concept of time value of money
-
Compounding techniques
-
Discounting techniques
-
Loan amortization schedule
8.5
Valuation concepts in finance
-
Concept of value: market value, book
value, replacement value, intrinsic value
-
Valuation of fixed income securities
-
Valuation of shares
-
Valuation of companies
-
Valuation of unit trusts
-
Valuation of mutual funds
8.6
cost of capital
-
The concept and significance of cost of
capital
-
Factors influencing cost of capital
-
Components of capital
-
Weighted average cost of capital (WACC)
-
Marginal cost of capital (MCC)
-
Capital structure and financial risk
-
Factors influencing capital structure
decisions
8.7
capital investment decisions under certainty
-
Nature of capital investment decisions
-
Categories of capital projects
-
Capital budgeting techniques
certainty: non discounted cash flow
techniques(Accounting rate of return (APR), payback period, discounted cash
flow techniques (net present value (NPV), internal rate if return (IRR),
discounted payback period, and profitability index (PI): NPV profile;
comparison of the NPV and IRR methods when evaluating independent and mutually
exclusive projects; problems associated with each of the evaluation methods
-
Expected relations among an investment’s
NPV, company value, and share price
-
Determination of cash flows for
investment decision
-
Incremental approach for cash flows
estimation
-
Capital rationing: evaluation of capital
projects and determination of the optimal capital project in situations of
capital rationing for a single period rationing
8.8
measuring business performance
-
Users of financial statements and their
information needs
-
Nature of financial ratio analysis
-
Types of financial ratios
-
Limitations of ratios analysis
-
Common size statements
-
Financial planning and forecasting
8.9
working capital management
-
Introduction to working capital
management
-
Importance of working capital management
-
Factors affecting working capital needs
-
The working capital cycle
-
Working capital policies
-
Management of cash , inventory, debtors
and creditors
8.10
Dividends policy
-
Forms of dividends
-
Dividends policies and factors influencing dividend policies
-
Dividend theories
8.11
Islamic Finance
-
Justification for Islamic finance:
history of Islamic finance; capitalism; halal; haram; riba; gharar; usury
-
Principles underlying Islamic finance:
principles of not paying or charging interest, principles of not investing in
forbidden items e.g. alcohol, pork, gambling or pornography; ethical investing;
moral purchases
-
The concept of interest (riba) and how
returns are made by Islamic financial securities
-
Sources of finance in Islamic financing:
muhabaha, sukuk, musharaka, mudaraba
-
Types of Islamic financial products:
-sharia-compliant products: Islamic investment funds; tafakul the Islamic
version of insurance Islamic mortgage, murabahah, ; leasing-ijara;
safekeeping-wadiah; sukuk-islamic bonds and securitization; ; sovereign sukuk;
Islamic investment funds; join venture-musharaka, Islamic banking, Islamic
contracts, Islamic treasury products and hedging products, Islamic equity
funds; Islamic derivatives
-
International standardization
/regulations of Islamic finance: case for Islamic financial services board
8.12 Emerging
issues and trends
PAPER
NO. 9 FINANCIAL REPORTING
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with
the knowledge, skills and attitudes that will enable him/her to prepare
financial statements for various entities and account for specialized
transactions in both the public and private sectors
9.0
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
·
Account for various assets and
liabilities
·
Prepare financial statements including
published financial statements for various types of organizations
·
Account for specialized transactions
·
Prepare group financial statements
·
Apply international financial reporting
standards (IFRSs) and international Public Sector Accounting Standards (IPSASs)
in preparing non-complex financial statements
CONTENT
9.1
assets and liabilities
-
Assets and liabilities covered in paper
no. 1: Financial Accounting still examinable(
in the context of published financial statements)
-
Borrowing costs
-
Investment property
-
Financial Instruments (presentation,
recognition, classes, measurement, de-recognition and disclosures) excluding
impairment, hedging and embedded derivatives)
-
Leases (all aspects including dealers
and sale and lease back)
-
Income tax (current and deferred tax but
not deferred tax in the case of groups)
-
Provisions, contingent liabilities and
contingent assets
9.2
Further aspects of partnerships
-
Dissolutions (including piece-meal)
-
Conversion of a partnership into a
company
9.3
special transactions
-
Contracts with customers (revenue
recognition). Hire purchase/instilment sales (split of hire purchase profit
into interest and gross profit and using actuarial method and sum of digits to
account for interest); sale of goods, construction contracts and real estate,
provision of services
9.4
Financial statements for various types of businesses
-
Farming
-
Insurance
-
Banks
-
Professional firms (lawyers and
accountants)
-
Independent local, dependent and foreign
branches
-
Co-operative societies
9.5
published financial statements
-
Presentation of financial statements
(income statement, statement of comprehensive incomes, statement of changes in
equity, statement of financial position and the notes to financial statements)
-
Accounting policies, changes in
accounting estimates and errors (prior period errors)
-
Events after the reporting period
9.6
subsidiaries (groups), associates and jointly controlled entities
-
Accounting for one subsidiary
(consolidated income statement, consolidated statement of financial position
and statement of cash flows-group financial statements); consolidated statement
of cash flows also covers associate of subsidiaries during the year
-
Accounting treatment of associate
companies
-
Jointly controlled entity
9.7
Financial statements under IPSASs
(Provisions of the following IPSASs (emphasis on
distinctions with equivalent IASs/IFRs)
-
Presentation of financial statements
-
Accounting policies, changes in
accounting estimates and errors
-
Borrowing costs
-
Consolidated and separate financial
statements
-
Investments in associates
-
Interests in joint ventures
-
Events after the reporting date
-
Construction contracts, leases and
inventories
-
Provisions, contingent liabilities and
contingent assets
9.8
Emerging issues and trends
PART II
SECTION
4
PAPER
NO. 10 AUDITING AND ASSURANCE
GENERAL
OBJECTIVES
This is intended to equip the candidate with
knowledge, skills and attitudes that will enable him/her to conduct the audit
of an entity
10.0
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
·
Plan an audit assignment
·
Comply with the regulatory framework
during an audit assignment
·
Obtain audit evidence and use the work
of others to meet audit objectives
·
Asses audit risk
·
Executes an audit assignment and prepare
an audit report
CONTENT
10.1
Assurance engagement
-
Definition and objectives
-
Elements of an assurance engagement
-
Types of assurance engagements
-
Levels of assurance and reports
-
Non-assurance engagements
10.2
Nature and purpose of an audit
-
Nature and objectives
-
Audit as an assurance engagement
-
Development of an audit (early audit and
modern audit)
-
Types of audit and limitations
10.3
legal framework and regulation
-
Regulatory framework within which
external audits take place
-
Statutory regulation; auditors’
liability, appointment, removal, remuneration, resignation, rights and duties
of auditors
-
International standards on auditing and
other regulations
-
Professional ethics/code of ethics for
professional accountants
-
Fundamental principles, threats and
safeguards other professional guidelines on audit fees, conflict of interest,
advertising and opinion shopping
10.4
planning and risk assessment
-
Obtaining clients acceptance and
retention
-
Understanding the entity and its
environment
-
Audit planning, audit programmes and documentation
-
Assessing audit risks
-
Errors, fraud and other irregularities
10.5
overview of forensic accounting
-
Nature, purpose and scope of forensic
accounting
-
Types of forensic investigations:
corruption asset misappropriation, financial statement fraud, others
-
Fraud prevention and deterrence
10.6
internal control system
-
Internal controls theory and practice
-
Evaluation of internal control system
and test of control
-
Communication of internal control system
(management letter)
-
Information technology threats and
control
10.7
Audit evidence
-
Financial statement assertions and audit
evidence
-
Audit sampling and other means of
testing
-
The audit of specific items (income/expenses/assets/liabilities)
-
Using the work of others (internal audit
and experts)
-
Computer assisted audit techniques
10.8
overall audit review
-
Subsequent events review
-
Going concern review
-
Contingencies and commitments
-
Management representations
-
Quality control and review
-
Role of auditors in receiverships and
liquidation
10.9
audit reports
-
7th schedule provisions on
audit reports
-
Basic elements
-
Types of opinions
-
Emphasis of master paragraph
-
Features of audit reports
10.10
auditing in the public sector
-
Introduction to auditing in the public
sector; regulatory provisions
-
Establishment, mandate and functions of
public sector auditors; Kenya
-
National Audit Office (KENAO) and
similar national audit bodies
-
Role of internal audit function in the
public entities
-
Relationship between external and
internal auditors in the public sector
-
International standards on supreme
auditing institutions
10.11
Emerging issues and trends
PAPER
NO. 11 MANAGEMENT INFORMATION SYSTEM
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with
knowledge, skills and attitudes that will enable him/her to apply information
communication technology (ICT) to enable business and other operations
11.0
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
·
Effectively use ICT facilities in an
organization
·
Apply the knowledge of ICT strategy and
its role in facilitating competitive advantage in business
·
Use data communication networks, the
internet and e-commerce in optimizing business opportunities
·
Implement information system’ security,
controls and social ethical issues required in a business environment
·
Implement ICT governance and risk
management and principles in business
CONTENT
11.1
Introductions to information Communication technology
-
overview of computer system
-
computer hardware
-
computer software
-
programming language
-
ICT personal and information
communication technology hierarchy
-
Role of ICT in business environments
-
Information centres
-
Factors that impact on ICT
11.2
ICT governance
-
Corporate governance and ICT governance
-
Monitoring of controls and risks
-
Policies and procedures
-
ICT management practices
-
Impact of ICT compliance with
professional standards and codes
11.3
System development
-
General systems theory
-
Role of management in system development
-
System development approaches
-
System development lifecycle
-
Rapid applications development
-
Business process re-engineering
-
System development constraints
-
Acquisitions of ICT assets
11.4
Information system in an enterprise
-
Components of an information system
-
Types of an information system
-
System in a functional perspective
-
Enterprise applications and the business
process integration
-
Outcome measure measurement of ICT
infrastructure
11.5
information systems architecture
-
Nature and types of information
-
Attributes of information
-
Files and file structure
-
File organization and methods
-
Database management systems
-
Characteristics, importance and
limitations of database systems
-
Data ware housing
-
Transaction processing phases in
business systems
-
File processing modes
11.6
data communication and computer networks
-
Principles of data communication and
computer networks
-
Data communication devices
-
Data transmission characteristics
-
Types of networks
-
Network topologies
-
Network/internet protocols
-
Benefits and challenges of networks in
an organization
-
Limitations of networks in an organization
-
Cloud computing
-
Internet of things
11.7
e-commerce
-
Impact of the internet on business
-
Models of e-commerce
-
E-commerce enabling software
-
Business opportunities in e-commerce
-
Challenges of e-commerce
-
Mobile computing
11.8
information system strategy
-
Overview of business strategy hierarchy
-
The strategic process and information
system planning
-
Development of information system
strategy
-
Aligning information systems to the
organization’s corporate strategy
-
Managing information systems strategy
-
Information systems for competitive
advantage
11.9
ICT Risk management
-
Risk management overview
-
Risk assessment and analysis
methodologies
-
Controls and countermeasures
-
Risk monitoring and communication
-
Disaster recovery and business
continuity planning
-
Information systems security management
11.10
legal, ethical and social issues in management information systems
-
Management information systems ethical
and social concerns
-
The moral dimension of management
information systems
-
The legal issues in management
information systems
11.11
Emerging issues and standards
PAPER
NO. 12 QUANTITATIVE ANALYSIS
GENERAL
OBJECTIVES
This papers is intended to equip candidates with
knowledge, skills and attitudes that will enable him/her to use quantitative
analysis tools in business operations and decision making
12.0
LEARNING OBJECTIVES
A candidate who passes this paper should be able to:
·
Use mathematical techniques in solving
business problems
·
Apply set theory in business decision
making
·
Apply operational research techniques in
decision making
·
Apply simulation techniques in analyzing
situations
CONTENT
12.1
Basic mathematical techniques
21.1.1
Functions
-
Functions, equations and graphs: linear,
quadratic, cubic, exponential and logarithmic
-
Application of mathematical functions in
solving business problems
12.1.2 Matrix algebra
-
Types and operations (addition,
subtraction, multiplication, transposition, and inversion)
-
Application of matrices; statistical
modeling, Markov analysis, input-output analysis and general applications
12.1.3
Calculus
-
Differentiation
·
Rules of differentiation (general rule,
chain, product, quotient)
·
Differentiation of exponential and
logarithmic functions
·
Higher order derivatives: turning points
(maxima and minima)
·
Ordinary derivatives and their
applications
·
Partial derivatives and their
applications
-
Integration
·
Rules of integration
·
Application of integration to business
problems
12.2
Probability
12.2.1 Set theory
-
Types of sets
-
Set description: Enumeration and
descriptive properties of sets
-
Operations of sets: Union, intersection,
complement and difference
-
Venn diagram
12.2.2
Probability theory and distribution
Probability theory
-
Definition: Event, outcome, experiment,
sample space
-
Types of events: Elementary, compound,
dependent, independent, mutually exclusive, exhaustive, mutually inclusive
-
Law of probability: Additive and
Multiplicative rules
-
Baye’s Theorem
-
Probability trees
-
Expected value, variance, standard
deviation and coefficient of variation using frequency and probability
Probability distribution
-
Discrete and continuous and continuous
probability distributions (Uniform, normal, binomial, Poisson and exponential)
-
Application of probability to business
problems
12.3
Hypothesis testing and estimation
-
Hypothesis tests on the mean (when population
standard deviation is unknown)
-
Hypothesis tests on proportions
-
Hypothesis tests on the difference
between means(independent sample)
-
Hypothesis tests on the difference
between means (matched pairs)
-
Hypothesis tests on the difference
between two proportions
12.4
correlation and regression analysis
Correlation
analysis
·
Scatter diagrams
·
Measures of correlation-product moment
and rank correlation coefficients (pearson and spearman)
Regression
analysis
·
Sample and multiple linear regression
analysis
·
Assumption of linear regression analysis
·
Coefficient of determination, standard
error of the estimate, standard error of the slope , t and F statistics
·
Computer output of linear regression
·
T-ratios and confidence interval of the
coefficients
·
Analysis of variance (ANOVA)
12.5
Time series
-
Definition of time series
-
Components of time series (circular,
seasonal, cyclical, irregular/random, trend)
-
Application of time series
-
Methods of fitting trend: free hand,
semi-averages, moving averages, least squares method
-
Models-additive and multiplicative
models
-
Measurement of seasonal variation using
additive and multiplicative models
-
Forecasting time series value using moving averages,
ordinary lest squares method and exponential smoothing
-
Comparison and application of forecasts
for different techniques
12.6
linear programming
-
Definition of decision variables,
objective function and constraints
-
Assumptions of linear programming
-
Solving linear programming using
graphical method
-
Solving linear programming using simplex
method
-
Sensitivity analysis and economic
meaning of shadow prices in business situations
-
Interpretation of computer assisted
solutions
-
Transportation and assignment problems
12.7
Decision theory
-
Decision process
-
Decision making
environment-deterministic situations (certainty), analytical hierarchical
approach (AHA), risk and uncertainty, stochastic situations (risks), situations
of uncertainty
-
Decision making under uncertainity
-maxmin, maxmax, minimax regret, Hurwicz decision rule, Laplace rule
-
Decision making under risk-expected
monetary value, expected opportunity loss, minimizing risk using coefficient of
variation, expected value of perfect information
-
Decision trees- sequential decision,
expected value of sample information
-
Limitations of expected monetary value
criteria
12.8
Game theory
-
Assumptions of game theory
-
Zero sum games
-
Pure strategy games (saddle point)
-
Mixed strategy games (joint probability
approach)
-
Dominance, graphical reduction of a game
-
Value of the game
-
Non zero sum games
-
Limitations of game theory
12.9
Network planning and analysis
-
Basic concepts- network, activity, event
-
Activity sequencing and network diagram
-
Critical path analysis (CPA)
-
Float and its importance
-
Crashing of activity/project completion
time
-
Project evaluation and review technique
(PERT)
-
Resource scheduling (leveling) and Gantt
charts
-
Limitations and advantages of CPA and
pert
12.10
Queuing theory
-
Components/elements of a queue: arrival
rate, service rate, departure, customer behavior, service discipline, finite
and infinite queues, traffic intensity
-
Elementary single server queuing systems
-
Multiple server queues
12.11
Simulation
-
Types of simulation
-
Variables in a simulation model
-
Construction of a simulation model
-
Monte Carlo simulation
-
Random numbers selection
-
Simple
queuing simulation: single server, single channel “ first come first
served” (FCFS) model
-
Application of simulation models
12.12
current developments
-
Role of advancement in information
technology in solving quantitative analysis problems
12.13
Emerging issues and trends
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