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Regulatory Environment

Unit: Advanced Auditing & Assurance

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April 2025

1 Questions
Question 4c
​​Joan and Jim Associates, a local audit firm, were the auditors of Dhawabu Bank Ltd. that recently went under receivership. Dhawabu Bank Ltd. has been sued for negligence by investors who lost up to Sh.40.3 million through a fake corporate bond issuance programme. 

The investors claim that the audit firm failed to verify the bank’s claim that it operated a Sh.17.6 million account with the Central Bank. However, it turned out that the non-existent bank account played a major role in inflating the banks financial position, thereby enticing investors to pump Sh.40.3 million into the company through a corporate bond issuance programme. The investors lost their money. 

Required: 
Evaluate Joan and Jim Associates’ legal liability in relation to the above claim.


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April 2024

2 Questions
Question 4b
​​Discuss FIVE factors that might have led to increased litigation against auditors.


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Question 5a
​​The anti-money laundering responsibility of accountants has become more significant in recent years. This is due to increased organised crime activities, making it necessary for governments around the world to initiate and implement actions aimed at preventing money laundering activities.

Required:

(i) Explain the term “money laundering”.

(ii) Using illustrations, describe FOUR money laundering offences, including those which could be committed by an accountant. 


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August 2022

2 Questions
Question 1
​​The Basel Core Principles for Effective Banking Supervision, “Risk Management Processes” require that banks and banking groups must have comprehensive risk management processes, including Board and senior management oversight to identify, evaluate, monitor and control/mitigate all material risks and further to assess their overall capital adequacy in relation to their risk profile. 

Required: 
(a) With reference to the above statements, discuss six components of an effective risk management programme for banks and similar institutions from an audit perspective.

(b) Describe the specific responsibilities of the Board in overseeing an institution’s strategic risk management process.


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Question 3c
​​Explain how audit files are archived and retrieved for a large organisation.


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April 2022

1 Questions
Question 1b
In the context of international regulation of the auditing profession, discuss the role of the International Forum of Independent Audit Regulators (IFIAR). 


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December 2021

3 Questions
Question 4a
​​Audit committees play a critical role in the governance structure of institutions and in the protection of public interest. Required: Discuss the key responsibilities of an audit committee.


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Question 4b
​​Money laundering continues to gain currency in spite of efforts by countries and international financial institutions to combat it. 

Required: 
Summarise some of the measures undertaken by various countries and international financial institutions to control and prevent money laundering.


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Question 5a
​ ​​ Explain the main rules of evidence in court proceedings relating to audit issues.


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September 2021

1 Questions
Question 5b
​​Discuss the practical challenges that professional bodies might face in trying to conduct audit quality assurance (AQA) activities in member audit firms.


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November 2020

1 Questions
Question 5b
​​Explain the role of the International Organisation of Supreme Audit Institutions (INTOSAI).


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December 2017

1 Questions
Question 1c
​​Argue three cases for and two cases against the use of global corporate governance standards.


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November 2015

1 Questions
Question 2b
​​Summarise the role played by the audit committee in enhancing corporate governance in an organisation.


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Question 3b
​​There are specific regulatory obligations imposed on accountants and auditors in relation to detecting and reporting money laundering activities. You have been asked to provide a training session to the new auditjuniors on the auditor's responsibilities in relation to money laundering. 

Required: 
(i) Explain the term "money laundering". Illustrate your explanation with examples of money laundering offences including those which could be committed by an accountant. 

(ii) Explain the policies and procedures that a firm of Certified Public Accountants should establish in order to meet its responsibilities in relation to money laundering.


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