Certified Public Accountants (CPA) Examination . - KASNEB
Certified Public Accountants(CPA)Examination SyllabusAdvance Copy - July 2018
TABLE OF CONTENTSPagePART ISection 1Paper No. 1Financial Accounting1Paper No. 2Business Law4Paper No. 3Entrepreneurship and Communication7Paper No. 4Economics10Paper No. 5Management Accounting14Paper No. 6Public Finance and Taxation16Paper No. 7Company Law19Paper No. 8Financial Management22Paper No. 9Financial Reporting26Paper No. 10Auditing and Assurance28Paper No. 11Management Information Systems30Paper No. 12Quantitative Analysis33Paper No. 13Strategy, Governance and Ethics36Paper No. 14Advanced Management Accounting39Paper No. 15Advanced Financial Management41Paper No. 16Advanced Public Finance and Taxation45Paper No. 17Advanced Auditing and Assurance48Paper No. 18Advanced Financial Reporting50Section 2PART IISection 3Section 4PART IIISection 5Section 6
PART ISECTION 1PAPER NO.1 FINANCIAL ACCOUNTINGGENERAL OBJECTIVEThis paper is intended to equip the candidate with knowledge, skills and attitudes that willenable him/her to prepare financial statements for different entities.1.0LEARNING OUTCOMESA candidate who passes this paper should be able to: Prepare books of original entry and basic ledger accounts under double entrysystem Prepare basic financial statements of sole traders, partnerships, companies,manufacturing entities and not for profit organisations Comply with the regulatory framework in the accounting field Account for assets and liabilities Analyse financial statements by use of ratios and statement of cash flows.CONTENT1.1Introduction to accountingThe nature and purpose of accountingObjectives of accountingUsers of accounting information and their respective needsThe accounting equationRegulatory framework of accounting (regulatory bodies such as ICPAK, IFAC,IASB, IPSASB, IAESB)Accounting standards (IASs/IFRSs) (importance and limitations)Professional ethicsAccounting concepts/principlesQualities of useful accounting information1.2Recording transactionsSource documents: quotations, purchase orders, statement of account,remittance advice, receipts, petty cash vouchers, sales and purchase invoice,credit notes and debit notes, bank statementsBooks of original entry: sales journal, purchases journal, returns inwards journal,returns outward journal, cash book, petty cash book and general journalDouble entry and the ledger; use of T- accounts and double entry aspects (debitand credit), sales ledger and purchases ledgerThe trial balanceComputerised accounting systems - role of computers, application andaccounting softwares in the accounting process, benefits and challenges ofoperating computerised accounting systems1.3Accounting for assets and liabilities1.3.1 AssetsC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-1-
-1.3.2Property, plant and equipment – recognition, capital and revenueexpenditure, measurement (depreciation and revaluation), disposal anddisclosures, property, plant and equipment scheduleIntangible assets – recognition, measurement (amortisation, impairmentand revaluation), disposals and disclosuresFinancial assets – examples and risks onlyInventory – recognition, measurement and valuation using specific costmethod, FIFO and weighted average cost onlyTrade receivables – bad debts and allowance for doubtful debts andreceivables control accountsAccrued income and prepaid expensesCash at bank – cash book and bank reconciliation statementCash in hand – cash book and petty cash booksLiabilitiesBank overdraft – cash book and bank reconciliation statementTrade payables – control accountsLoans – accounting treatment of repayment of principal and interestPrepaid incomes and accrued expenses1.4Correction of errors and suspense account1.5Financial statements of a sole traderIncome statementStatement of financial position1.6Financial statements of a partnershipPartnership agreementIntroduction to partnership accountsDistinction between current and fixed capitalIncome statementStatement of financial positionChanges in partnership – admission of a new partner, retirement, death andchange in profit sharing ratio1.7Financial statements of a companyTypes of share capital – ordinary shares and preference sharesIssue of shares (exclude issue by instalment and forfeiture)Types of reserves – share premium, revaluation reserve, general reserves andretained profitsIncome tax - accounting treatment and presentation (exclude computation)Financial statements – income statement and statement of financial positionPublished financial statements (describe a complete set of published financialstatements but not preparation)1.8Financial statements of a manufacturing entityFeatures of a manufacturing entityClassification and apportioning costs between manufacturing, selling andadministrationFinancial statements – manufacturing account, income statement and statementof financial positionC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-2-
1.9Accounts from incomplete recordsFeaturesTypes of incomplete records(pure single entry, simple single entry, quasi singleentry)Ascertainment of profit by capital comparisonPreparation of statement of affairs and profit determinationTechniques of obtaining complete accounting information1.10Financial statements of a not for profit organisationDistinction between not for profit making organisation and profit makingorganisationNature of receipts and payments accountAccounting treatment of some special itemsIncome and expenditure accountStatement of financial position1.11Analysing financial statementsStatement of cash flows (categories of cash, methods of preparing statement ofcash flows and the importance)Financial ratios – definition, categories, analysis and interpretation, applicationand limitations1.12Introduction to Public Sector AccountingFeatures of public sector entities (as compared to private sector)Structure of the public sector (National and county governments, statecorporations and other agencies)Regulatory structures and oversight [IPSASB, PSASB (establishment, mandateand functions), Director of Accounting Services, National Treasury, ParliamentaryCommittees, Accounting Officers at national and county levels]Objectives of public sector financial statementsObjectives of IPSASAccounting techniques in public sector (budgeting, cash, accrual, commitmentand fund)(Preparation of financial statements excluded)1.13Emerging issues and trendsC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-3-
PAPER NO. 2 BUSINESS LAWGENERAL OBJECTIVEThis paper is intended to equip the candidate with knowledge, skills and attitudes that willenable him/her to apply the principles of legal system and business law in variousenvironments.2.0LEARNING OUTCOMESA candidate who passes this paper should be able to: Demonstrate knowledge of essential elements of the legal system Demonstrate knowledge of legal personality Apply law of contract and tort in various scenarios Apply general principles of business law in practice.CONTENT2.1Elements of the legal system2.1.1-Nature, purpose and classification of lawMeaning of lawNature of lawPurpose of lawClassification of lawLaw and morality2.1.2-Sources of lawThe ConstitutionLegislationSubstance of common law and doctrines of equityAfrican customary lawIslamic lawJudicial precedentGeneral rules of international law and ratified treaties2.1.3-Administrative lawMeaning of administrative lawFunctions of administrative lawsDoctrine of separation of powersPrinciples of natural justiceJudicial control of the Executive2.1.4-The court systemEstablishment, structure, composition and jurisdiction of courtsSupreme CourtCourt of AppealHigh CourtEmployment and Labour Relations CourtMagistrates CourtC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-4-
-Court MartialKadhi’s Court2.1.5-Alternative dispute resolutionsNature of alternative dispute resolutions (ADR)General principles of ADRMediationNegotiationConciliation2.2Law of personsNatural personsNationality, citizenship and domicileArtificial personUnincorporated associationsIncorporate associationsCo-operative societies2.3Law of tortNature of tortGeneral defences of tortNegligenceVicarious liabilityStrict LiabilityDefamationLimitation of actions2.4Law of contractDefinition of contractClassification of contractsEssentials of a valid contractTerms of a contractVitiating factorsIllegal contractsDischarge of contractRemedies for breach of a contractLimitation of actions2.5Sale of goodsNature of the contractFormalities of the contractTerms of the contractImplied terms by statuteRights and duties of the partiesAuction salesInternational contracts of sale: FAS, FOB, CIF, FCA, CPT, CIP, DAT, DAP, DDP,CFR, DAF,DDU, Ex-works and Ex-ship2.6Hire purchase contractsNature of the hire purchase contractDifference between hire purchase and conditional sale/credit saleFormalities of the hire purchase contractC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-5-
2.7Implied Terms of the hire purchase contractRights and duties of the partiesTermination and completion of the hire purchase contractAgencyMeaning and nature of the agency contractTypes of agentsCreation of agencyAuthority of an agentRights and duties of the partiesTermination of agency2.8PartnershipNature of partnershipTypes of partnershipsRights, duties and liabilities of existing, incoming and minor partnersManagement of partnerships.Dissolution of partnerships and its consequences2.9Indemnity and guaranteesNature of the contractsRights and duties of the partiesTermination of the contract.Remedies for breach of contract2.10 InsuranceNature of the contractFormalities of the contractPrinciples of insuranceTypes of insuranceTermination of the contract2.11 Negotiable instrumentsNature and characteristicsNegotiability of the instrumentTypes: cheques, promissory notes, bills of exchangeobligations of the parties2.12 The law of propertyDefinition of propertyClassification of property (real and personal, movable and immovable, tangibleand intangible)Property in land: private, public and community landInterests in land: estates, servitudes and encumbrancesIntellectual property: plant breeder’s patents, trademarks, copyrights andindustrial designs2.13 Emerging issues and trendsC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-6-
PAPER NO.3 ENTREPRENEURSHIP AND COMMUNICATIONGENERAL OBJECTIVEThis paper intends to equip the candidate with knowledge, skills and attitudes that will enablehim/her to apply entrepreneurship knowledge in business and other environments.3.0LEARNING OUTCOMESA candidate who passes this paper should be able to: Identify viable business opportunities Prepare a business plan Demonstrate entrepreneurial orientation skills Communicate effectively in a business environment Apply entrepreneurial knowledge in response to the emerging business trends.CONTENT3.1Entrepreneurial mindsetDefinition of entrepreneurshipHistorical development of entrepreneurshipCharacteristics of entrepreneursTypes of entrepreneursDistinction between entrepreneurs and small business ownersApproaches to entrepreneurshipImportance of entrepreneurs to development3.2Entrepreneurship and innovationCreativity and innovationCorporate entrepreneurship and innovationQualities of entrepreneurial firmsSocial enterprises and sustainabilityEntrepreneurial ethics, responsibility and leadershipCase study on corporate entrepreneurship3.3Opportunity identification and developmentMethods of generating ideasSources of innovative ideasQualities of viable business opportunitiesEvaluating business opportunitiesChallenges of starting new venturesWhy new ventures failBusiness incubationRole of government in promoting entrepreneurship3.4Creating and starting a new ventureApproaches to creating new venturesAcquiring an established business ventureBusiness planningOverview of the business planScope and value of a business planPractical experience in writing of a business planC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-7-
3.5Business growth strategiesPenetration, market and product development strategyPublic and private placementsJoint venturesDiversificationLoans and equity financingVenture capitalistsInformal risk capitalistsCrowd funding and crowding sourcing3.6Entrepreneurship and technologyInternet and e-commerceThe enterprise websiteImpact of globalisationGlobal entrepreneursBusiness process outsourcingElectronic and mobile money transfersBusiness networking3.7Nature of business communicationMeaning of communicationPurposes of business communicationInternal and external communicationThe communication processMethods of communicationCommunication systems and networksPrinciples of effective communicationBarriers to effective communication3.8Written communicationRules of effective writingBusiness correspondenceReportsMemorandumProposal writingForms and questionnaire designCirculars and newslettersNotices and advertisementsPublicity materialsPress releasesGraphic communication3.9Oral and non-verbal communicationOral communication in businessEffective listeningInterviewsNon-verbal communicationInterpersonal relationshipsPresentations skills3.10MeetingsNoticeC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-8-
-AgendaRole of the chairpersonRole of the secretaryRole of participantsConduct of meetingsMinutes of meetings3.11Information technology and communicationThe internetTeleconferencingWireless technologiesElectronic postal servicesUse of E-mails3.12Ethics and integrity in business communicationConcept of ethics and integritySignificance of ethical communicationFactors influencing ethical communicationEthical dilemmas in communicationGuidelines to handle communication ethics dilemmasBusiness ethics in communication3.13 Emerging issues and trendsC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-9-
SECTION 2PAPER NO. 4 ECONOMICSGENERAL OBJECTIVEThis paper is intended to equip the candidate with knowledge, skills and attitudes that willenable him/her to apply the fundamental principles of economics in decision making.4.0LEARNING OUTCOMESA candidate who passes this paper should be able to: Apply basic mathematical and graphical techniques to analyse economicrelationships and interpret the results Apply the knowledge of economics in decision making Analyse economic problems and suggest possible policy related recommendations Apply knowledge of economics in international trade and finance Apply economic principles in the development and implementation of policies inagriculture and industryCONTENT4.1Microeconomics4.1.1 Introduction to economicsDefinition of economicsBasic economic concepts: economic resources, human wants, scarcityand choice, opportunity cost, production possibility curves/frontiersScope of economics: Micro and macro economicsMethodology of economics: positive and normative economics, scientificmethods, economics as a social science.Economic systems: free market economy, mixed economy, consumers’sovereignty.4.1.2Demand, supply and determination of equilibrium4.1.2.1 Demand analysisDefinitionIndividual demand versus market demandFactors influencing demandExceptional demand curvesTypes of demandMovement along and shifts of demand curvesElasticity of demandTypes of elasticity: price, income and cross elasticityMeasurement of elasticity; point and arc elasticityFactors influencing elasticity of demandApplication of elasticity of demand in management and economicpolicy decision making4.1.2.2 Supply analysisDefinitionIndividual versus market supplyFactors influencing supplyMovements along and shifts of supply curvesDefinition of elasticity of supplyC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-10-
-Price elasticity of supplyFactors influencing elasticity of supplyApplication of elasticity of supply in management and economicpolicy decision making4.1.2.3 Determination of equilibriumInteraction of supply and demand, equilibrium price and quantityMathematical approach to equilibrium analysisStable versus unstable equilibriumEffects of shifts in demand and supply on market equilibriumPrice controlsReasons for price fluctuations in agriculture4.1.3The theory of consumer behaviourApproaches to the theory of the consumer - cardinal versus ordinalapproachUtility analysis, marginal utility (MU), law of diminishing marginal utility(DMU)Limitations of cardinal approachIndifference curve analysis; Indifference curve and budget lineConsumer equilibrium; effects of changes in prices and incomes onconsumer equilibriumDerivation of a demand curveApplications of indifference curve analysis: substitution effect andincome effect for a normal good, inferior good and a giffen good;derivation of the Engels curveConsumer surplus /Marshallian surplus4.1.4The theory of a firm4.1.4.1 The theory of productionFactors of productionMobility of factors of productionShort run analysisTotal product, average and marginal productsStages in production and the law of variable proportions/the lawof diminishing returnsLong run analysisIsoquant and isocost linesThe concept of producer equilibrium and firm’s expansion curveLaw of returns to scaleDemand and supply of factors of productionWage determination theoriesTrade unions: functions and challengesProducer surplus/economic rent/Marshallian surplus4.1.4.2The theory of costsShort run costs analysis and size of the firm’s total cost, fixedcost, average cost, variable costs and marginal costLong run costs analysisOptimal size of a firmEconomies and diseconomies of scaleC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-11-
4.1.54.2Market structuresDefinition of a marketNecessary and sufficient conditions for profit maximisationMathematical approach to profit maximisationOutput, prices and efficiency of: perfect competition, monopoly,monopolistic competition, oligopolistic competitionMacroeconomics4.2.1 National incomeDefinition of national incomeCircular flow of incomeMethods/approaches to measuring national incomeConcepts of national income: gross domestic product (GDP), grossnational product (GNP) and net national product (NNP), net nationalincome (NNI) at market price and factor cost, disposable incomeDifficulties in measuring national incomeUses of income statisticsAnalysis of consumption, saving and investment and their interaction in asimple economic modelDetermination of equilibrium national incomeInflationary and deflationary gapsThe multiplier and accelerator conceptsBusiness cycles/cyclical fluctuations4.2.2Economic growth, economic development and economic planningThe differences between economic growth and economic developmentActual and potential growthThe benefits and costs of economic growthDeterminants of economic developmentCommon characteristics of developing countriesRole of agriculture and industry in economic developmentObstacles to economic developmentThe need for development planningShort term, medium term and long term planning toolsChallenges to economic planning in developing countries4.2.3 Money and banking4.2.3.1 MoneyThe nature and functions of moneyDemand and supply of moneyTheories of demand for money: The quantity theory, theKeynesian liquidity preference theory4.2.3.2 The banking systemDefinition of commercial banksThe role of commercial banks and non-banking financialinstitutions in the economyCredit creationDefinition of central bankThe role of the central bank; traditional and changing role in aliberalised economy, such as financial sector reform, exchangerate reformC er ti fie d Pu bli c Ac cou nt an ts (C PA ) Exa mi na ti on Sy ll ab us - Ju ly 20 18-12-
-Monetary policy, definition, objectives, instruments an
Paper No. 7 Company Law 19 Paper No. 8 Financial Management 22 Paper No. 9 Financial Reporting 26 Section 4 Paper No. 10 Auditing and Assurance 28 Paper No. 11 Management Information Systems 30 Paper No. 12 Quantitative Analysis 33 PART III Section 5 .
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