August 2025 Governance and Compliance Audit Past Paper Answers

Description

QUESTION ONE
RAFIKI CONSUMER BRANDS LIMITED (RCBL)
Rafiki Consumer Brands Limited (RCBL) founded in 2007 in Nairobi, Kenya began as a small manufacturer of cleaning products aimed at low and middle-income households. Over the years, it evolved into a leading regional player in the fast-moving consumer goods (FMCG) industry, offering a diverse range of personal care and hygiene products across East Africa. The company gained a loyal customer base due to its reputation for affordability and quality. In response to growing environmental awareness, RCBL also adopted eco-friendly packaging and refill systems reflecting its commitment to sustainability.
Despite its success, the company faced internal challenges as whistle-blower reports highlighted governance issues, procurement irregularities and ethical concerns. The newly appointed Board Chairman, Ann Wanjiru, convened an emergency meeting in March 2025 leading to the hiring of Integrity East Africa LLP to conduct a governance and compliance audit. Led by governance expert, Martin Ngetich, the audit was designed to be collaborative and transparent. A planning phase followed, during which audit objectives were set, key risk areas were identified and communication strategies were developed to ensure co-operation across the organisation.
The fieldwork began in April 2025 and involved interviews with board members, senior executives and staff. It also included document reviews and focused group discussions. Key findings indicated weaknesses in procurement practices and conflict-of-interest monitoring, with evidence of contracts awarded to companies linked to former executives. The audit team used internationally accepted methods to collect and validate evidence, ensuring an objective and credible process. Observations were supported by third-party confirmations and internal records creating a strong audit trail.
mid-June, the final audit report was issued highlighting both strengths and significant gaps in RCBL’s governance. Recommendations included establishing an independent audit committee and improving procurement and conflict-of- interest policies. The board embraced the findings initiating reforms through a dedicated taskforce. Immediate actions included suspending questionable contracts, training staff on ethics and enhancing board diversity. July 2025, 60% of the recommendations had been implemented earning praise from stakeholders and signalling a successful transformation toward stronger governance and ethical leadership.

Required:
(a) Examine FIVE merits of the data collection method used to engage board members and senior executives at RCBL.
(10 marks)

(b) A particular aspect of evidence was determined and agreed upon by both teams from the onset.
Explain FIVE factors to consider in determining this aspect. (10 marks)

(c) Analyse FOUR users of the report that was developed by Integrity East Africa LLP. (8 marks)

(d) RCBL faced certain internal challenges as highlighted in the whistle-blower reports.
Examine TWO impacts of each of the challenges on RCBL. (12 marks)
(Total: 40 marks)

QUESTION TWO
(a) Outline THREE differences between#8220;direct reporting engagement” and#8220;attestation engagement” in the context of an assurance report. (6 marks)
(b) Highlight FIVE qualities of a good governance and compliance audit. (5 marks)

(c) Lydia Kombonah has adopted a compliance matrix to monitor the compliance undertakings at Bidii limited.
Explain FOUR benefits of adopting this matrix. (4 marks)
(Total: 15 marks)

QUESTION THREE
(a) An Audit Committee is a sub-committee of the board of directors that plays critical roles in an organisation.
Outline FIVE roles of this committee. (5 marks)

(b) The Institute of Certified Public Secretaries of Kenya (ICPSK) plays a critical role in governance and compliance.

Analyse FIVE of its functions. (10 marks)
(Total: 15 marks)
QUESTION FOUR
(a) Highlight FOUR ways in which data analytics may be applied in the conduct of a governance and compliance audit. (4 marks)
(b) Identify SEVEN components of a risk register. (7 marks)

(c) Summarise FOUR objectives of documentation in governance and compliance audit. (4 marks)
(Total: 15 marks)

QUESTION FIVE
(a) Highlight SIX objectives of the Institute of Certified Public Secretaries of Kenya (ICPSK) Champion of Governance Awards. (6 marks)

(b) Explain FIVE circumstances under which subsequent events occurring after the audit report date but before its issuance may arise. (5 marks)
(c) Peer review in governance audit refers to the independent evaluation of the audit process.

With reference to the above statement, assess FOUR elements that may be covered in this review. (4 marks)
(Total: 15 marks)
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