| Certified Credit Professional CCP Proffessional Course

Certified Credit Professional (CCP) Proffessional Course - KASNEB

Certified Credit Professionals (CCP) Examination is for persons who wish to qualify and work or practice in various fields of credit management including credit analysis, debt management and recovery, corporate lending and related areas in both formal and informal sectors.

KASNEB

KASNEB

  •  Proffessional Course  3 years

    Credit Management has established itself world wide as a vital management function with a major contribution to make the economic well being of organizations of all kinds. Efficient credit management with its critical impact on cash flow can make all the differences between survival and insolvency in the public/private sectors. Therefore, there can be very little doubt that all Credit/Debt Managers need the knowledge and expertise to handle this crucial and sensitive area of the economy

    Certified Credit Professionals are skilled and competent top level managers, practitioners and consultants in the rapidly developing field of credit management.

    The CCP Examination is held twice yearly in May/June and November/December. The examination is divided into three parts of two sections each. Each section consists of three papers.
    A candidate may attempt two sections in a part together or separately in ascending order but before proceeding to the next part, a candidate must pass the lower part.

    The examination is rigorous and standards are high and therefore a candidate is advised to devote approximately the equivalent of twelve months of full-time study for each part of the examination. Ideally, a student should be able to complete the CCP examination in a period not exceeding three years.
    Students taking the CCP examination are advised to look for ways and means of acquiring practical experience so that they can match progress in examination with competence in the performance of duties in the work environment. The practical experience may be acquired during or after the qualification process.
    Upon completing the CCP examination, the graduates are eligible to register with the Institute of Credit Management Kenya [ICM (K)] as members. In addition, the CCP graduates are eligible for admission to pursue masters and other higher degrees in reputable universities, both in Kenya and foreign countries.
     

    Certified Credit Professional CCP Proffessional Course - objectives

    Certified Credit Professionals (CCP) Examination is for persons who wish to qualify and work or practice in various fields of credit management including credit analysis, debt management and recovery, corporate lending and related areas in both formal and informal sectors.

    The aims of CCP Examination include to:

    • Produce a credit professional with knowledge and expertise in the areas of credit management and practice, regulations governing credit management, lending practices and related areas as applicable in formal and informal sectors.
    • Impart professional values and ethics, communication skills, creativity, innovation and ability to generate new ideas.

    Aims of CCP Part I Examination
    The aims of CCP Part I examination include to:

    • Provide the candidate with knowledge and skills in credit management and the legal environment in which businesses operate.
    • Enable the candidate to apply the principles of public financial management and taxation in practice.
    • Provide a basis for further progression to CCP Part II.

    Aims of CCP Part II Examination
    The aims of CCP Part II examination include to:

    • Equip the candidate with knowledge on the legal environment governing credit practice and operations of companies.
    • Enable the candidate apply the principles of financial management, marketing and public relations in practice.
    • Provide a basis for further progression to CCP Part III.

    Aims of CCP Part III Examination
    The aims of CPA Part III examination include to:

    • Produce a professional with a high level of understanding and expertise on credit management and practice and related areas including debt recovery and corporate lending.
    • Produce a professional with ability to apply the legal principles and regulations governing credit and banking practices.
    • Ensure the professional is competent to be registered as a Certified Credit Professional with high regard to professional values and ethics.

    Entry Requirements

    A person seeking to be registered as a student for the CCP examination must show evidence of being a holder of one of the following qualifications:

    • Kenya Certificate of Secondary Education (KCSE) examination with an aggregate average of at least grade C plus (C+).
    • kasneb technician, diploma or professional examination certificate.
    • A degree from a recognised university.
    • Such other certificates or diplomas as may be approved by kasneb.

    Persons intending to take the November/December examinations must register as students not later than 15 September while those intending to take the May/June examinations must register as students not later than 15 March.
    kasneb reserves the right to refuse to register any applicant who in its opinion is not fit and proper to be registered as a student. Similarly, kasneb reserves the right to cancel the registration of any student who in its opinion is not fit and proper to be a student of kasneb.

    Exemptions
    Exemptions may, on application, be granted to registered students who are holders of certain degrees and diplomas recognised by kasneb. Exemptions will be granted on a paper by paper basis.
    Retention of Credits
    There are six sections in the CCP examination. Each section has three papers. Papers taken and passed in a section shall be retained as credits for the candidate provided that the candidate fulfils the requirements set out below:

    • The candidate must enter and attempt all the papers in a section unless the candidate is exempted from some papers in the section or has earned credits in previous attempts.
    • A candidate who is awarded one or two credits in a section must enter and pass the failed paper(s) in the section within two and a half (2 1/2) years or five (5) consecutive sittings failure to which the candidate will be required to resit all the papers in the section.

    Progression Rule

    • A candidate must attempt and pass the CCP Part I examination before proceeding to the CCP Part II examination.
    • A candidate must attempt and pass the CCP Part II examination before proceeding to the CCP Part III examination.
    • A candidate will not be allowed to enter a higher section in a part before completing the lower section unless the candidate has been referred in the higher section or has entered the two sections simultaneously

    Certified Credit Professional CCP Proffessional Course - course content

    SUMMARY OF THE CERTIFIED CREDIT PROFESSIONAL (CCP) EXAMINATION SYLLABUS
    Part I

    Section 1

    • Paper No. 1 Credit Management
    • Paper No. 2 Commercial Law
    • Paper No. 3 Entrepreneurship and Communication

    Section 2

    • Paper No. 4 Economics
    • Paper No. 5 Principles of Accounting
    • Paper No. 6 Public Finance and Taxation

    Part II
    Section 3

    • Paper No. 7 Company Law
    • Paper No. 8 Financial Management
    • Paper No. 9 Marketing and Public Relations

    Section 4

    • Paper No. 10 Law Governing Credit Practice
    • Paper No. 11 Management Information Systems
    • Paper No. 12 Quantitative Analysis

    Part III
    Section 5

    • Paper No. 13 Strategy, Governance and Ethics
    • Paper No. 14 Banking Law and Practice
    • Paper No. 15 Credit Management in the Financial Sector

    Section 6

    • Paper No. 16 Debt Recovery
    • Paper No. 17 Corporate Lending
    • Paper No. 18 Credit Practice 

    CERTIFIED CREDIT PROFESSIONAL (CCP) PROGRAM CONTENT

    SECTION 1
    PAPER NO. 1 CREDIT MANAGEMENT
    GENERAL OBJECTIVE

    This paper is intended to equip the candidate with the knowledge, skills and attitude for the application of the concepts and techniques of credit management.
    1.0 LEARNING OUTCOMES

    • A candidate who passes this paper should be able to:
    • Apply the principles of credit in a business environment
    • Analyse the effects of cost of credit to the business and economy as a whole
    • Perform debt collections activities
    • Organise and supervise a credit department.

    CONTENT

    1.1 Introduction to credit

    • Definition of credit
    • History of credit
    • Reason for and benefits of extending credit
    • Effect of credit to the business
    • Categories of credit (consumer; trade and export credit)

    1.2 Credit department structure and responsibilities

    • Organisational structure of a credit department
    • Role of the credit department within an organisation
    • Reporting lines of a credit department within an organisation
    • Reporting performance of a credit department
    • Credit department staff recruitment and retention
    • Promoting relationship (between credit department with other departments within the organisation

    1.3 The credit policy

    • Definition of a credit policy
    • Objectives of a credit policy
    • Types of credit policy
    • Features of a credit policy
    • Advantages of a credit policy
    • Contents of a credit policy
    • Formulation and implementation of a credit policy
    • Operating principles of a credit policy
    • Factors to consider when developing a credit policy

    1.4 Credit risk management

    • Credit risk defined
    • Forms of credit risk
    • Distinction between credit management and risk management
    • Common causes of credit risk situations
    • Objectives of credit risk management
    • Role of senior management and Board of directors in risk management
    • Best practices in credit risk management
    • Credit scoring
    • Methods against credit risk hedging
    • Credit culture

    1.5 Credit assessment

    • Definition of credit assessment
    • The credit appraisal process
    • Sources of information used in credit appraisal
    • Use of financial statements in credit appraisal and evaluation
    • Qualitative information used in credit assessment
    • Techniques and models used in credit assessment
    • Market risk assessment in granting credit
    • Individual and company credit application assessment

    1.6 Sales ledger administration

    • Definition of sales ledger
    • Sales ledger format and contents
    • Statements and reports
    • Sales ledger control
    • Importance and interpretation of a sales ledger

    1.7 Credit terms

    • Definition of credit terms
    • Factors affecting determination of credit terms
    • Types of credit terms
    • Effects of credit terms on working capital management

    1.8 Payment methods

    • Definition of payment method
    • Factors to consider in choosing payment method
    • Types of payment methods
    • Advantages and disadvantages of various payment methods

    1.9 Collection management

    • Overview of collections
    • Establishing targets
    • Collection planning
    • Collection cycle
    • 80/20 principle application in collections
    • Collection tools and methods
    • Computer as an aid to collection
    • Communication with defaulters
    • Tracing gone away debtors
    • Restructuring of debts
    • Rules for effective collection practices
    • Mistakes made during collection
    • Reasons for delays in payments
    • Third party collectors
    • Collection through alternative dispute resolutions(ADR)
    • Legal process for debt recovery

    1.10 Credit insurance

    • Definition of credit insurance
    • Characteristics of a good credit insurance cover
    • Basic principles of domestic credit insurance
    • Financing of credit insurance premiums
    • Benefits of credit insurance to an organisation
    • Types of credit insurance policies
    • Advantages and disadvantages of credit insurance

    1.11 Automation of credit function

    • Process of automating of credit function
    • Benefits of automating credit operations
    • Types of credit management information software
    • Customer master file
    • Online credit management
    • Billing management system

    1.12 Emerging issues and trends

     

    PAPER NO. 2 BUSINESS LAW

    GENERAL OBJECTIVE

    This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply the principles of legal system and business law in various environments.

    2.0 LEARNING OUTCOMES

    • A 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.

    CONTENT

    2.1 Elements of the legal system

    2.1.1 Nature, purpose and classification of law

    • Meaning of law
    • Nature of law
    • Purpose of law
    • Classification of law
    • Law and morality

    2.1.2 Sources of law

    • The Constitution
    • Legislation
    • Substance of common law and doctrines of equity
    • African customary law
    • Islamic law
    • Judicial precedent
    • General rules of international law and ratified treaties

    2.1.3 Administrative law

    • Meaning of administrative law
    • Functions of administrative laws
    • Doctrine of separation of powers
    • Principles of natural justice
    • Judicial control of the Executive

    2.1.4 The court system

    • Establishment, structure, composition and jurisdiction of courts
    • Supreme Court
    • Court of Appeal
    • High Court
    • Employment and Labour Relations Court
    • Magistrates Court
    • Court Martial
    • Kadhi’s Court

    2.1.5 Alternative dispute resolutions

    • Nature of alternative dispute resolutions (ADR)
    • General principles of ADR
    • Mediation
    • Negotiation
    • Conciliation

    2.2 Law of persons

    • Natural persons
    • Nationality, citizenship and domicile
    • Artificial person
    • Unincorporated associations
    • Incorporate associations
    • Co-operative societies

    2.3 Law of tort

    • Nature of tort
    • General defences of tort
    • Negligence
    • Vicarious liability
    • Strict Liability
    • Defamation
    • Limitation of actions

    2.4 Law of contract

    • Definition of contract
    • Classification of contracts
    • Essentials of a valid contract
    • Terms of a contract
    • Vitiating factors
    • Illegal contracts
    • Discharge of contract
    • Remedies for breach of a contract
    • Limitation of actions

    2.5 Sale of goods

    • Nature of the contract
    • Formalities of the contract
    • Terms of the contract
    • Implied terms by statute
    • Rights and duties of the parties
    • Auction sales
    • International contracts of sale: FAS, FOB, CIF, FCA, CPT, CIP, DAT, DAP,DDP, CFR, DAF,DDU, Ex-works and Ex-ship

    2.6 Hire purchase contracts

    • Nature of the hire purchase contract
    • Difference between hire purchase and conditional sale/credit sale
    • Formalities of the hire purchase contract
    • Implied Terms of the hire purchase contract
    • Rights and duties of the parties
    • Termination and completion of the hire purchase contract

    2.7 Agency

    • Meaning and nature of the agency contract
    • Types of agents
    • Creation of agency
    • Authority of an agent
    • Rights and duties of the parties
    • Termination of agency

    2.8 Partnership

    • Nature of partnership
    • Types of partnerships
    • Rights, duties and liabilities of existing, incoming and minor partners
    • Management of partnerships.
    • Dissolution of partnerships and its consequences

    2.9 Indemnity and guarantees

    • Nature of the contracts
    • Rights and duties of the parties
    • Termination of the contract.
    • Remedies for breach of contract

    2.10 Insurance

    • Nature of the contract
    • Formalities of the contract
    • Principles of insurance
    • Types of insurance
    • Termination of the contract

    2.11 Negotiable instruments

    • Nature and characteristics
    • Negotiability of the instrument
    • Types: cheques, promissory notes, bills of exchange obligations of the parties

    2.12 The law of property

    • Definition of property
    • Classification of property (real and personal, movable and immovable, tangible and intangible)
    • Property in land: private, public and community land
    • Interests in land: estates, servitudes and encumbrances
    • Intellectual property: plant breeder’s patents, trademarks, copyrights and industrial designs

    2.13 Emerging issues and trends

    PAPER NO.3 ENTREPRENEURSHIP AND COMMUNICATION

    GENERAL OBJECTIVE

    This paper intends to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply entrepreneurship knowledge in business and other environments.

    3.0 LEARNING OUTCOMES

    • A 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 emerging business trends.

    CONTENT

    3.1 Entrepreneurial mindset

    • Definition of entrepreneurship
    • Historical development of entrepreneurship
    • Characteristics of entrepreneurs
    • Types of entrepreneurs
    • The distinction between entrepreneurs and small business owners
    • Approaches to entrepreneurship
    • Importance of entrepreneurs to development

    3.2 Entrepreneurship and innovation

    • Creativity and innovation
    • Corporate entrepreneurship and innovation
    • Qualities of entrepreneurial firms
    • Social enterprises and sustainability
    • Entrepreneurial ethics, responsibility and leadership
    • Case study on corporate entrepreneurship

    3.3 Opportunity identification and development

    • Methods of generating ideas
    • Sources of innovative ideas
    • Qualities of viable business opportunities
    • Evaluating business opportunities
    • Challenges of starting new ventures
    • Why new ventures fail
    • Business incubation
    • Role of government in promoting entrepreneurship

    3.4 Creating and starting a new venture

    • Approaches to creating new ventures
    • Acquiring an established business venture
    • Business planning
    • Overview of the business plan
    • Scope and value of a business plan
    • Practical experience in writing of a business plan

    3.5 Business growth strategies

    • Penetration, market and product development strategy
    • Public and private placements
    • Joint ventures
    • Diversification
    • Loans and equity financing
    • Venture capitalists
    • Informal risk capitalists
    • Crowdfunding and crowding sourcing

    3.6 Entrepreneurship and technology

    • Internet and e-commerce
    • The enterprise website
    • Impact of globalisation
    • Global entrepreneurs
    • Business process outsourcing
    • Electronic and mobile money transfers
    • Business networking

    3.7 Nature of business communication

    • Meaning of communication
    • Purposes of business communication
    • Internal and external communication
    • The communication process
    • Methods of communication
    • Communication systems and networks
    • Principles of effective communication
    • Barriers to effective communication

    3.8 Written communication

    • Rules of effective writing
    • Business correspondence
    • Reports
    • Memorandum
    • Proposal writing
    • Forms and questionnaire design
    • Circulars and newsletters
    • Notices and advertisements
    • Publicity materials
    • Press releases
    • Graphic communication

    3.9 Oral and non-verbal communication

    • Oral communication in business
    • Effective listening
    • Interviews
    • Non-verbal communication
    • Interpersonal relationships
    • Presentations skills

    3.10 Meetings

    • Notice
    • Agenda
    • Role of the chairperson
    • Role of the secretary
    • Role of participants
    • Conduct of meetings
    • Minutes of meetings

    3.11 Information technology and communication

    • The internet
    • Teleconferencing
    • Wireless technologies
    • Electronic postal services
    • Use of E-mails

    3.12 Ethics and integrity in business communication

    • Concept of ethics and integrity
    • Significance of ethical communication
    • Factors influencing ethical communication
    • Ethical dilemmas in communication
    • Guidelines to handle communication ethics dilemmas
    • Business ethics in communication

    3.13 Emerging issues and trends

    SECTION 2

    PAPER NO. 4 ECONOMICS

    GENERAL OBJECTIVE

    This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply the fundamental principles of economics in decision making.

    4.0 LEARNING OUTCOMES

    • A candidate who passes this paper should be able to:
    • Apply basic mathematical and graphical techniques to analyse economic relationships 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 in agriculture and industry.

    CONTENT

    4.1 Microeconomics

    4.1.1 Introduction to economics

    • Definition of economics
    • Basic economic concepts: economic resources, human wants, scarcity and choice, opportunity cost, production possibility curves/frontiers
    • Scope of economics: Micro and macro economics
    • Methodology of economics: positive and normative economics, scientific methods, economics as a social science.
    • Economic systems: free market economy, mixed economy, consumers’ sovereignty.

    4.1.2 Demand, supply and determination of equilibrium

    4.1.2.1 Demand analysis

    • Definition
    • Individual demand versus market demand
    • Factors influencing demand
    • Exceptional demand curves
    • Types of demand
    • Movement along and shifts of demand curves
    • Elasticity of demand
    • Types of elasticity: price, income and cross elasticity
    • Measurement of elasticity; point and arc elasticity
    • Factors influencing elasticity of demand
    • Application of elasticity of demand in management and economic policy decision making

    4.1.2.2 Supply analysis

    • Definition
    • Individual versus market supply
    • Factors influencing supply
    • Movements along and shifts of supply curves
    • Definition of elasticity of supply
    • Price elasticity of supply
    • Factors influencing elasticity of supply
    • Application of elasticity of supply in management and economic policy decision making

    4.1.2.3 Determination of equilibrium

    • Interaction of supply and demand, equilibrium price and quantity
    • Mathematical approach to equilibrium analysis
    • Stable versus unstable equilibrium
    • Effects of shifts in demand and supply on market equilibrium
    • Price controls
    • Reasons for price fluctuations in agriculture

    4.1.3 The theory of consumer behaviour

    • Approaches to the theory of the consumer cardinal versus ordinal approach
    • Utility analysis, marginal utility (MU), law of diminishing marginal utility (DMU)
    • Limitations of cardinal approach
    • Indifference curve analysis; Indifference curve and budget line
    • Consumer equilibrium; effects of changes in prices and incomes on consumer equilibrium
    • Derivation of a demand curve
    • Applications of indifference curve analysis: substitution effect and income effect for a normal good, inferior good and a giffen good; derivation of the Engels curve
    • Consumer surplus /Marshallian surplus

    4.1.4 The theory of a firm

    4.1.4.1 The theory of production

    • Factors of production
    • Mobility of factors of production
    • Short run analysis
    • Total product, average and marginal products
    • Stages in production and the law of variable proportions/the law of diminishing returns
    • Long run analysis
    • Isoquant and isocost lines
    • The concept of producer equilibrium and firm’s expansion curve
    • Law of returns to scale
    • Demand and supply of factors of production
    • Wage determination theories
    • Trade unions: functions and challenges
    • Producer surplus/economic rent/Marshallian surplus

    4.1.4.2 The theory of costs

    • Short run costs analysis and size of the firm’s total cost, fixed cost, average cost, variable costs and marginal cost
    • Long run costs analysis
    • Optimal size of a firm
    • Economies and diseconomies of scale

    4.1.5 Market structures

    • Definition of a market
    • Necessary and sufficient conditions for profit maximisation
    • Mathematical approach to profit maximisation
    • Output, prices and efficiency of: perfect competition, monopoly, monopolistic competition, oligopolistic competition

    4.2 Macroeconomics

    4.2.1 National income

    • Definition of national income
    • Circular flow of income
    • Methods/approaches to measuring national income
    • Concepts of national income: gross domestic product (GDP), gross national product (GNP) and net national product (NNP), net national income (NNI) at market price and factor cost, disposable income
    • Difficulties in measuring national income
    • Uses of income statistics
    • Analysis of consumption, saving and investment and their interaction in a simple economic model
    • Determination of equilibrium national income
    • Inflationary and deflationary gaps
    • The multiplier and accelerator concepts
    • Business cycles/cyclical fluctuations

    4.2.2 Economic growth, economic development and economic planning

    • The differences between economic growth and economic development
    • Actual and potential growth
    • The benefits and costs of economic growth
    • Determinants of economic development
    • Common characteristics of developing countries
    • Role of agriculture and industry in economic development
    • Obstacles to economic development
    • The need for development planning
    • Short term, medium term and long term planning tools
    • Challenges to economic planning in developing countries

    4.2.3 Money and banking

    4.2.3.1 Money

    • The nature and functions of money
    • Demand and supply of money
    • Theories of demand for money: The quantity theory, the
    • Keynesian liquidity preference theory

    4.2.3.2 The banking system

    • Definition of commercial banks
    • The role of commercial banks and non-banking financial institutions in the economy
    • Credit creation
    • Definition of central bank
    • The role of the central bank; traditional and changing role in a liberalised economy, such as financial sector reform, exchange rate reform
    • Monetary policy, definition, objectives, instruments and limitations
    • Determination of interest rates and their effects on the level of investment, output, inflation and employment
    • Harmonisation of fiscal and monetary policies
    • Simple IS–LM Model
    • Partial equilibrium and general equilibrium

    4.2.4 Inflation and unemployment

    4.2.4.1 Inflation

    • Definition and types of inflation
    • Causes of inflation: cost push and demand pull
    • Effects of inflation
    • Measures to control inflation

    4.2.4.2 Unemployment

    • Definition of unemployment
    • Types and causes of unemployment
    • Control measures of unemployment
    • Relationship between unemployment and inflation: the Phillips curve

    4.2.5 International trade and finance

    • Definition of International trade
    • Theory of absolute advantage and comparative advantage
    • World trade organization (WTO) and concerns of developing countries
    • Protection in international trade
    • Regional integration organizations, commodity agreements and the relevance to less developed countries (LDCs)
    • Terms of trade, balance of trade, balance of payments (causes and methods of correcting deficits in balance of payments), exchange rates, types of foreign exchange regimes, factors influencing exchange rates, foreign exchange reserves
    • International financial institutions: International Monetary Fund (IMF) and World Bank
    • National debt management: causes and interventions
    • Structural Adjustment Programmes (SAPs) and their impacts on the LDCs

    4.3 Emerging issues and trends

    PAPER NO. 5 PRINCIPLES OF ACCOUNTING

    GENERAL OBJECTIVE

    This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to prepare and interpret financial statements for different entities.

    5.0 LEARNING OUTCOMES

    • A candidate who passes this paper should be able to:
    • Prepare books of original entry and basic ledger accounts under double entry system
    • Prepare basic financial statements of sole traders, partnerships, companies and 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.

    CONTENT

    5.1 Introduction to Accounting

    • The nature and purpose of accounting
    • Users of accounting information and their respective needs
    • Accounting Standards and their purposes
    • Regulatory framework (ICPAK, IASB, IAESB, IPSASB)
    • Professional ethics
    • Principles; concepts and conventions underlying the preparation of accounting statements

    5.2 Accounting procedures and techniques

    • Double entry book-keeping
    • The cash book; two and three column including cash journal
    • The ledger and their role in recording and summarising, classifying accounting data
    • Books of original entry
    • Petty cash book
    • Balancing accounts and preparing the trial balance
    • Introduction to simple statements of financial performance
    • Statements of financial position

    5.2.1 Computerised accounting

    • Different accounting packages
    • Rationale for computerised accounting system
    • Components of a computerised accounting system
    • Selecting a good computerised accounting system
    • Challenges of a computerised accounting system
    • Current trends in computerised accounting software

    5.3 Preparation of financial statements and year-end adjustments

    • Depreciation of non-current assets including their disposal (by part exchange; ordinary sale; accident)
    • Methods and reasons of providing for depreciation
    • Preparation of movement of property, plant equipment (as per International
    • Financial Reporting Standards)
    • Trade receivables, bad debts write-offs and provision for bad and doubtful debts
    • Accruals, prepayments, reserves and provisions
    • Necessary adjustments in statements of financial performance to record increase and decrease in provision for bad and doubtful debts

    5.4 Confirming and correcting mechanism

    • Bank reconciliation statements
    • Control accounts

    5.5 Errors and correction of errors

    • Errors affecting and not affecting the agreement of the trial balance
    • Use of the suspense accounts
    • The effect of errors on statement of financial performance and statement of financial position

    5.6 Sole traders accounts

    • Income statements
    • Statements of financial position

    5.7 Partnership accounts

    • Basic contents of a partnership agreement
    • Provisions of the Partnership Act
    • Partnership statement of financial performance and appropriation account
    • Partners current account and statement of financial position
    • Financial statements to reflect elementary changes in partnership such as admission, retirement and dissolution

    5.8 Introduction to simple company accounts

    • Share capital and reserve
    • Issue of shares at par; premium; discount
    • Over and under subscriptions
    • Allotment and calls on shares, forfeiture of shares
    • Preparation of statements of financial performance and appropriation account and the statement of financial position
    • Published accounts: Components of a complete set of published financial statements only

    5.9 Manufacturing accounts

    • Elements of cost and cost behaviour
    • Preparation of manufacturing accounts, statement of financial performance and statement of financial position
    • Accounting treatment of manufacturing profit or loss and unrealised profit on closing stock

    5.10 Financial statements of a not-for-profit organisation

    • What non-profit making organisations are
    • Receipts and payments accounts
    • Income and expenditure accounts and statement of financial position

    5.11 Incomplete records and single entry book keeping

    • Why incomplete records
    • Preparation of statement of affairs
    • Preparation of financial statements

    5.12 Analysis of financial statements

    • Introduction to accounting ratios
    • Profitability ratios
    • Revenue ratios
    • Liquidity ratios
    • Preparation of cash flow statements (International Accounting Standard 7)

    5.13 Public sector accounting

    • Features of public sector entities (as compared to private sector)
    • Structure of the public sector and examples of entities in public sector
    • Objectives of public sector financial statements
    • Users of public sector financial statements and officers (treasury, accounting officers, public accounts committee, auditor general)
    • IPSAS on inventory, property, plant and equipment and intangible assets (the ledger accounts of central and county governments are not examinable)
    • Accounting techniques in public sector (budgeting, cash, accrual, commitment and fund)

    5.14 Emerging issues and trends

    PAPER NO. 6 PUBLIC FINANCE AND TAXATION

    GENERAL OBJECTIVE

    • This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to comply with and implement public financial management regulations and compute taxes for various entities.

    6.0 LEARNING OUTCOMES

    • A candidate who passes this paper should be able to:
    • Comply with the regulatory framework in public financial management (PFM)
    • Compute tax for various entities
    • Manage the budgetary process, public revenue and control public expenditure
    • in national and county governments
    • Apply the written tax law in addressing various tax issues
    • Manage non-complex public financial management issues in public entities.

    CONTENT

    6.1 Introduction to public financial management

    • Nature and scope of public finance
    • General overview of public financial management as envisaged by the
    • Constitution
    • Role of the national and county treasuries
    • Overview of the Public Financial Management Act
    • Financial regulations
    • Treasury circulars; meaning and application
    • Process of developing national and county government finance bills
    • Role of budget officers in budget preparation and execution
    • Responsibilities of the national and county treasuries in relation to budget preparation
    • Budget process for both national, county and public entities

    6.2 Establishment of public funds in the public sector

    • Provision of establishing public funds
    • Rationale of creation of public funds
    • The Consolidated Fund
    • The establishment and administration of contingency funds
    • The establishment and administration of equalisation funds
    • County revenue sources

    6.3 Supply chain management in public entities

    • Definitions and terminologies
    • General overview of Public Procurement and Disposal (PPD) Act
    • Procurement guidelines as envisaged by PPD Act
    • Committees responsible for procurement
    • Procurement process by National, County and other public entities
    • Tendering process and selection of suppliers in public sector
    • Concept of e-procurement

    6.4 Oversight function in public finance management

    • The role of National Assembly
    • The role of Senate
    • The role of County Assembly
    • The role of Auditor General
    • The role of Internal Audit
    • Role of Controller of Budget in relation to disbursement of public funds as envisaged by the Constitution and PFM Act, 2012

    6.5 Introduction to taxation

    • History of taxation
    • Types of taxation
    • Principles of an optimal tax system
    • Single versus multiple tax systems
    • Classification of tax systems
    • Tax shifting
    • Factors that determine tax shifting
    • Tax evasion and tax avoidance
    • Taxable capacity
    • Fiscal policies
    • The Revenue Authority; history, structure and mandate

    6.6 Taxation of income of persons

    • Taxable and non-taxable persons
    • Sources of taxable incomes
    • Employment income:
    • Taxable and non-taxable benefits
    • Allowable and non-allowable deductions
    • Tax credits (withholding tax, personal and insurance relief, others)
    • Incomes from past employment
    • Business income:
    • Sole proprietorship
    • Partnerships (excluding conversions)
    • Incorporated entities (excluding specialised institutions)
    • Turnover tax/resumptive tax
    • Income from use of propertyrent and royalties
    • Farming income
    • Investment income
    • Miscellaneous taxes and other revenues
    • Stamp duty
    • Catering levy
    • Motor vehicle advance tax
    • Capital gains tax

    6.7 Capital deductions

    • Rationale for capital deductions
    • Investment deductions: ordinary manufacturers
    • Industrial building deductions
    • Wear and tear allowances
    • Farm works deductions
    • Shipping investment deduction
    • Other deductions

    6.8 Administration of income tax

    • Registration and deregistration of tax payers
    • Assessments and returns
    • Operations of PAYE systems: Preparation of PAYE returns, categories of employees
    • Statutory deductions (NSSF and NHIF)
    • Notices, objections, appeals and relief for mistakes
    • Tax decisions; objections and appeals
    • Collection, recovery and refund of taxes
    • Administrative penalties and offences
    • Application of ICT in taxation: iTax

    6.9 Administration of value added tax

    • Introduction and development of VAT
    • Registration and deregistration of businesses for VAT
    • Taxable and non taxable supplies
    • Privileged persons and institutions
    • VAT rates
    • VAT records
    • Value for VAT, tax point
    • Accounting for VAT
    • VAT returns
    • Remission, rebate and refund of VAT
    • Rights and obligations of VAT registered person
    • Changes to be notified to the commissioner
    • Offences fines, penalties and interest
    • Enforcement
    • Objection and appeals: Requirements and procedure

    6.10 Customs taxes and excise taxes

    • Customs procedure
    • Import and export duties
    • Prohibitions and restriction measures
    • Transit goods and bond securities
    • Purposes of customs and excise duties
    • Goods subject to customs control
    • Import declaration form, pre-shipment inspection, clean report of findings
    • Excisable goods and services
    • Application for excise duty (licensing)
    • Use of excise stamps
    • Offences and penalties
    • Excisable goods management system

    6.11 Emerging issues and trends

    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 and comply with the provisions of company law in relevant circumstances and environments.

    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 liquidation of corporates and restructuring
    • Comply with the legal principles relating to companies incorporated outside Kenya
    • Ensure books of account are prepared in compliance with the law.

    CONTENT

    7.1 Nature and classification of companies

    • Nature and characteristics of a company
    • Types of companies
    • Principle of legal personality and veil of incorporation
    • Distinction between companies and other forms of business associations, sole proprietorships, partnerships and cooperative societies.

    7.2 Formation of companies

    • Promoters and pre-incorporation contracts
    • Process of forming a company
    • Memorandum and articles of association
    • Certificate of incorporation
    • Effects of incorporation

    7.3 Membership of a company

    • Acquisition of membership
    • Register of members
    • Rights and liabilities of members
    • Cessation of membership

    7.4 Shares

    • Classes of shares
    • Variation of class rights
    • Share certificates
    • Issue and allotment
    • Transfer and transmission
    • Transfer of shares under central depository system
    • Mortgaging and charging of shares

    7.5 Share capital

    • Meaning and types of share capital
    • Raising of share capital
    • Prospectus/information memorandum
    • Maintenance of capital
    • Alteration of capital
    • 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 a valid meeting
    • Voting
    • Resolutions

    7.8 Directors

    • Qualifications, appointment, and disqualification
    • Powers and duties of directors
    • Removal and vacation of office
    • Register of directors
    • Remuneration of directors
    • Loans to directors
    • Compensation for loss of office
    • Disclosure of director’s interest in contracts
    • The rule in Turquand’s case/Indoor Management rule
    • Insider dealing

    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 investigation

    • Books of accounts
    • Form and content of accounts
    • Group accounts
    • Director’s report
    • Auditor’s report
    • Annual returns
    • Investigation of company affairs
    • Appointment and powers of inspectors
    • Inspector’s report

    7.12 Corporate restructuring

    • Need for restructuring
    • Mergers,
    • Post merger reorganisation
    • Takeovers and acquisitions
    • Schemes of arrangement and compromises
    • Reconstruction

    7.13 Receivership and liquidation of companies

    • Meaning of receivership
    • Appointment and vacation of office
    • Powers and duties of a receiver
    • Termination of receivership
    • Meaning of liquidation
    • Types of liquidation
    • Appointment, powers and duties of liquidators
    • Discharge of liquidators
    • Distribution of assets and dissolution of companies

    7.14 Companies incorporated outside the country

    • Process of registering a company
    • Certificate of registration
    • Power to hold land
    • Registration of charges
    • Accounts of foreign companies
    • Service of process and notices on foreign companies
    • Returns
    • Penalties
    • Cessation of business

    7.15 Emerging issues and trends

    PAPER NO.8 FINANCIAL MANAGEMENT

    GENERAL OBJECTIVE

    This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply financial management principles in practice.

    8.0 LEARNING OUTCOMES

    • A candidate who passes this paper should be able to:
    • Analyse the sources of finance for an organisation and evaluate various financing options
    • Evaluate various investment decision scenarios available to an organisation
    • Evaluate the performance of a firm using financial tools
    • Make appropriate capital structure decisions for a firm
    • Value financial assets and firms
    • Make appropriate liquidity and dividend decisions for a firm
    • Evaluate current developments in business financing strategies.

    CONTENT

    8.1 Overview of financial management

    • Nature and scope of finance
    • Finance functions
    • Goals of a firm; financial and non-financial objectives, overlaps and conflicts among the objectives
    • Agency theory, stakeholder’s theory and corporate governance
    • Measuring managerial performance, compensation and incentives
    • Ethical issues in financial management
    • Corporate social responsibility (CSR) and financial management.

    8.2 The financing decision

    • Nature and objectives of the financing decision
    • Factors to consider when making financing decisions
    • Sources of finances for enterprises; internally generated funds and the externally generated funds, long term sources, medium term and short term sources of finance
    • Evaluation of financing options
    • Methods of issuing ordinary shares Public issue, private placement, bonus issue, employee stock option plans (ESOPS) and rights issues

    8.3 Financial institutions and markets

    • Nature and role of financial markets
    • Classification of financial markets: primary and secondary securities market, money and the capital markets, over-the counter and organised market, derivatives market, mortgage market, forex market
    • The security exchange listing and cross border listing
    • Market efficiency efficient market hypothesis
    • Stock market indices
    • The financial institutions and intermediaries: commercial banks, savings and loans associations and co-operative societies, foreign exchange bureaus,
    • Unit trusts and mutual funds, insurance companies and pension firms, insurance agencies and brokerage firms, investment companies, investment banks and stock brokerage firms, micro-finance institutions and small and medium enterprises (SMEs)
    • The role of regulators in financial markets
    • Central depository system and automated trading system
    • Timing of investment at the securities exchange Dow theory and Hatch system of timing

    8.4 Time-value of money

    • Concept of time value of money
    • Relevance of the concept of time value of money
    • Time value of money versus time preference of money
    • Compounding techniques
    • Discounting techniques

    8.5 Valuation models

    • Concept of value; book value, going concern value, substitution value, replacement value, conversion value, liquidation value, intrinsic value and market value
    • Reasons for valuing financial assets/business
    • Theories on valuation of financial assets; fundamental theory, technical theory, random walk theory and the efficient market hypothesis
    • Valuation of redeemable, irredeemable and convertible debentures and corporate bonds
    • Valuation of redeemable, Irredeemable and convertible preference shares
    • Valuation of ordinary shares; net asset basis, price earnings ratio basis, capitalisation of earnings basis, Gordon’s model, finite earnings growth model,
    • Super-profit model, Marakon model, Walter’s model, Discounted free cash flow, residual income model
    • Use of relative measures such as Economic Value added (EVA) and Market
    • Value Added (MVA)
    • Valuation of unit trusts and mutual funds
    • Valuation of private companies: income and market based approaches

    8.6 Cost of capital

    • Firms capital structure and factors influencing capital structure decisions
    • Factors influencing firms cost of capital
    • Relevance of cost of capital
    • Component costs of capital
    • The firm’s overall cost of capital
    • Weighted average cost of capital (WACC)
    • Weighted marginal cost of capital (WMCC)
    • Introduction to break-points in weighted marginal cost of capital schedule
    • Operating and financial leverage degree of operating leverage and operating risk; degree of financial leverage and financial risk
    • Combined leverage degree of combined leverage and total risk

    8.7 Capital budgeting decisions

    • The nature and importance of capital investment decisions
    • Capital investment’s cash flows initial cash outlay, terminal cash flows and annual net operating cash flows, incremental approach to cash flow estimation
    • Capital investment appraisal techniques
    • Non-discounted cash flow methods payback period and accounting rate of return
    • Discounted cash flow methods net-present value, internal rate of return, profitability index, discounted payback period and modified internal rate of return (MIRR)
    • Strengths and weaknesses of the investment appraisal techniques
    • Expected relations among an investment’s NPV, company value and share price
    • Capital rationing evaluation of capital projects and determination of optimal capital budget in situations of capital rationing for a single period rationing
    • Capital investment options timing option, strategic investment option, replacement option and abandonment option
    • Problems/difficulties encountered when making capital investment decisions in reality

    8.8 Financial analysis and forecasting

    • Users of financial statements and their information needs
    • Ratio analysis; nature of financial ratios, classification and calculation of financial ratios and limitation of financial ratios
    • Common size statements Vertical and horizontal analysis
    • Financial forecasting; cash budgeting and percentage of sales method of forecasting

    8.9 Working capital management

    • Introduction and concepts of working capital
    • Working capital versus working capital management
    • Factors influencing working capital requirements of a firm
    • Importance and objectives of working capital management
    • Working capital operating cycle; the importance and computation of the working capital operating cycle
    • Working capital financing policies aggressive, conservative and matching financing policy
    • Management of stock, cash, debtors and creditors

    8.10 Dividend decision

    • Forms of dividend
    • How to pay dividends and when to pay dividends
    • How much dividend to pay
    • Firms dividend policy and factors influencing dividend decision
    • Why pay dividends
    • Dividend relevance theories; Bird in hand, Clientele effect, Information signaling theory, Walter’s model, Tax differential theory, Modigliani and Miller dividend irrelevance theory

    8.11 Introduction to risk and return

    • Risk-return trade off/relationship
    • Distinction between risk free and risky assets
    • Expected return of an asset
    • Total risk of an asset
    • Relative risk of an asset
    • Expected return of a 2 asset-portfolio
    • The actual total risk of a 2-asset portfolio

    8.12 Islamic finance

    • Justification for Islamic Finance; history of Islamic finance; capitalism; halal; haram; riba; gharar; usury
    • Principles underlying Islamic finance: principle of not paying or charging interest, principle of not investing in forbidden items such as 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 financingTypes of Islamic financial products:-
    • sharia-compliant products: Islamic investment funds; takaful the Islamic
    • version of insurance Islamic mortgage, murabahah,; Leasing ijara;
    • safekeeping Wadiah; sukuk islamic bonds and securitisation; sovereign -
    • sukuk; Islamic investment funds; Joint venture Musharaka, Islamic banking,
    • Islamic contracts, Islamic treasury products and hedging products, Islamic equity funds; Islamic derivatives
    • International standardisation/regulations of Islamic Finance: case for standardisation using&