Detailed Syllabus of Chartered Accountancy Professional (CAP-111)

Paper 1: Advanced Financial Reporting

(One Paper-Three Hours-100 Marks)

Level of Knowledge : Expert

Objectives : i. To build on the basic knowledge gained during CAP- , and
ii. To enable the candidates to understand the purpose and context of financial
reporting, to interpret financial statements and other data for the benefits of
users (internal as well as external), to prepare financial statements for limited
liabilities companies and other specialized entities applying national and
international standards and to explain their preparations.

Detailed Course Contents

1. Accounting principles, concepts and theory

a. Fundamental Accounting Concepts and their relevance in preparation of financial statements
b. Moving towards realizable (fair) value concept from conventional historical cost concept of
preparation of financial statements
2. National and International Accounting and/or International Financial Reporting Standards.
a. Accounting and reporting standards and interpretations (including mandatory, voluntary and
exposure drafts) issued by Nepal Accounting Standards Board and nternational Accounting
Standards Committee.
b. National and nternational Accounting Framework and recognition and measurement of
elements of financial statements and significant departure of current corporate practices
therefrom.
c. The legitimacy of current accounting practices and its relevance to the users of general
purpose financial statements.
d. ssues and problems associated in general purpose financial reporting with the adoption of
accounting and/or reporting standards.
e. The effect of current business decisions and proposed changes or adoption of accounting and/
or reporting standards.
f. Comparative study of national and international financial/accounting standards or GAAPs.

3. Preparation and presentation of financial statements

a. Advanced problems in preparation and presentation of financial statements of limited liabilities

companies, bank and other financial institutions (finance companies, mutual funds, merchant
banker), insurance companies, stock broker and electricity company in accordance
withapplicable national and international standards and relevant acts and rules.
b. Valuation of goodwill and shares
c. Disclosure of
• Accounting policies
• Segment information
• Related parties transactions
• Significant ratios (including Earning per Share)

CAP-III/Paper 1: Advanced Financial Reporting 1

 • Current and deferred taxation
• Human Resource Accounting
• Corporate Social Reporting
• Environmental Accounting
• Other as per the relevant acts or rules or directives from regulating
authorities. d. Understanding of recent development in accounting:
• Interim and group reporting
• Value added statement
• Economic value added statement

4. Preparation of consolidated financial statements

• Definitions of subsidiary and controlled companies

• Financial issues related to subsidiary and controlled companies for their
inclusion and exclusion like intra-group transactions, fair value adjustments,
minority interest
• Preparation of consolidated accounts of holding and group companies
• Accounting for amalgamation using purchase and pooling of interest methods of
accounting.
• Preparation of group cash flow statements.
• Accounting for foreign currency transactions and entities.
• Accounting issues related to corporate restructuring including de-mergers take
over and group chemes.

5. Analysis and interpretation of financial statements and related information

• Appraisal of financial and related information by vertical and horizontal analysis, ratio
analysis, common size statement, cash flow statement.
• Appraisal of the impact of changes in accounting policies and the regulatory
framework on shareholders fund.
• The assessment of the impact of price level changes and available methods of
valuation on business decisions and performance.

6. Accounting treatments for specialized transactions

• Accounting treatment of transactions under lease, contract, intangible assets,

financial instruments, taxes, business combinations in line with applicable national
and international accounting standards.

Reference Books:

1. Nepal Accounting Standards (NAS)/Nepal Public Sector Accounting Standards (NPSAS)

2. International Financial Reporting Standards ( IFRS)
3. Advanced Accounting, R.L. Gupta & M. Radhaswamy, S. Chand & Sons, New Delhi
4. Advanced Financial Accounting, R.E. Baker, V.C. Lembke & T.E. King, McGraw Hill Book Co.
5. First Lessons in Financial Reporting - M.P. Vijay Kumar-Snow White Publications Pvt. Ltd.