PART
III
SECTION
5
PAPER NO. 13
STRATEGY, GOVERNANCE AND ETHICS
This paper is intended to equip
the candidate with knowledge, skills and attitudes that will enable him/her to
formulate and implement strategies and demonstrate good governance and ethical
practices
13.0 LEARNING
OUTCOMES
A candidate who passes this paper
should be able to:
·
Analyze
the environment and its impact on strategic decision making
·
Formulate
and implement a strategic plan
·
Practice the tenets and principles of good
governance
·
Comply
with ethical principles in an organization
CONTENT:
13.1 Overview of management
-
Importance
of management
-
Principles
of management
-
Management
as a science, an art or a profession
-
Functions
and roles of management
-
Levels of
management and managerial skills
-
Management
and administration
13.2 Development of management thought
-
Pre-industrial
revolution management theories
-
Classical
theories, neo-classical theories
-
Contemporary
theories
13.3 Overview of management function
-
Planning
-
Organizing
-
Staffing
-
Directing
-
Controlling
13.4 Overview of corporate strategy and governance
-
meaning of
strategy, management and strategic management
-
scope of
strategic management
-
levels of
strategic management
-
benefits
of strategic management
-
limitations
of strategic management
-
strategic
management process
-
meaning
and importance of governance
-
principles
of corporate governance
-
best
practice in corporate governance
-
codes of
corporate practices and conduct in public and private sectors
13.5 Environmental analysis
-
purpose of
environmental analysis
-
internal
environment analysis
-
external
environment analysis
13.6 Strategy formulation
-
Organizational
vision and mission
-
Organizational
goals and objectives
-
Development
of corporate strategy and business strategy
-
Strategic
options
-
Strategy
formulation constraints
-
Competitive
advantage
13.7 Strategy implementation
-
Organizational
structure
-
Resource
allocation
-
Organizational
culture
-
Role of
leadership on strategy implementation
-
Innovation
and knowledge management
-
Constraints
to strategy implementation
13.8 Strategic monitoring and evaluation
-
Purpose
and role of strategic monitoring and evaluation
-
Process of
strategic monitoring and evaluation
-
Tools of
strategic monitoring and evaluation
-
Role of management
information system
-
Performance
measurement; balance scorecard and benchmarking
-
Features
of good strategic monitoring and evaluation system
-
Review and
feedback
-
Continuous
improvement
13.9 Management of strategic change
-
Strategic
leadership
-
Implementing
change
-
Managing
organization power and politics
-
Business
excellence model
-
Learning
organization
-
Lean and
quality management
13.10
Promoting
good corporate governance
-
Rights of
shareholders and responsibilities to stakeholders
-
The
chairman, board of directors and management
-
The
secretary
-
Duties,
and responsibilities of auditors
-
Investor
education
-
Internal
and external corporate governance controls
13.11
Composition,
appointment and duties of directors
-
Mix of
skills and competencies of directors
-
Executive
and non-executive directors
-
Qualification,
appointment, removal, retirement and reappointment
-
Director’s
remuneration
-
Directors
training and development
-
Directors
liabilities and insurance indemnity
-
Framework
for performance evaluation of the board of directors
-
Statutory
and fiduciary duties of directors
-
Directors
as agents of shareholders
-
Matters
reserved to the board of directors
-
Conflict
of interest and disclosure
-
Code of
good boardroom practice
13.12
Enterprise
risk management (ERM)
-
The ERM
framework: Risk management philosophy, risk appetite, control
-
Categories
of risk
-
Management
risk: financial and operational risk; risk management process
-
Role of
the board in ERM
-
Risk
response: avoidance, reduction and sharing
13.13
Professional
values and ethical principals
-
Professional
judgment.
-
Confidentiality
-
Ethics:
definition, theories and principles on ethics
-
Ethical
norms, morality and values
-
Code of
ethics
-
Standards
of conduct and personal integrity
-
Ethics in
business
-
Corporate
social responsibility
13.14
1 Conflict
of interest and insider trading
-
Conflict
of interest and market manipulation
-
Disclosure
of interest
-
Communication
of the conflict of interest
-
Insider
trading
-
Whistle
blowing
-
Conflict
of interest register
-
Dispute
resolution mechanism
13.15
Emerging trends
PAPER
NO.14 14 ADVANCED MANAGEMENT ACCOUNTING
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with
knowledge, skills and attitudes that will enable him/her to apply advanced
management accounting techniques in business decision making
14.0
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
·
Use cost estimation data in decision
making
·
Apply inventory management techniques to
decision making
·
Use financial and non-financial
indicators to measure organizational
performance
·
Apply environmental management
accounting concepts in practice
CONCEPT
14.1
Nature of management accounting
-
Value of information in decision making;
perfect and imperfect information
-
Ethical standards of management
accountants
14.2
cost estimation and forecasting
-
An overview of the methods of cost
estimation and prediction; engineering, simulation and statistical methods,
simple and multiple regressions, the statistical properties of regression
-
Learning curve and its application
14.3
short-term planning and decision-making
-
Overview of single product and multiple
product cost-volume-profit analysis under conditions of uncertainty
-
single product and multiple product
cost-volume –profit analysis under conditions of uncertainty
-
risk assessment
-
application of marginal costing: product
mix decisions, special orders, make or buy decision, pricing decision and other
similar short-run decisions, relevant information in decision making
14.4
budgetary control and advanced variance analysis
-
flexible and static budget, purpose of
budgetary control; operation of a budgetary control system, organization and
and coordination of the budgeting function
-
human aspects (motivational aspects) of
budgeting, emerging trends in budgetary control; ERPS, ABB,ZBB, program
budgeting
-
advanced variance analysis and
performance evaluation; expost variances and opportunity costs in variances
-
variance investigation models
14.5
inventory control decisions
-
cost of holding and ordering inventory
-
stochastic inventory models
-
inventory model for perishable items
-
application of simulation models in
inventory control
14.6
decision theory
-
Decision process
-
Decision making environment- certainity,
risk, uncertainity and competition
-
Decision making under
uncertainity-maxmin, maxmax, minimax regret, Hurwicz decision rule, Laplace
decision 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
-
Game theory-non zero sum, two persons
zero sum games, dominance, value of the game, saddle point, mixed strategies
-
Limitations of game theory
14.7
performance measurement and evaluation
-
Linkage between performance measurement
and organizational vision
-
Responsibility accounting and
responsibility centres, segmented reporting
-
Distinction between financial
performance measures and non financial performance measures
-
Cost of information
-
Methods of evaluating responsibility
centre performance such as return on investment (ROI) and residual income (RI)
and economic value added (EVA) (importance and limitations of the methods)
-
Other financial/non-financial
performance measures: balance score card, performance pyramid, Fitgerald and
Moon’s building block model, performance prism
-
Managerial incentives schemes
-
Performance contracting
-
Performance measures in the service
industry
14.8
Pricing decisions
-
External pricing methods
-
Internal pricing methods (transfer
pricing)
-
Backflush accounting
-
Throughput costing
-
Target costing
-
Life cycle costing
14.9
Environmental management accounting
-
Role of accountants in environmental
management accounting
-
Using environmental accounting to manage
costs
-
Opportunities for environmental
awareness in management accounting
14.10
Emerging issues and trends
PAPER
NO. 15 ADVANCED FINANCIAL MANAGEMENT
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with
knowledge, skills and attitudes that will enable him/her to apply advanced
financial management techniques in an organization
15.0
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
·
Evaluate capital investment decisions
under uncertain economic conditions
·
Design an optimal capital structure for
an organization
·
Predict corporate failure
·
Apply derivatives in financial risk
management
·
Apply financial management skills in the
public sector
CONTENT
15.1
Nature and purpose of financial management
-
Introduction to financial management
-
Stakeholders theory
-
Conflicting stakeholders interest and
corporate governance
-
Corporate social responsibility (CSR)
and financial management
-
Ethical issues in financial management
15.2
The investment Decision
-
Investment decision under capital
rationing: multiperiod
-
Investment decision under inflation
-
Investment decision under
uncertainty/risk
-
Nature and measurement of risk and
uncertainty
-
Techniques of handling risk: sensitivity
analysis; scenario analysis; simulation analysis; decision theory models;
certainty equivalent; risk adjusted discount rates; utility curves
-
Special cases in investment decision:
projects with unequal lives; replacement analysis; abandonment decision
-
Real options in investment decisions:
types of real options; evaluation of a capital project using real options
-
Common capital budgeting pitfalls
-
Bond refinancing/refunding
15.3
Portfolio theory and analysis
-
Portfolio theory and risk reduction
-
Risk return trade off, mean-Variance
Analysis
-
Capital efficient portfolios
-
Capital asset pricing models (CAPM)
-
Arbitrage pricing model (APT) and other
multifactor models
-
Beta estimation
-
Portfolio performance measurement:
Treynor’s measure, Sharpe’s measure and Jensen’s measure
15.4
The financing decision
-
Introduction to financing decision
-
Nature and significance of financing
decision
-
Cost of capital and significance :
specific cost of capital, weighted average cost of capital (WACC), Marginal
cost of capital (MCC), MCC-IOS/MCC-IRR schedules
-
Capital structure theories: Traditional
theories; Net Income (NI) Approach, Net Operating Income (NOI)
-
Fanco Modigliani & Merton Miller
(MM) propositions: MM without taxes, MM with corporate taxes, MM with corporate
capital structure theories
-
Special topics in financing: EBIT_EPS
analysis, financial and operating leverage, financial and operating leverage
combined, geared and ungeared betas, lease versus purchase
-
Impact of financing on investment
decisions-adjusted present value
-
Financial distress: signs of financial
distress, forms of financial distress, predicting organization failure,
solution to financial distress
15.5
Corporate valuation
-
Application of valuation model
-
Use of free cash flows in valuation
-
Use of relative measures: economic value
added (EVA)
-
Use of enterprise value
15.6
Mergers and acquisitions
-
Nature of mergers and acquisitions
-
Reasons for mergers and acquisitions
-
Acquisition and mergers versus organic
growth
-
Valuation of acquisition and mergers
-
Financing acquisitions and mergers
-
Takeover and defense tactics
-
Regulatory framework for mergers and
acquisition
-
Valuation and analysis of corporate
restructuring, leveraged buy outs (LBO) divestitures, strategic alliances,
liquidation and recapitalization
-
Mergers and acquisition in the global
context
15.7
Derivatives in financial risk management
-
Introduction to financial risk
management
-
Types of risks: operational risks,
political risks, economic risks, fiscal risks, regulatory risks: currency
risks, and interest rate risks
-
Foreign currency risk management: Types
of forex risks, hedging currency risks, forward rate agreement, interest rate
futures, interest rate swaps, interest rate options
-
Derivatives in risk management: meaning
and purpose of derivatives; types of derivatives; forwards, options, futures
and swaps
-
Valuations of derivatives: options;-
Black Scholes options pricing models Greeks (definitions)
15.8
International financial management
-
International investments
-
International financial institutions
-
Dividend policy for multinationals
-
Availability and timing of remittances
-
Transfer pricing: Impact on taxes and
dividends
15.9
Emerging issues and trends
PART
III
SECTION
6
PAPER NO.16
ADVANCED PUBLIC FINANCE AND TAXATION
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with knowledge, skills and
attitudes that will enable him/her to address advanced public finance and
taxation matters in public and private sector entities
16.0 LEANING
OUTCOMES
A candidate who passes this paper should be able to:
·
Design a tax policy
·
Manage public and private partnership arrangements
·
Compute tax for complex aspects of companies and
specialized entities
·
Apply tax laws in mitigating tax costs for various
tax payers
·
Analyse the taxation issues associated with
international transactions
·
Apply advanced public financial management
principles in practice
·
Evaluate the effectiveness of the public finance,
tax systems and policies in economic growth of a country
·
Manage public investments
CONTENT
16.1 External
Resource Financing
-
Establishment of External Resource
Department in the National Treasury structure
-
Role played by External Resource Department in
raisin of external finances
-
Book keeping and management of donor funds
-
Monitoring of public projects through clients
connections and EPROMIS
-
Development partners and contractual agreements
-
Role played by Ambassadors, High Commissioners and
other Diplomas in initiation of external funding
16.2 Public
Investment
-
Establishment of government investment departments
-
Mandate of government investment departments
-
Establishment of state Corporations (State
Corporations Act: Cap446)
-
Role of Public Investment Board (KenInvest)
-
Role of public Investment Committee
-
Other players in public investment
16.3 Public
Private Partnership Arrangements
-
Establishment of public private partnership (PPP) Unit in the National
Treasury
-
Legal framework for PPP (PP Act,2013)
-
Contract/project agreements, guidelines and
standards
-
Composition and role of PPP petition committee
-
Establishment and role of PPP petition facilitation
fund
16.4 Public debt
management
-
Establishment of debt management office
-
Objectives of debt management in public sector
-
Sources of public debt in Kenya
-
Debt management strategy paper
-
Relationship between debt management and budget
process
-
Comparative study of debt management strategy in
East Africa Community
-
Management of debts by county government and public
entities
-
Role of cabinet secretary of the National Treasury
in public debt management
16.5 Advanced
aspects of the taxation of business income
-
Conversion of partnership into liability companies,
and incorporation incoming and retiring partners during the year
-
Limited companies, including holding companies,
taxation of related parties charitable institutions
-
Charitable institutions
-
Leasing entities
-
Co-operatives societies
-
Trade association and clubs
-
Petroleum
-
Mining
-
Banking, insurance, sea and air transport undertakings
-
Unit trusts
-
Real estate investment trusts (REITS)
-
Property developers and contractors
-
Application of relevant case law
16.6 Tax evasion
-
Tax refund
-
Events which may trigger an investigation
-
Tax investigation
-
Back duty and in-depth examinations
-
Methods of computing omitted and understated income
-
VAT computation, refunds, false claims and
accountant’s certificate, compliance management, reconciliation of returns and
compliance checks
-
Incorrect and fraudulent returns
-
Customs and excise investigations
-
Negotiation for settlement
-
Tax audit
-
Appellant bodies and appeal procedures
-
Application of relevant case law
16.7 Taxation of
cross border activities
-
Distinction between trading in and trading with a
country; double taxation agreements; theory, design and application
-
Regional perspective with reference to the East
African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA)
-
Most favoured nation status
-
Withholding tax provisions
-
Transfer pricing
-
Application of relevant case law
16.8 Tax
planning
-
Tax planning for individuals and companies
-
Employment opportunities
-
Identifying opportunities to alleviate, mitigate or
defer the impact of direct or indirect taxation
-
Evaluating remuneration packages
-
Corporate structure and dividend flows
-
Tax avoidance and anti-avoidance provisions
-
Uses of tax incentives
-
Disposal of business operations and restructuring of
activities
16.9 Tax systems
and policies
-
Types of tax systems
-
Role of taxation in economic development
-
Design of a tax policy
-
Criteria for evaluation of a tax system
-
Tax reforms and modernization of tax systems under
various Acts
16.10
professional ethics in taxation
-
Forms of tax practices and matters relating thereto
-
Obligations to clients
-
Confidentiality
-
Matters relating to new clients
-
Handling of client work
-
Charging for services
-
Matters for giving rise to conflict of interest
-
Disclosure in tax returns, computations and
correspondence with the Revenue Authority
-
Moral and social issues in taxation
16.11 current developments
in public finance and taxation
-
Legislative/policy changes on public financial
management
-
Large and medium tax payers units
-
Tax information exchange arrangements
-
Capital gains tax, other taxes
16.12 Emerging
issues and trends
PAPER NO.17
ADVANCED AUDITING AND ASSURANCE
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with knowledge, skills and
attitudes that will enable him/her to undertake advanced audit and assurance
engagement in compliance with regulatory frameworks and international auditing
standards
17.0 LEARNING
OUTCOMES
A candidate who passes this paper should be able to:
·
Apply international standards in auditing and
assurance engagements
·
Implement quality control policies and procedures in
management of audits
·
Demonstrate how subsequent events and post balance
sheet events affect the audit opinion and reports
·
Undertake forensic audits
CONTENT
17.1 Assurance
and non assurance
-
The concept of assurance and non assurance
engagements
-
Agreed upon procedure
-
Compilation engagements
-
Assurance reports
17.2 Audit framework and regulations
-
Objective and general principles
-
Legal framework
-
International regulatory framework for audit and
assurance services
-
Auditors professional liability and legal precedents
17.3 Professional
and ethical considerations
-
Code of ethics for professional accountants
-
Fundamental principles, threats and safeguards
-
Advertising, publicity, obtaining professional work
and fees and money laundering
-
Professional skepticism (in the concept of errors
and fraud)
17.4 Management
of audit practice
-
Client
acceptance and retention
-
Tendering for audit services
-
Professional appointments
-
Planning, materiality and assessing risk of
misstatement (audit risk)
-
Methods and techniques of auditing high risk areas
-
Use and evaluation of internal control system by
auditors
-
Preparation of audit working papers
17.5 Audit
evaluation and reviews
-
Financial statements assertions and audit procedures
-
Subsequent events
-
Going concern
-
Related parties management representation
-
Group audit/joint/components audit
-
Analytical review
-
Government grants
-
Employee benefits
-
Inventory and construction contracts
-
Impairments
-
Segment reporting
-
Changes in accounting policy
-
Leases and EPS
-
Share based payments
-
Financial instruments
-
Forex changes
-
Investment properties
-
Revenue recognition
17.6 Audit
related and assurance services
-
Prospective financial information, due diligence
investigation
-
Social, environmental and integrated reporting
(enhanced disclosure)
-
Corporate governance/audit committee and internal
audit
-
Outsourcing
-
E0commerce
-
Value for money
-
Audit of performance information in the public
sector
-
Role of auditors in receiverships and liquidations
17.7 Forensic
accounting
-
Conduct of forensic investigations: accepting the
investigation, planning, evidence gathering, reporting
-
Rules of evidence in court proceedings
-
Regulations and standards of forensic accounting
-
Applicable code of ethics
17.8 Audit
clearance and reporting
-
Quality control and review
-
Reports to those charged with governance
-
Reporting on compliance and other information
(chairman’s statement and directors report)
-
Audit report on financial statements
17.9 Current
trends
-
Professional and ethical developments
-
International standards on Assurance engagements
-
International Advisory practice standards (IIA)
-
International Standards on supreme Auditing
Institutions for public sector entities
-
International standard on Audit and Quality Controls
(ISQC) 1
17.10 Emerging
issues and Trends
PAPER NO.18
ADVANCED FINANCIAL REPORTING
GENERAL
OBJECTIVES
This paper is intended to equip the candidate with knowledge; skills and
attitudes that will enable him/her account for complex accounting transaction
and prepare advanced financial reports
18.0 LEARNING
OUTCOMES
A candidate who passes this paper should be able to:
·
Prepare financial statements for subsidiaries,
associates and jointly controlled entities in compliance with International
Financial Reporting Standards (IFRS) and International Public Sector Accounting
Standards (IPSASs) as applicable
·
Analyse financial statements for public and private
sector entities
·
Account for complex accounting transactions
·
Apply ethical standards in accountancy work and
principles
CONTENT
18.1 Regulatory
framework
-
Importance of the accounting framework
-
Steps in developing international financial
reporting interpretations by IFRIC
(excluding detailed IFRICS)
-
Ethical and legal issues in financial reporting
18.2
Subsidiaries, associates and jointly controlled entities
-
Accounting for subsidiaries including piece-meal
acquisitions, several subsidiaries and sub-subsidiaries
-
Associates
-
Jointly controlled firms
-
Foreign entities (subsidiary, associate and jointly
controlled entity)
-
Disposal of investment subsidiary (partial and full
disposal)
18.3 Assets and
liabilities
-
Non-current assets held for sale
-
Impairment of assets
-
Assets used in exploring and evaluating mineral
resources
-
Financial instruments (including hedging, impairment
and embedded derivatives)
-
Income taxes-Including group aspects
-
Share based payments
-
Employee benefits with emphasis on post –employment
benefits
18.4 Preparing
financial statements and other reports
-
Published financial statements (including group
statement of cash flow where a subsidiary is acquired or sold during the year)
-
Interim financial statements
-
Financial statements of pension schemes/retirement
benefit plans
-
Segment reports
-
Earnings per share
-
IFRS for small and medium sized entities
-
Related parties
-
Effects of inflation and hyper inflationary
economies (exclude inflation adjusted financial statements)
-
Internal and external
reorganizations/reconstructions
-
Management commentary ( management discussion and
analysis)
-
Integrated reporting
18.5 Public
sector accounting
Provisions of the following IPASSs (emphasis on
distinctions with equivalent IASs/IFRSs
-
Effects of changes in foreign exchange transactions
-
Revenue from exchange and non-exchange transactions
-
Hyperinflationary economies (ignore inflation
adjusted financial statements)
-
Segment reports
-
Related party disclosures
-
Impairment of cash generating and non-cash
generating assets
-
Disclosure of information about general government
sector
18.6 Current
trends
-
Social reports
-
Environmental reports
-
Corporate governance reports
-
Directors reports (content only)
18.7 Emerging
issues and trends
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