Professional Documents
Culture Documents
Syllabus 2009 10
Syllabus 2009 10
INTRODUCTION FOUNDATION
M odu le A
Paper A1 Functional English Paper A 2 Quantitative Methods 7 9
3 5
M odu le B
Paper B 3 Introduction to Economics and Finance Paper B 4 Introduction to Financial Accounting Paper B 5 Mercantile Law 12 15 19
INTERMEDIATE
Module C
Paper C 6 Financial Accounting Paper C 7 Taxation Paper C 8 Business Communication and Behavioural Studies
21
23 26 29
Module D
Paper Paper Paper Paper D D D D 9 Company Law 10 Cost Accounting 11 Auditing 12 Information Technology 32 34 37 40
FINAL
Module E
Paper E 13 Information Technology Management, Audit and Control Paper E 14 Advanced Accounting & Financial Reporting Paper E 15 Corporate Laws Paper E 16 Business Management
49
51 58 61 66
Module F
Paper Paper Paper Paper F F F F 17 18 19 20 Management Accounting Business Finance Decision Advanced Taxation Advanced Auditing 72 77 81 83
INTRODUCTION
The Institute of Chartered Accountants of Pakistan has tailored its syllabus keeping in view the latest developments in the accounting profession worldwide. The Chartered Accountancy courses do not only comprise of the core areas of accounting but also encompass other relevant areas such as taxation, law, business management, business finance decision and information technology. Therefore, our professionals are not only sound in technical knowledge but are also equipped with the right set of management skills to express their unique potential, exchange innovative ideas, disseminate prompt and accurate information and establish leading standards to achieve greater success in business. The syllabus booklet aims to explain these areas of study through a detail and precise description of syllabus of all subjects in the Foundation, Intermediate and Final Stage Examinations. This would define the study route that the student needs to follow to study fo his/her examinations. Students should be consciously aware of their learning abjective right from the start of their professional studies at the Foundation level. Similarly,. the teachers at all levels of studies for prospective Chartered Accountants should ensure that the learning outcomes of all syllabi are aimed not only towards awareness and completion of the subject but more importantly towards application in each and every area of the syllabus coverage.
Recommended Reading
The individual syllabi are followed by a list of Recommended Reading which contains: o Reference Books o Supplementary Study Materials Students are advised to take caution while studying from Supplementary Study Material that the edition is latest and covers the syllabus contents.
F O U N D AT I O N
Challenges are what make life interesting; overcoming them what makes life meaningful.
(Joshau J. Marine)
Foundation Examination
Functional English
Module A
PA PE R A 1 : F u n c t io n a l E ng l is h (100 marks)
Objective
The objective of this syllabus is to help students communicate effectively in English language through proper usage of vocabulary & knowledge of English grammar.
Weightage
10 40 50
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Vocabulary
a. Frequently confused words b. Frequently misused words c. Phrases, synonyms, antonyms, idioms d. General vocabulary
Foundation Examination
Functional English
c.
Punctuation Periods, Question Marks, Exclamation marks, Semicolons, Colons, Commas, Apostrophes, Quotation Marks
Recommended Reading
2. 3. 4. 5.
Understand & Communicate (book 2 and 3) published by FEP International (Pvt.)Ltd. Concepts (book 3 and 4) by P.C. Wren.
} }
Foundation Examination
Quantitative Methods
Module A
PA PE R A 2 : Q u a n t it a t iv e M e t h o d s (100 marks)
Introduction
The role of an accountant has changed over the years; it has become imperative for him to have knowledge of various Mathematical and Statistical Techniques, which are being used in Financial Analysis and Decision Making. The latest research carried out in the above areas is mostly based on such techniques. The syllabus includes topics which the students will use not only in their later studies but throughout their career.
Objective
The objective of the course is to train the students in the use of Quantitative Techniques in business and finance. The students are required to gain thorough theoretical knowledge of the subject and understanding of the application of such knowledge.
Weightage
50
S ta ti s tic s 5. 6. 7. 8. Statistical Methods Methods of Least Square & Regression Probability & Probability Distribution Sampling & Decision Making 50
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Foundation Examination
Quantitative Methods
Contents:
1. Basic Mathematics
Rates, ratios, percentages; discounts, markup, markdown; indices, exponential and logarithmic functions.Use of brackets, simplification rules, co-ordinate system, concept of equation, gradient, equation of straight line, application of straight line in business and economics; simultaneous equations; quadratic equations; factorization of equations including factorization by completion of squares, arithmetic progression and geometric progression.
2. Financial Mathematics
Simple interest, present and future values; discounting notes; bank discount; compound interest and annuities; sinking funds, present value; perpetuities; effective rate of interest. (Note: The students should be able to use both formulas as well as mathematical table)
3. Calculus
Techniques of differentiation; sum, difference, product and quotient rules of differentiation. Marginal function, calculation of revenue, cost & profit of marginal unit. Use of second order derivatives; maxima, minima and point of inflexion.
5. Statistical Methods
Collection, presentation, tabulation, graphical presentation through graphs, charts and diagrams, stem and leaf display, box and whisker plot. Measures of central tendencies. Measures of dispersions. Index numbers, weighted index numbers, concept of purchasing power and deflation of income.
10
Foundation Examination
Quantitative Methods
population proportion, difference between two population proportions, single population variance and test of association through z, t and Chi-square. Confidence interval for estimating population mean. Population and variance. Difference between means, proportion and difference between proportion and population variance. Problems of determination of sample size for the study of population mean and proportion. Note: Although the use of scientific calculators is allowed, the use of programmable calculators/ devices is not allowed. (Refer our website ww.icap.org.pk for list of permissible calculators)
Recommended Reading
4.
Business Statistics
5. 1. 2. 6. 7. 3. Introductory for Business Economics and The book covers almost all syllabus and is very Mathematics Statistics for and Finance by the entire the topics with Management by Hamid A Hakeem. Hamid A Hakeem useful covering theoretical as well as bank. easy examples and is a good questionpractical aspects of statistics. Business Mathematics by M. M. Hasan and The book is specifically written for students of M. A. Mirza Concepts and Methods by finance and management and covers the Statistics The book is very useful for conceptual Khursheed Alam. understanding entire syllabus. of statistics. Introduction for Business and Economics Mathematics to Statistics (Third edition) by The book is useful for Finance Mathematics.for: book is very useful especially Ronald E. H. Nicholson. by Robert Walpole. probability, normal distribution and hypothesis testing.
11
Foundation Examination
Module B
PA PE R B 3 : I n t r o d uc t io n t o E c o n o m ic s & F in a n c e (100 marks)
Introduction
The object of the course is to enable candidates to equip themselves with the main economic concepts and their use, relevance in economic analysis and as an introduction to the economic environment of trade, industry and banking as well as to methods of analysis relevant to the study of financial decisions.
Weightage
10 40 50
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Economic Concepts
a. b. c. d. e. f. Basic concepts; Natural resources, labour, capital and enterprise; Allocation of scarce resources production, distribution and consumption; Production possibility frontier and the opportunity cost; Key characteristics of market economy, planned economy and mix economy; Microeconomics and Macroeconomics.
2. Microeconomics
a) Concept of Market i. ii. iii. iv. v. vi. Market forces of demand and supply; Demand and supply; Equilibrium of demand and supply; Elasticity of demand and supply; Utility analysis and indifference curve; Consumer, producers and efficiency of market. b) Theory of the Firm i. ii. iii. iv. v. vi. Production function and isoquants; Cost, revenue and profits; Maximization of profits; Cost and revenue curves; Distinction between long run and short run assumptions; Equilibrium of firm under perfect competition, monopoly, oligopoly and monopolistic conditions.
12
Foundation Examination
c) Factors of Production i. ii. iii. Laws of returns; Pricing of factors of production Marginal productivity theory.
3. Macroeconomics
a. National Income i. ii. iii. iv. v. vi. Circular flow of income; Measurement of national income including knowledge of basic concepts like GDP, GNP, NNP; Marginal propensity to consume and save; Consumption, saving and investment functions; Multiplier and accelerator; Equilibrium of national income;
b. Government and the Economy i. ii. iii. iv. v. c. Fiscal Budget Unemployment; Inflation; Growth, price stability and employment; Recession
Fiscal Policy i. ii. Direct and indirect taxation; Principles, methods and forms of taxation.
d. Money & Monetary Policy i. ii. iii. iv. v. vi. vii. e. Types of money; Value of money; Nature and functions of money; Definitions of banking, banking system and its institutions; Financial intermediaries; Role of State Bank; The supply of money and interest rate policy.
f.
International Trade i. ii. iii. iv. v. vi. Trade and balance of payments; Foreign exchange rates (floating and fixed exchange rates) their nature, function and determination; Trade and its determinants; Markets and demand for imports and exports; Open Economy (Basic concept) Introduction to World Trade Organization
13
Foundation Examination
Recommended Reading
The book covers all topics of syllabus, with covers almost all the topics written in simple and plain is a good It is especially easy examples and language. question bank. useful for micro economics. Business Mathematics by M. M. Hasan and The book is specifically written for students of Introduction M. A. Mirza to Economics & Finance by The book management written for ICAPs finance and is specificallyand covers the Abdul Haleem Khawaja. entire syllabus. students and contains all syllabus areas. It is especially recommended for macro economics. Mathematics for Business and Economics The book is useful for Finance Mathematics. Economics by Samuelson by Robert H. Nicholson. and Nordhaus. The book covers almost all topics of syllabus in detail. Macro Economics by Paul Crompton, Michael Swann, Sandra Hopkins, William A. McEachen. The Monetary and Financial System by David Goacher. This book covers the entire syllabus contents and includes case study questions which will help students in studying the subject with a practical point of view. The book discusses all the relevant topics at an introductory stage in simple language.
5.
14
Foundation Examination
Module B
PA PE R B 4 : I n t r o d uc t io n t o F i n a n c ia l Ac c o un t i n g (100 marks)
Objective
The objective of this course is to enable candidates to understand fundamentals of accounting theory; apply theory to basic financial accounting and prepare accounting statements of sole proprietorships and partnerships. To develop knowledge and understanding of financial statements and the techniques used to prepare financial statements including necessary underlying records.
Weightage
10 35 20
35
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. a) Introduction to business and accounting theory i. Definition and scope of business; ii. Economic setup of business; iii. Organization structures; Q Sole proprietorship; Q Partnership (its merits and demerits); Q Limited Companies (their advantages and disadvantages); iv. Types of finances including Q Long term finance; Q Short term finance;
15
Foundation Examination
Commercial Banks; Stock Exchange Insurance Companies; Procurement and production of goods; Marketing and sales;
x.
b) Accounting Theory i Fundamental accounting concepts including: Q Q Q Q Q Q Q Q Accrual basis Consistency True and fair view Materiality Prudence Completeness Going Concern Substance over form ii Financial statements; Q Q Q Q iii Components Responsibility Presentation Users of financial statements;
Asset valuation alternatives; Q Q Q Q Historical cost; Fair value; Net realizable value; Replacement cost;
16
Foundation Examination
b) Accounting for property, plant and equipment (IAS-16) i ii iii iv Initial measurement of property, plant & equipment (components of cost, exchange of assets); Subsequent costs; Depreciation Unit of measure, depreciable amount, depreciation period and depreciation method Derecognition
c) Branch accounts (excluding foreign branches); d) Treatment of the following in partnership accounts: i ii iii Admission; Retirement / death of partner (excluding life insurance policies, annuities etc); Goodwill.
Note:
Reference to IAS shall be deemed to have been changed whenever the same is replaced by a new reporting standard.
17
Foundation Examination
Recommended Reading
Accounting The Basis of Business The book is very useful for conceptual Decisions by Meigs William Haka Bettner. understanding. Modern Accountancy Mukherjee & Hanif. (Volume 1) by The book covers substantial part of the syllabus and is very useful for: final accounts of sole traders and partnership, receipts and payments accounts, accounts from incomplete records, branch accounts, and syllabus topics of partnership.
3.
Business Accounting by Frank wood and The book contains almost all syllabus areas Alan Sangster. and is recommended for: accounting theory, financial accounting practices, branch accounts, syllabus topics of partnership etc. Gripping IFRS Vol.I published by ICAP. Chapters related to inventories (IAS-2) and fixed assets (IAS-16) may be studied from this book.
4.
5.
Framework for the preparation and The book contains detailed material including presentation of financial statements and background, rationale and practical examples International Accounting Standards(1, 2 of various topics included in the syllabus. and 16) issued by IASB and is published by ICAP as IFRS Bound Volume 1.
18
Foundation Examination
Mercantile Law
Module B
PA PE R B 5 : M e r c a n t i le L a w (100 marks)
Objective
The syllabus aims to enable the students to develop a professional approach towards matters connected with Mercantile Law in the performance of their duties as Chartered Accountants.
Weightage
40 30
30
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Introduction to Legal System
Sources of law; process of legislation; and the legal system in Pakistan
19
I N T E R M E D I AT E
Intermediate Examinations
Financial Accounting
Module C
PA PE R C 6 : F i na nc ia l Ac c ou n t i n g (100 marks)
Objective
This course is designed to provide understanding of accounting methods and procedures as followed by business organizations. It systematically covers the accounting process of classification, summarization, presentation in the light of established accounting practices and application of principles set out by International Accounting and Reporting Standards in the preparation of financial statements. The course is built on the basic accounting techniques covered in Paper B 4 and is designed to develop and broaden the knowledge and understanding of more financial accounting concepts.
Weightage
25 40 35
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Accounts of limited companies
a) Accounting and preparation of Financial Statements of limited companies in line with the requirement of the Companies Ordinance, 1984 and International Financial Reporting Standards (referred to at the end of syllabus); (excluding liquidation. reconstruction, merger and consolidation); b) Significant accounting ratios and their relationship.
23
Intermediate Examinations
Financial Accounting
b) Accounting treatment of tangible and intangible assets including their recognition, derecognition, depreciation / amortization and subsequent remeasurement (revaluation, impairment, fair value etc); c) Accounting treatment of contingent losses and contingent gains; d) Related party disclosures; e) Revenue Recognition
Note:
1. 2. 3. All items included in the syllabus of Introduction to Financial Accounting paper of Module B may again be tested in the above paper. To encourage proper understanding and application of knowledge no questions requiring word by word reproduction of contents of IASs \ IFRS will be asked. Reference to local and international pronouncements shall be deemed to have been changed whenever the same is replaced by a reporting standard.
24
Intermediate Examinationss
Financial Accounting
Recommended Reading
4.
5.
Preparation of financial accounts of a limited company is regulated by the Companies Ordinance 1984 and therefore it is necessary to study it to understand the disclosure requirements. Each book explains the concerned topic in context of accounting treatment prescribed by IASs.
6.
25
Intermediate Examinations
Taxation
Module C
P AP ER C 7 : T a x a t i o n (100 marks)
Objective
The aim of this paper is to develop basic knowledge and understanding in the core areas of Income Tax and its chargeability as envisaged in the Income Tax Ordinance 2001 and the Income Tax Rules 2002 (relevant to the syllabus), Sales Tax Act 1990 and the Sales Tax Rules (relevant to the syllabus).
Weightage
15 40 10 10
2. Sales T ax
Prescribe chapters of Sales Tax Act and Rules. 25
Total
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Note: a. Finance Act / Ordinance, Notifications and circulars issued within a period of less than 4 months from the date of examination shall not be tested b. Chapters, Parts and Divisions not mentioned here specifically are excluded from the syllabus. However, it is clarified to eliminate any ambiguity that if only a chapter is mentioned it includes all parts and if only a part is mentioned it includes all divisions. c. The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected. d. Students are not expected to remember the tax rates. Same if applicable shall be given in the question paper.
26
Intermediate Examinations
Taxation
Contents:
1. Income Tax Ordinance 2001
a Basic concepts of taxation i. ii. iii. Chapter I Chapter II Chapter IV Preliminary (concepts of terms defined) Charge of tax (excluding section 7) Common rules (Part I & II)
b. Heads of income, Computation of income, Determination of tax liability i. ii. iii. iv. c. Chapter III Chapter IX Chapter X Part V Chapter XII Tax on taxable income (excluding Sec 29A, 30 & 31) Minimum tax Advance tax and deduction of tax at source Transitional Advance Tax provisions
Types of persons and their taxation i. ii. iii. iv. Chapter Chapter Chapter Chapter V Part I V Part II - Div I V Part III VII Part II Central concepts Individuals Association of persons Taxation of foreign-source income of residents
d. Procedures and Administration i. ii. iii. iv. v. vi. e. Chapter Chapter Chapter Chapter Chapter Chapter X Part I X Part II X Part III X Part IV X Part VIII XI Part I Returns Assessments Appeals including Alternative Dispute Resolution Collection and recovery of tax (Sections 137 to 140) Audit (Section 177) Administration General (excluding section 224 to 227)
The rules related to the above chapters of the Income Tax Ordinance 2001 shall also be examined
Q Q Q Q
vi. The following rules (excluding annexure and forms) of the Sales Tax Rules 2006 related to the relevant chapters of the Sales Tax Act may be examined. Rules other than the following shall not be examined at this stage: Chapter Chapter Chapter Chapter I II III IV Registration, Voluntary registration and De-registration Filing of returns Credit and Debit Note and Destruction of Goods Apportionment of Input Tax
27
Intermediate Examinations
Taxation
Recommended Reading
PAPER C 7: Taxation
Book Name & Author
1. 2. Complete Income Tax Law by S. A. Salam. Law & Practice of Income tax by Dr. Ikram-ul-Haq.
3. 4. 5.
Sales Tax Ready Reference by S. A.Salam. Synopsis of taxation by Mirza Munawar Hussain. Pakistan income tax law Principles and Practice by Mian Safiullah & Kashif Aziz Jahangiri.
6.
The book provides summarized notes to the students which will help them at the time of revision. The book also includes practical Questions and original income tax ordinance and rules & sales tax act and rules.
28
Intermediate Examinations
Module C
PAPE R C 8 : Bu s ine s s C om m un ic at io n & Be h av io ur a l S tu di es (100 marks)
Objective
The course aims to introduce students to the key concepts of business communication and their application. The course also intends to incorporate an understanding of the concepts of organizational behaviour to develop problem solving skills, negotiation skills and leadership qualities in the students.
Weightage
25 40 35
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Principles of Effective Business Communication
a. Introduction i ii. iii. Concepts and benefits of effective communication Components of communication including effective listening Problems of communication
b. Basic Principles of Business Communication Seven Cs of effective communication c. Interpersonal Communication (IPC) i. ii. iii. Universals of IPC Axioms of IPC Types of IPC
29
Intermediate Examinations
b. Meetings Preparation of Agenda, Notice and Minutes of meetings c. Report and proposal writing i ii. iii. Short report Long report Proposals
b. Organizational processes i. ii. iii. c. Organizational structure & design (principles of organization, different ways of structuring organization) Organizational Change (nature of change process, resistance to change) Organizational culture (concept, dysfunctional aspect of culture)
Individual Behaviour i. ii. iii. iv. Perception Attitude Job Satisfaction Job Stress
30
Intermediate Examinations
d. Motivation i. ii. iii. iv. v. Types of Motivation Theories of Motivation Applications Job Design Goal setting and Management by Objectives (MBO) Management by Exception (MBE)
e. Leadership i. ii. iii. iv. Type of Leadership Theories of Leadership Applications Roles, Activities, Skills of Leaders Group Dynamics and teamwork (types of groups, group formation, group structure, individual in groups, team work)
f. Conflict and Negotiation i. ii. iii. iv. Levels of Conflict Conflict Resolution Negotiation & Stages of Negotiation Peculiar Negotiation Situations
Recommended Reading
2. 3.
These are very useful books for understanding the theoretical and practical aspects of organizational behavior.
31
Intermediate Examinations
Company Law
Module D
P AP E R D 9 : C O M PA N Y LA W (100 marks)
Objective
This course aims to provide candidates with knowledge of the Companies Ordinance, 1984 and to develop amongst them an understanding of their application to corporate and other business environment, excluding advanced topics such as provisions relating to arbitration, arrangements and reconstruction, prevention of oppression and mismanagement, winding up etc. that are covered at the Final Examination stage.
Weightage
20
25 55
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. a. b. c. d. e. The Compani es Or dinanc e, 1984 Se ctions 1 to 51 Part I; Preliminary (concepts of terms defined) Part II; Jurisdiction of courts Part III; Section 12 and Section 13 Part IV; Incorporation of companies and matters incidental thereto First schedule to the Companies Ordinance, 1984
32
Intermediate Examinations
Company Law
2. 3.
The Se curi ti es a nd Ex cha nge Commis sion of P ak is ta n Act, 1997 The Compani es Or dinanc e, 1984 Se ctions 52 to 136
a. Part V; Prospectus, allotment, issue and transfer of shares and debentures, deposits, etc. b. Part VI; Share capital and debentures. c. Part VII; Registration of mortgages, charges etc. 4. The Compani es Or dinanc e, 1984 Se ctions 142 to 262
a. Part VIII Management and Administration (excluding investigation & related matters) b. Third Schedule to the Companies Ordinance, 1984
Recommended Reading
33
Intermediate Examinations
Cost Accounting
Module D
PA PE R D 10 : Co s t A c c o u nt in g (100 marks)
Objective
The course is designed to equip candidates with fundamentals of accounting for material, labour and manufacturing expenses; an understanding of the importance of the role of cost accounting in planning and controlling the wide range of organizational and manufacturing cost. The students are expected to acquaint themselves with a comprehensive knowledge of established practices of cost accumulation methods and learn the application of this knowledge to basic planning, control and decision making. The course also covers job order, process costing and standard costing systems.
Weightage
40
30 30
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Cost Concepts, Uses and Classification
a. The nature and scope of Cost Accounting; Sources of Cost data b. Definition of and distinction between financial accounting, cost accounting and management accounting c. The concept of Cost for different types of entities d. Cost classification
34
Intermediate Examinations
Cost Accounting
Overheads i. ii. iii. iv. Manufacturing expenses actual and applied Over or under applied overhead Concept of production & Service Departments Basis of apportionment and allocation of service department overheads to production department
3. Costing Systems
a. b. c. d. e. f. g. h. Fundamentals of Cost Accounting Information System Manufacturing Cost Accounting Cycle Chart of accounts Factory Ledger and accounting entries Reconciliation of Cost and Financial accounts Job order Costing Process costing Treatment of Joint Products and By-Products
4. Cost Behaviour
a. b. c. d. e. f. Analysis of fixed, variable and semi variable expenses Direct cost and Indirect cost Cost estimation using high-low points method and linear regression analysis Marginal costing and Absorption costing Product cost and Period cost Breakeven analysis and charts
35
Intermediate Examinations
Cost Accounting
6. Decision Making
a. b. c. d. e. f. g. Opportunity Cost Relevant Cost Make or buy decisions Pricing for special orders Further processing decisions Utilization of spare capacity Decision with limiting factors (excluding linear programming)
Recommended Reading
2.
3.
36
Intermediate Examinations
Auditing
Module D
PA PE R D 11 : Au d it i ng (100 marks)
Objective
The purpose of the syllabus is to give students theoretical and to a limited extent, technical knowledge and skills of auditing and review of historical financial information. It will provide a foundation for acquiring intensive knowledge required for professional competence. The syllabus will ensure that candidates are able to understand the nature of auditing and review services and are familiar with the intellectual and procedural bases for performing them.
Weightage
25 35 20 20
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. General concepts and principles of audit
i. ii. iii. iv. v. vi. vii. Objective and general principal governing an audit Responsibility for the financial statements Auditors responsibility to consider fraud and errors Introduction to International Federation of Accountants Introduction to international auditing and assurance standard setting body Legal consideration relating to appointment and removal of auditor Acceptance and continuance of audit client including requirement of Code of Ethics issued by ICAP viii. Audit engagements
37
Intermediate Examinations
Auditing
Recommended Reading
2.
3.
4. 5.
Advanced Auditing by Dr. Khawaja Amjad Saeed. Practical Auditing by Javed H. Zubairi.
These books contain almost all syllabus areas and explain various topics in context with the ISAs.
39
Intermediate Examinations
Information Technology
Module D
PA PE R D 12 : I n f o rm a t io n T e c h n o lo g y (100 marks)
Objective
The objective of this syllabus is to provide the students with adequate knowledge of the following areas and their applications with particular reference to business and finance: a. b. c. d. e. f. Computer hardware and software. Important elements and concepts of information systems. Basic principles of computer programming Computer software application. IT Security and controls . Practical experience on performing various general procedures and use of standard packages
Weightage
10 10 20 20 40
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Computer Hardware and Related Matters:
1.1 Parts and accessories of computer i. Recent developments in computer hardware
1.2 Networking i. ii. iii. Networking components Network configuration and design Types of networks iv. Use of communication devices vi. Transmission medium vii. Network administration and controls
40
Intermediate Examinations
Information Technology
2. Information Systems:
a. Fundamentals of Information Systems i. ii. General system concepts System architectures
b. Organizational Information Systems i. ii. iii. iv. v. vii. viii. ix. c. Information flow in an organization Management Information System Transaction Processing Systems Financial reporting systems Order processing and inventory control systems Personnel systems Sales and marketing systems Integrated systems
d. Knowledge Based Systems i. ii. iii. e. Decision Support System (DSS) Executive Information System (EIS) Expert System (ES)
Transaction processing in business and accounting applications i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. General application processing Data entry/ capturing / editing Master file update Reporting and queries Processing modes Batch processing On-line processing Real time processing Distributed processing Multi tasking Multi processing
41
Intermediate Examinations
Information Technology
c.
Decision Tables i. ii. Benefits and limitation of decision tables Types of decision tables
d. Computer Aided Software Engineering (CASE) Types of CASE tools, their applications and advantages e. Operating System Introduction to commonly used operating systems including DOS, Windows, Novell NetWare, Unix and Linux f. Utility Software Compression utilities, disk maintenance utilities, antivirus programs and audio and video software etc., their features, benefits and limitations g. Communication Software Features, benefits and limitations of Internet browsers, email software, chatting programs, telephony via Internet and video conferencing etc. h. E-Commerce
42
Intermediate Examinations
Information Technology
b. Data organization and access Methods i. ii. iii. c. Data structures and file organizations Access methods and file maintenance Types of data files
Database Management System (DBMS) Introduction to commonly used DBMS like Oracle and SQL Server etc. (their characteristics, advantages and limitations)
d. Control Activities
Introduction to:
i. ii. iii. iv. e. Control design General controls Preventive, detective and corrective controls Audit trails
Control over Data Integrity, Privacy, and Security i. ii. iii. iv. v. Logical access controls Physical access controls Program security techniques Data security and public networks Monitoring and surveillance techniques
f.
Disaster Recovery Planning i. ii. iii. iv. Threat and risk management Software and data backup techniques Alternative processing facility arrangements Disaster recovery procedural plan
43
Intermediate Examinations
Contents:
M icr oso ft Win do ws and Inter net
a. Window s A cce ss orie s
i. ii. iii. System Tools Communication & Entertainment Accessibility
b. c.
d.
e.
f. g.
44
Intermediate Examinations
b.
c.
S ha ring a nd S ec urity
i. ii. iii. iv. Protecting cells, worksheets, and workbooks Sharing workbooks Merging workbooks Tracking, accepting, and rejecting changes to workbooks
d.
e.
C us tomi zi ng Ex ce l
i. ii. Customizing toolbars and menus Creating, editing, and running macros
b.
c.
45
Intermediate Examinations
d.
e.
b.
c.
46
Intermediate Examinations
b.
b.
c.
P roje ct Tr ac king
i. ii. iii. iv. Saving a baseline to compare with later versions Incorporating progress information into the project Checking the progress of the project Tracking risks and issues associated with a project
d.
47
Intermediate Examinations
b.
Sc heduling
i. ii. iii. Creating and modifying appointments, meetings, and events Customizing calendar settings Creating, modifying, and assigning tasks
Orga nizing
i. ii. iii. Creating and modifying distribution lists Linking contacts to other items Creating and modifying notes
Recommended Reading
2.
3.
4.
48
FINAL
There are two ways to meeting difficulties: You alter the difficulties, or you alter yourself to meet them
(Phylis Bottome)
Final Examination
Module E
P AP E R E 1 3: I nf or m a t io n T e c h n o lo g y M a n a g e m e nt , A u di t a n d C on t r o l (100 marks)
Introduction
This sy llabus aim s to p rovid e: a. b. c. Essential body of IT knowledge related to business information systems. IT security, control and governance knowledge related to business information systems. Application of knowledge to manage the above and evaluate IT.
The Case studies in ICAP study material for this syllabus are designed to assist the students in enhancing their knowledge and skills in: Managerial role; Evaluator role; Enterprise resource planning; and Electronic Commerce. Case studies / scenario based questions will be set in the examination.
Contents:
1. IT Strategy and Management
Broad know ledg e / sk ill area IT strategy M ain t opic cov erag e Strategic considerations in IT development Illus trat ive sub -top ics Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Planning of information systems based on business success factors/criteria Position of the entity within its industry/sector Alignment/integration with business objectives/success factors Risks: economic, technical, operational, behavioral Components of long range plans Operational dynamics that influences the entitys business/programs Business to Consumer (B2C) Business to Business (B2B) Business to Employee (B2E) Consumer to Consumer (C2C) Government to Citizen (G2C) Developing operational priorities Compatibility of computers Planning IT capacity Impact of IT on procedures Data/information architecture IT infrastructures (hardware, facilities, networks)
E-Business models
Management of IT
51
Final Examination
Software (systems, applications, utilities) Performance measurement (productivity, service quality) Collaborative computing Distributed system EDI and electronic commerce Outsourced services (ISPs, ASPs, etc.) Technology diffusion Information center, help desk End-user system security Support for end-user applications Capital budget Time/expense tracking Cost charge out / monitoring Accounting for system costs Effectiveness, efficiency, economy of operations Reliability of financial reporting Effectiveness of controls (design, operation) IT asset safeguarding Compliance with applicable laws and regulations System reliability: Availability and continuity (back-up, recovery) Access controls (physical, logical) Processing integrity (completeness, accuracy, timeliness, authorization) Data integrity Supply chain management (SCM) Enterprise resource planning (ERP) Sales force automation (SFA) Customer relationship management (CRM) Electronic commerce systems: Brochure, catalog, order entry, payment processing, fulfillment Knowledge management systems Knowledge creation, capture, sharing, maintenance Managing Information Technology Planning for Business Impact Acquisition of Information Technology The Implementation of Information Technology Solutions IT service Delivery and Support Executive Checklist.
Q Q Q Q Q Q Q Q Q Q Q Q Q Q
IT control objectives
Software
Q Q Q Q Q
Q Q Q Q Q
52
Final Examination
IT control frameworks Control objectives Effectiveness, efficiency, economy of operations Reliability of financial reporting
Q Q
Relevance, reliability, comparability / consistency At a point in time; during a period of time Evaluation of facilities management and IT asset safeguarding Prevention/detection of fraud, error and illegal acts Privacy, confidentiality, copyright issues Availability and continuity (back-up, recovery) Access control (physical, logical) Processing integrity (completeness, accuracy, timeliness, authorization) Completeness, accuracy, currency / timeliness, consistency/comparability, authorization, auditability, Input /output; reception/distributic controls Attitudes, laws and regulations Board level, management level, IT administrative /operational level Hardware, facilities, network System, application User departments, individual user Board, top management IT management and IT personnel User departments, individuals Auditors
Effectiveness of control Q (design, operation) IT asset safeguarding Compliance with applicable laws and regulations System reliability Q Q Q Q Q Q Q Q Layer of control Societal Organizational Q environment Technology infrastructure Software Q Business process Q Role and responsibilities of key parties Q Q Q Q
Data integrity
53
Final Examination
Control environment
Record keeping, privacy, copyright, taxation, etc, Regulatory compliance, fiduciary obligations, IT governance, system reliability Integrity and ethical values, commitment to competence Leadership for IT organization, organization of IT function, segregation of incompatible IT and user functions, partnership with other organizations Business practices, codes of conduct, documentation of systems, operations, user responsibilities, reporting relationships Strategic planning, business system/IT integration planning, budgeting, performance measurement, monitoring, compliance with policies Hiring, training, evaluation, compensation of IT personnel, career paths Budgeting process; Cost charge out methods; Economic, technical, operational behavioral Main reason for failure of computer Projects Error, fraud , vandalism/abuse, business interruption, competitive disadvantage, excessive cost, deficient revenues, statutory sanctions, social costs, etc. Quantitative / qualitative Monetary, non-monetary Balancing costs of controls vs. costs of unmitigated risks
Board/audit committee Q governance Management philosophy and operating style Plans/structure of organization Q Q
Q Method to communicate the assignment of authority and responsibility Management control methods Q
Human resource policies and practices Financial policies and practices Risk Assessment Risk Categories
Q Q Q Q
Q Q Q
54
Final Examination
Control activities
Control design
Q Q Q Q Q Q Q
Objectives, framework, environment, activities, monitoring Legal, ethical, professional standards/requirements Preventive/detective /corrective strategies Effective control environment (personnel management methods) Preventative application controls Detective application controls Contingency plans, insurance Authorization Separation of incompatible functions (organizational design, user identification, data clarification, user/function/data authorization matrix, user authentication) Adequate documents and records Asset safeguards; limitation of access to assets Independent check on performance; verification of accounting records, comparison of accounting records with assets Computer-dependent controls (edit, validation, etc.) User controls (control balancing, manual follow-up, etc.) Audit trails Error identification/investigation /correction / tracking Understanding of data protection legislation Consideration of personnel issues and confidentiality Classification of information Access management controls Physical design and access control Logical access control (user authorization matrix) Network security (encryption, firewalls) Program security techniques Monitoring and surveillance techniques Threat and risk management software and data backup techniques (problems of on-line systems, etc.) Alternate processing facility arrangements Disaster recovery procedural plan, documentation
Control procedures
Q Q
Q Q Q Q Q Q Q Control over data integrity, privacy and security Q Q Q Q Q Q Q Q Q Control activities Availability / continuity Q of processing, disaster recovery planning and Q control Q
55
Final Examination
Q Q Q IS processing /operations Q
Integration with business continuity plans Periodic tests of recovery procedures Insurance Planning and scheduling; service levels; Risks Standards Infrastructure (hardware, facilities, networks) Software Human resources (skill sets and staffing level) Business processes Performance monitoring Costs / benefits (quantitative and qualitative impact on management Jobs and office procedures) Business drivers that impact IT (e.g., scalability, rightsizing, flexibility of change in technology) or business, speed to market, cross-platform capability) Control over productivity and service quality Software /data library management Input/output distribution and control Security and backup, and recovery Internal monitoring processes Performance review processes External monitoring processes Processes for addressing-non-compliance Familiarisation with: System analysis and documentation (e.g., flowcharting package, review of program logic, etc.) System /program testing (e.g., test data ,integrated test facility, parallel simulation etc.), Data integrity testing (e.g., generalized audit software, utilities, custom programs, sampling routines, etc.) Problem solving aids (e.g. spreadsheet, database. Online data bases, etc) Administrative aids (e.g., word processing, audit program generation, work paper generators etc).
Q Q Q
56
Final Examination
Recommended Reading
2.
Information
3.
57
Final Examination
Module E
PA PE R E 1 4 : A dv a n c e d Ac c o un t i n g & F in a n c i a l R e p o rt in g (100 marks)
Introduction
The purpose of this syllabus is to prepare the students to appreciate prevailing financial regulatory environment and to apply the knowledge gained to practical situations for arriving at pragmatic solutions. Students will be expected to be aware of the requirements of the International Accounting Standards (IASs) and International Financial Reporting Standards (as and when issued) as applicable in Pakistan and their application to practical situations and the informational needs of different users of accounts. Students will be expected to analyse, interpret and explain the commercial activities of an organisation as shown by its financial statements. The emphasis will be on the presentation, interpretation and use of data. Students should be able to prepare financial statements for complex business arrangements (e.g. reorganisations, demergers, business combinations, dissolutions, etc.) in accordance with applicable statutory disclosure requirements. Students will be expected to be familiar with the preparation of the financial statements of enterprises engaged in specialised industries. The students should be able to demonstrate an integrated knowledge of Financial Reporting. The students are encouraged to be abreast of current accounting and financial issues. The examinees are expected to possess profound understanding of the subject over and above what they have learnt at the Foundation and Intermediate stages. Topics examined at the earlier stages may or may not be directly re-examined here, however, examinees would need to utilise knowledge and skills learnt at an earlier stage. Case studies / scenario based questions will be set in the examination.
Weightage
30
45 15 10
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
58
Final Examination
Contents:
1 a. Financial Statements and Reporting
i. ii. iii. iv. v. vi. vii viii. Preparation of financial statements including consolidated financial statements and their disclosure. Accounting for investments in subsidiaries and associated undertakings Financial reporting on interests in joint venture Interim financial reporting Reporting on discontinued operations Preparation of statutory and directors report Related party transaction Segment reporting
b. International Financial Reporting Standards (IFRSs) and Statutory Requirements Recognition, measurement, accounting treatment and disclosure of various transactions and items in accordance with the requirements of IFRSs and their interpretations issued by International Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee (IFRIC) respectively, adopted by the Institute of Chartered Accountants of Pakistan. ii. Accounting treatments and disclosure requirements under the Companies Ordinance, 1984 iii. Specific departures from IFRSs under the local statutory requirements i.
59
Final Examination
Recommended Reading
5.
Insurance Ordinance 2000 and Banking Companies Ordinance 1962. IFRS Interpretation and Application of International Accounting and Financial Reporting Standards (Wiley Series) by Barry J. Epstein and Abbas Ali Mirza. IFRS Practical Implementation Guide and Workbook (Wiley) by Abbas Ali Mirza, Graham J. Holt and Magnus Orrel. Published Financial Statements of Leasing Companies, Mutual Funds, Banks and Insurance Companies.
6.
7.
8.
60
Final Examination
Corporate Laws
Module E
PA PE R E 1 5 : C or p o r a t e L a w s (100 marks)
Introduction
The syllabus aims to provide the knowledge and understanding of corporate and other relevant laws, rules and regulations and to familiarize with the secretarial practices including the knowledge of handling various matters usually expected to be performed by the secretary of a corporate entity. Case studies / scenario based questions in addition to descriptive Questions will be set in the examination. The examinees are expected to possess detailed knowledge of the Companies Ordinance 1984 over and above what they have learnt at the Intermediate stage. Topics examined at the Intermediate stage may or may not be directly re-examined here, however, examinees would need to utilize knowledge and skills learnt earlier. The knowledge required for Companies Rules would also be comprehensive but for other Laws and regulations only general knowledge would suffice.
Weightage
40 30 15 15
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Companies Ordinance, 1984
a. Areas of the Companies Ordinance, 1984 covered at Module D Examination in Company Law Paper.
In the Corporate Laws paper at Final level, students should have a more in-depth knowledge and understanding of those parts of the Companies Ordinance, 1984 which were covered in the Company
The Institute of Chartered Accountants of Pakistan
61
Final Examination
Corporate Laws
f. f. g. g. h.
NBFC Rules issued by SECP on April 01, 2003, Chapters I and Schedules I & IV only.IV only. NBFC Rules issued by SECP on April 01, 2003, Chapters I to III and Schedules I & Regulation 25 of the Non-banking Finance Companies and Notified Entities Regulations, 2008. Regulation 25 of d Non-banking Finance Companies and Notified Entities Regulations, 2008.
Schedule IX (Fit and Proper Criteria) and Schedule X (Long, Medium and Sort Term Financing Facilities) of the Non-Banking Finance Companies and Notified Entities Regulations 2008.
3. Secretarial practices
Floatation of shares and securities including prospectus, offer for sale and convertible securities, stock exchange listing rules, underwriting, brokerage, etc.; and discount and premium on shares; application and allotment of shares, issue of share certificates and bonus and right shares and transfer and transmission of shares of companies, investigation and dividend. a. b. c. Filing requirements, maintenance of statutory books and registers under the Companies Ordinance, 1984. Meetings of shareholders and directors and all proceedings thereto, including notices, agenda, quorum, voting, poll, proxies, resolutions and minutes. Functions and responsibilities of the Securities and Exchange Commission of Pakistan under the SECP Act (Act No. XLII of 1997).
63
Final Examination
Corporate Laws
Laws gov erning certain s pecializ ed inst itut ions c. Banking Companies Ordinance, 1962 - Sections pertaining to audit and accounts, mainly sections 34 to 38 of the Banking Companies Ordinance, 1962.
d. The Central Depositories Act, 1997 and Central Depository Companies (Establishment and Regulation) Rules 1996 - Understanding of provisions relating to: i. ii. Central Depository System; and Effect of the Central Depository on provisions of the Companies Ordinance, 1984 relating to interalia, sending of notices to members, registration of transfers, payment of dividend, maintenance of register of members, issue of bonus and right shares and effect on the rights of members.
e.
Mod araba C omp anies and M odarab as (Floatat ion and Cont rol) Ordinance, 1980. i. Q Q Q ii. Q Q Q Q Provisions relating to the following: Definitions (Section 2) Registration of Modaraba Companies (Section 4 to 6) Provisions applicable to Modaraba (Section 7 to 23,33,37,41 and 42) Modaraba Companies and Modaraba rules, 1981 Rules 2 to 4,7 to 13,16 to 20-B,23 and 25 to 28 First Schedule (Form no.1,9 and 11 including annexures) Third Schedule Fourth Schedule (salient features of matter to be specified in prospectus and reports to be set out therein)
f.
The Insurance Ordinance, 2000 provisions relating to statutory and special audits and maintenance of accounts, mainly sections 45 to 49, 51 and 52 and the Securities and Exchange Commission (Insurance) Rules 2002 including regulations and Format accounts. Broad understanding of the Code of Corporate Governance for listed and unlisted insurance companies.
g. The Securities and Exchange Ordinance 1969 and the Securities and Exchange Rules, 1971 provisions pertaining to issuance of shares and securities to the general public (mainly section 9 ) and Insider Trading. h. Com pet ition Ordinance and Reg ulations The following topics will be covered: i. Competition Ordinance 2007 Chapter - I Preliminary Chapter - II Prohibition of abuse of dominant position, certain agreements, deceptive marketing practices and approval of mergers. Chapter - IV Functions and Powers of the Commission Chapter - V Penalties and Appeals ii. iii. Competition (Merger Control) Regulations 2007 excluding the Schedule Competition (Leniency) Regulations 2007
64
Final Examination
Corporate Laws
i.
j.
Listed Companies (Substantial Acquisition of voting shares and Takeovers) Regulations, 2008
Listed Companies (Substantial Acquisition of voting shares and Takeovers) Ordinance 2002
j. K
Rules and regulations framed by the Federal Government from time to time, as may be specifically notified by the Institute of Chartered Accountants of Pakistan for inclusion in the syllabus. Not e: Where specific reference to an Act, Ordinance, Rules, Regulations, Guidelines or SRO gazette notification is given it is to be assumed that it covers any subsequent amendments that may be made therein from time to time.
Recommended Reading
3. 4.
Covers relevant part of the syllabus. Covers relevant part of the syllabus.
5.
65
Final Examination
Business Management
Module E
P AP ER E 16 : Bu s i ne s s M a n a g e m e n t (100 marks)
Introduction
The ob ject ive of t his p aper is t hat the ind ivid ual s hould b e ab le to: Identify the principles and concepts in the theories and practices of strategic business management; Asses the impact of environmental forces such as global microeconomic forces, international trade and financial system on organizational strategies and plans; Understand the importance of linking information systems development and management to business goals and needs; Understand the interplay of marketing with other vital functional areas in business management and to understand the accountants role in servicing the needs of marketing and other functions of business; Recognize the role of global marketing and international business; Assess the importance of human resources development to organisations and identify methods of managing people effectively; Evaluate ways in which change can be managed successfully; Appreciation of social and ethical implication of strategic policies in business; Understand the aims of corporate codes of conduct and their role in improved corporate governance; and Understand the managers role and responsibilities in relation to the working environment.
Weightage
30 30 20 20
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
66
Final Examination
Business Management
Contents:
1. Strategic management and planning:
a. b. c. The purpose of strategic management and business planning and their inter relationship The methods which organisations use to plan for the future including the role of information technology Pos ition ap prais al and analys is : i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. d. Identifying the organizations strengths and weaknesses, opportunities and threats Identification and quantification of the planning gap Closing the planning gap through the identification and evaluation of alternative courses of action: improved efficiency; improved product(s);or service(s); introducing new product; entering new markets; merging with or acquiring other organisations Use of alternative strategies Quality and a strategic variable; its implementation and management Performance against operational and strategic targets; flexibility economy, efficiency and effectiveness Performance against that of competitors; benchmarking; use of inter-firm comparisons; the limitations of external data Performance of costs, profit and investment centres using financial and non-financial measures Problems of measuring divisional and subsidiary company performance International and multinational trading; transfer pricing of goods and services and their impact on trading results Impact of changing price level on current performance and the future projections Customer outlets, including customer profitability analysis
The eff ect of ex ternal environm ent on st rateg y and p lans and ap prais ing t he env ironment : i. ii. iii. iv. Scanning the environment of the organisation and the context in which it is set for changes, developments and opportunities Forecasting trends and developments in relevant areas through the use of relevant quantitative and qualitative analysis Future basing (i.e Anticipating long-term prospects for the business and its likelihood of survival) and other scenario-building techniques Impact on the organisation of changing national and international influences: demography; technology (progressional alternative / acceptability); economic resources; social attitudes and aspirations; legislation and regulation; political forces; government and other agencies, including pressure groups Competitive advantage: Q Q Q its meaning in different markets and industries of nations and the implications of this for organisational success the different approaches used by organisations and management in different countries and the lessons which can be applied to Pakistan the effect on organisations of working in an international environment, the key aspects of that environment and methods of entry into it
v.
67
Final Examination
Business Management
vi.
Use of renewable and non-renewable resources including the ethical implications of such use; the effect of the environment on corporate performance vii. External sources of information, including databases, both private and public, and their usefulness to the organisation viii. Impact of innovation, substitution and obsolescence on business process (including marketing and production) ix. Impact of international market integration on the transfer of goods, services and labour x. Comparative organizational performance: market share production capacity e. f. Methods of gaining support and commitment for strategies Es tab lishing the corporat e object ives: i. ii. iii iv v. g. h. i. Organizational missions, aims, goals and objectives Long-term (strategic) and short-term (operational) objectives: quantitative and qualitative evaluation Application of decision theory Problems of achieving balanced growth and development Internal and external factors effecting decisions; implication of short-termism
Formulating and evaluating plans with an awareness of the various techniques available to managers Understanding and managing the risk of a proposed business plan for the plan itself and for all the aspects of business which it will influence Reviewing strategy for the effect it will have on the organisation and the local and global community
c. d. e. f.
68
Final Examination
Business Management
5. Marketing Management
An introduction to marketing principles, the purpose of marketing philosophy and concepts in providing for customer needs. Areas include: a. S trat egy in t he m arket place i. ii. iii. iv. v. Assessing threats and opportunities to the marketing plan; determining the need for change in the planning area Development of marketing strategies to meet organisation objectives Assessing the nature and size of the market using internal records, market intelligence, market research The process of creating, reviewing, selecting and marketing the right product in the right place, to the right customer at the right time, while achieving the right price; relevance of the product life cycle The product portfolio; formulation, management, the relevance of branded merchandise
69
Final Examination
Business Management
vi. Consumer power within the marketing environment vii. Strategic management of markets through mergers, acquisitions and divestments viii. Problems associated with the acquisition of the foreign subsidiaries especially in respect of performance appraisals b. c. Analyzing the impact of globalization on marketing to assess competitive advantage Techniques for analyzing the market, choosing the target market and the appropriate marketing mix, distribution channels, promotions, and developing a marketing plan
6. International Business
a. b. c. The environment of global marketing, global opportunities and threats; difficulties in International business and alternative approaches to managing the process The development of multinational organisations and transnational corporations and their role in the world economy Int ernational f inancial m anagem ent d ecisions i. ii. iii. Alternative methods of financing imports and exports The workings of international money and capital markets and the opportunities that they offer to companies as a source of finance and as a repository for the investment of funds The management of financial resources within a group of companies including: iv. payments between companies cash management transfer pricing judging the performance of companies within a group the financial control of a group of companies
The appraisal of international capital investments, applying the appropriate techniques, and the consideration of the major issues in the decision-making process, including: strategic objectives the principle of foreign home country versus host country returns the form of foreign investments, including the use of branches versus subsidiaries the different methods of financing foreign investments the effect of taxation on foreign investment decisions repatriation of sales amounts, earnings and charges to foreign operating companies political risk analysis
70
Final Examination
Business Management
Recommended Reading
3. 4.
Human Resource Management by H. John Bernardin. Management and Organizational Behaviour by Laurie J. Mullins.
5. 6.
71
Final Examination
Management Accounting
Module F
P AP ER F 1 7 : M a n a g e m e n t Ac c o u n t in g (100 marks)
Introduction
The object ives of this sy llabus are: The The The The The understanding of cost accounting in relation to management functions. application of financial information for control purposes. development and interpretation of data for decision making. techniques for performance appraisal and operational research. candidates ability to design and present plans and schemes to the management.
The examinees are expected to possess comprehensive understanding of the subject over and above what they have learnt at the Intermediate stage. Topics examined at the Intermediate stage may or may not be directly re-examined here, however, examinees would need to utilize knowledge and skills learnt earlier. The paper is designed to cover theory and practical aspects of management accounting with special reference to Pakistan and real life situations. Case studies / scenario based questions will be set in the examination.
Weightage
30
2. a. Standard Costing b. Budgetary controls c. Management control systems d. Activity based costing e. Preparation and interpretation of financial forecasts f. Cost control g. Total quality management h. Non financial risk management 3. Working capital management 4. Quantitative techniques a. Learning curve b. Network planning c. Operational research and cost reduction d. Linear programming
40
15
15
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
72
Final Examination
Management Accounting
Contents:
1. a. Cost accounting
Objective of a costing system; inventory valuation; cost classification; costing methods and systems, cost estimation; cost apportionment; job order costing; product costing (including process costing); and joint-and by-product. b. Cos t concep t in decis ion m aking Relevant and apportioned costs; differential cost, incremental cost; opportunity costs, and break-even & cost volume profit analysis c. Marg inal cost ing Distinction between marginal costing and absorption costing; break-even analysis, cost volume profit analysis. Various decision making options. d. Pricing and outp ut d ecisions Full cost pricing policies, including ROI; pricing of new products; opportunity cost; full cost vs marginal cost; transfer pricing methods and optimisation.
2. a. Standard costing
Nature and method of standard, marginal and absorption costing; standard setting; variance analysis and disposals of variances; use of standard costs in internal and external reporting; responsibility accounting, comparison with budgets; classification of variances; and planning and operational variances. b. Budg ets Concepts of budgetary control; advantages, administration and preparation of budget; functional budgets leading to preparation of master budget; fixed and flexible budgets; performance budgeting; the budget as part of the overall business plan; sales budget; sales forecast; production budget; direct materials budget; direct labour budget; manufacturing overhead budget; inventory budget; cost of goods sold budget; selling and administrative expenses budget; inflation aspects; zero based budgets, capital expenditure budgets and human & motivational aspects of budgets. c. Manag ement control sy st ems Responsibility accounting; decentralised divisional control; transfer prices; residual income and ROI as tools of control; centralised control and budgetary systems; evaluation of performance; performance budgeting. Reporting on performance at different levels.
The Institute of Chartered Accountants of Pakistan
73
Final Examination
Management Accounting
d.
Activ ity bas ed cost ing Activity based costing for control and decision making purposes.
e.
Prep aration and int erpret ation of f inancial forecas ts Preparation of projected financial forecast and application of probability and regression analysis in preparation of estimates
f. g.
Cost Control Cost control as distinct from cost determination. Control over wastages, scrap, spoilages, and defects. Total quality management Basic concepts and application of TQM
h.
Non f inancial ris k m anagem ent i. ii. iii. iv. Aspects of risk, such as: political, economic, social, technological and fraud Techniques of minimising the risk of fraud, such as: fraud policy statements, effective recruitment policies and good internal controls especially over procurement and cash Principle of diversifying risk (no numerical calculations required) Risk of loss while goods are in transit and the risk of litigation
Inv entory manag ement i. ii. iii. iv. v. vi. vii. Costs associated with the acquisition and holding of inventories The derivation and use of the economic order quantity (EOQ) model Optimal production plans Financial ratios of inventory Lead-time, buffer stocks and stock-out costs Perpetual inventory and continuous stocktaking Just-in-time (JIT) stock management
c.
Deb tor/ credit ors m anagement i. ii. iii. iv. v. Collection policies Credit policies Customer evaluation Credit financing (including factoring) Financing of imports and exports
74
Final Examination
Management Accounting
Cas h manag ement Solvency and liquidity Cash flow forecasting Uncertainty in cash forecasting Short term investment opportunities Cash handling and transmissions
4. Quantitative Techniques
a. Learning curve The theory of learning curve and its effect in cost estimation b. Net work planning Concept and application; drawing simple networks; concept of critical path and float; accelerated project times; cost analysis; uncertainly; probability analysis; loading analysis; gantt charts; and time management. c. Operat ional research and cos t reduct ion Introduction to operational research, application concepts and its advantages. Cost reduction: techniques for cost reduction such as work study, time and motion study and value analysis. Employee participation in cost reduction programmes, significance of constituting special cost reduction cells. d. Linear prog ramming Introduction to mathematical programming and major forms of linear programming, principles, formulation of problems, graphical solutions, limitations of linear programming and shadow price concept. Not e: Questions will not be set involving application of simplex or assignment techniques.
75
Final Examination
Management Accounting
Recommended Reading
2.
3.
76
Final Examination
Module F
PA PE R F 1 8 : B u s in e s s F in a n c e D e c i s io n s (100 marks)
Introduction
The aims of the syllabus are to provide a sound understanding of the conceptual principles and practical applications of modern analysis of financial decisions and of the relationship between sources of finance and financial management. The candidates are expected to have complete understanding for the preparation, evaluation and implementation of practical business plans and reports on strategic and operational business decisions. The paper is designed to cover theory and practical aspects of financial management with special reference to Pakistan and real life situations. Case studies / scenario based questions will be set in the examination.
Weightage
30
2. a. Capital investment decisions and project planning b. Inflation and financial management c. Risk and Returns, including portfolio management 3. a. Analysis and interpretation of published financial statements b. Strategic planning c. Valuation d. Mergers, amalgamations and acquisitions e. Reports to management
40
30
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
77
Final Examination
Contents:
1. a. Sources of local finance
i. ii. iii. iv. v. vi. b. Credit, money and capital markets in Pakistan Raising capital, equity, debt, mezzanine debt, convertibles, factoring, warrants, term finance certificates, venture capital financing, project financing, short term finance. Financial leasing Futures Pakistani stock markets Prudential regulations
Int ernational f inancing and f inancial m anagem ent i. ii. iii. iv. Raising international finance Introduction to international financial management Exchange rate risk management Foreign exchange transactions
c.
Cap ital s truct ure, interes t rat e ris ks and cost of capit al i. Capital structure: business and financial risk, financial gearing and operating gearing, the effect of taxes ( except calculations involving the effect of personal taxes on capital structure), and impact on earnings per share Interest rate risk management including the use of interest rate swaps Cost of capital, equity, debt, convertibles, weighted average rate and use of cost of capital in investment appraisal.
ii. iii. d.
The div idend d ecision i. ii. Dividend and valuation Information content of dividend, clientele effect and other factors affecting dividend levels.
78
Final Examination
x.
Decisions under constraints, including interpretation of the linear programming output including dual values (shadow prices and opportunity costs), assumptions and limitations of linear programming, application of linear programming to capital rationing problems xi. Preparation of project report and evaluation of proposals xii. Social cost benefits analysis xiii. Project planning techniques b. Inf lation and f inancial manag ement Inflation and financial analysis; project appraisal under inflationary conditions; relationship with interest rates c. Risk and returns , includ ing port folio m anagement i. ii. iii. iv. Measures of risk and return, and their relationship Portfolio analysis; risk reduction effects and diversification Attitudes to risk Capital assets pricing model and its practical use
Strategic planning i. ii. iii. iv. v. vi. vii. viii. ix. Objectives Production functions and resource analysis Production strategy Manpower planning Financial strategy Competition strategy Information strategy Business and corporate plans Implementation of business plans
c.
Valuat ion i. Valuation of business Q Q Q Q ii. Earnings and asset valuation models Merger valuation models Attitudes to risk and analytical procedures for dealing with uncertainty Other factors ( e.g. the impact of the accounting treatment of goodwill and intangibles on debt covenants; the nature of executives incentive contracts)
Valuation of shares Q Q Earnings dividend and assets valuation models Valuing minority interests
79
Final Examination
Q Q Q d.
Valuing controlling interest Other factors influencing share values ( including uncertainty) Identify components of shareholder value and identify ways in which shareholders value can be increased.
Merg ers, amalg amat ion, acquis ition, et c Amalgamation, reconstruction, takeovers and mergers, including devising schemes and advising management.
e.
Report s t o m anagem ent i. ii. iii. The design and presentation of plans and reports Designing various forms and reports for different levels of management Specific reports Q Q Q Q On On On On acquisition and disposal of business or assets application for new or additional borrowings specialised one-off assignments (e.g. management buyouts) other problem areas.
Recommended Reading
4.
5.
80
Final Examination
Advanced Taxation
Module F
P AP E R F 1 9 : A dv a n c e d T a x a t i on (100 marks)
Introduction
The objective of this paper is to test comprehensive knowledge and understanding of the examinees on the income tax and sales tax laws prevailing in Pakistan, as are described below. The examinees shall also be expected to have command on the practical application of the laws. A general knowledge of the Central Excise Law will also be examined. The paper covers the following laws. Q Q Q Q Q Q The The The The The Income Tax Ordinance, 2001 Sales Tax Act, 1990 Sales Tax Ordinance, 2000 promulgated by the Provinces Islamabad Capital Territory (Tax on Services) Ordinance, 2001 Federal Excise Act, 2005
Notifications, Rules, General orders and Circulars issued under the above mentioned laws
As candidates are required to have comprehensive knowledge of the laws described above, detailed contents are, therefore, not given hereunder. The examinees are expected to possess profound understanding of the subject over and above what they have learnt at the Intermediate stage. Topics examined at an earlier stage may or may not be directly re-examined, however, examinees would need to utilize knowledge and skills learnt at the Intermediate stage. Knowledge of specific agreements for avoidance of double taxation will not be required. Candidates are also not expected to quote specific legal cases. Case studies / scenario based questions will be set in the examination. Notifications and circulars in respect of Finance Act/Ordinance, issued within a period of less than six months from the examination date will not be tested. However, the Finance Act/Ordinance would be examined from the attempt following its date of enforcement.
Weightage
55 65 25 35 7 15
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
81
Final Examination
Advanced Taxation
Recommended Reading
3.
Sales Tax Ready Reference Act by S.A. Salam. Federal Excise Act, 2005 including relevant notifications, circulars etc. by Tariq Najeeb Choudhry. Practical Handbook of Income Tax by Dr. Ikram-ul-Haq. Synopsis of taxation by Mirza Munawar Hussain. Pakistan income tax law Principles and Practice by Mian Safiullah & Kashif Aziz Jahangiri.
4.
5. 6. 7.
These are very useful books for understanding practical application of taxation.
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Final Examination
Advanced Auditing
Module F
P AP E R F 2 0 : A dv a n c e d Au d it in g (100 marks)
Introduction
To ensure that students have acquired the competence to provide comprehensive audit and business assurance services, by testing their ability to integrate and apply their knowledge of auditing to realistic problems. Students will be expected to have the knowledge of the International Standards on Auditing and Related Services, the International Auditing Practice Statements, Technical Releases and circulars issued by ICAP. For details see syllabus contents below. Students will be expected to be aware of the role of Information Technology as part of the assurance process and should be fully conversant with the use of Computer Assisted Audit Techniques (CAATs). Students will be expected to display the ability to document the accounting and internal control systems of an enterprise and prepare simple flow charts thereon. Students will also be expected to possess knowledge of the implications on the audit, of laws, rules and regulations covered in the Corporate Laws paper. Students will be expected to draft audit reports, qualifications in audit reports, management letters, internal control memoranda, representation letters, reports on case studies and any other types of letters or reports. Knowledge of the Code of Ethics for Chartered Accountants issued by ICAP, CA Ordinance and ByeLaws. The students are encouraged to be abreast of current issues relating to the auditors and audit practice as discussed / reported in accounting magazines, national press, etc. The examinees are expected to possess a profound understanding of the subject over and above what they have learnt at the Intermediate stage. Topics examined at the Intermediate stage may or may not be directly re-examined here, however, examinees would be required to utilise knowledge and skills acquired at the Intermediate stage. Case studies / scenario based questions will be set in the examination.
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Final Examination
Advanced Auditing
Weightage
35
25
10
30
Total
Note:
100
The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected.
Contents:
1. Practical aspects in respect of areas of auditing covered at Intermediate stage 2. Advanced issues in planning an audit
a. b. c. Consideration of laws and regulations in the audit of financial statements. Performance of client acceptance procedures at the time of accepting new audit engagements and issuing engagement letters. Cons iderat ion of the ef fect s on an aud it w hen: i. ii. The financial statements are audited for the first time; or when the financial statements for the prior period were audited by another auditor who has expressed an unqualified or a qualified opinion.
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Final Examination
Advanced Auditing
d. e. f.
The examination of prospective financial information and its effects on different stages of audit. Obtaining knowledge of business and significant business risks, and using it to develop overall audit approach plan. Cons iderat ions in using the work of : i. ii. iii. iv. Internal auditors; experts; another auditor; and audit committees.
g.
Determining the components of audit risk i.e. inherent risk, control risk, detection risk and use of this assessment to formulate overall audit plan in order to keep the audit risk to an acceptable low level. Relationship between materiality and audit risk. Development of the overall audit plan identifying the significant/critical audit areas. Development of detailed audit programmes. Organising and planning complex audit situations, including group audits, joint audits, multilocation engagements, special purpose engagements including due diligence reviews and related service engagements. Identification of related parties and effects of transactions with related parties on the financial statements and auditors opinion.
h. i. j. k.
l.
m. Securit y is sues in com put erised s ys tem s: (i) IFAC guideline on Managing Security of Information; and (ii) Information Security Governance Guidance for Boards of Directors and Executive Management. Both of these publications are available on IFAC website www.ifac.org. n. o. p. Time budgeting, staffing and costing. Changes to overall audit plan and audit programmes. Maintenance and updating of Permanent audit files.
85
Final Examination
Advanced Auditing
a.
Id entif ying risk s of m aterial mis st atem ents in: i. ii. iii. Existence, ownership / obligation, accuracy / measurement, valuation and completeness of assets and liabilities; appropriateness of accounting policies and their consistent application; and disclosures in the financial statements of an entity, including additional information relating to capital commitments and contingencies and effects of post balance sheet events.
b.
Selecting one or more analytical procedures from comparison, averaging, ratio analysis and quantitative analysis (but excluding correlation, regression, time-series analysis and more advanced statistical techniques) to yield informative results relevant to identified risks. Applying selected analytical procedures to given financial and other data. Selecting one or more tests of controls and substantive procedures (using CAATs where applicable) from inspection, observation, enquiry (including management representations, assessment of the work of other auditors and specialists, and independent confirmations) and computations to provide evidence relevant to identified risks which will be sufficiently reliable and which avoid duplication of work. Outlining the differences between statistical and non-statistical methods of sampling and selecting samples from random, value-weighted, systematic, haphazard and block populations. Documentation of audit work alongwith evidence of review and conclusions drawn. Reporting of significant issues identified during the audit. Drawing straightforward conclusions regarding financial statements, given the results of analytical procedures, audit tests and post balance sheet events.
c. d.
e.
f. g.
These conclus ions should : i. ii. iii. Present and justify a view, where there is sufficient evidence to do so; identify and justify requirements of further evidence, where there is insufficient evidence to form a view but such evidence could practicably be obtained; and state that it is not possible to form a view, where there is insufficient evidence to do so and such evidence could not practicably be obtained.
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Final Examination
Advanced Auditing
b. c. d.
e.
6. Special reports
a. b. c. d. e. f. g. h. i. j. k. l. Special purpose reports e.g. on forecasts and estimates etc. Reporting and related services (compilation and review engagements). Reports on prospectuses. Certificates of auditors on statutory reports. Reports relating to bonus issues. Reports on prospective financial information. Audit reports on special purpose audit engagements. Special audit reports relating to forensic assignments. Reporting on due diligence engagements. Reporting on compliance with the Code of Corporate Governance. Report on component of financial statements Certificates on break-up value, net worth, right issue, other matters as specified from time to time by Regulating authorities.
7. Special audits
a. Non statutory audits, cost audits, management audit, systems audits, operational audits, forensic assignments (including money laundering aspects), due diligence reviews, internal audit functions (in house and outsourced). Audits of specialised enterprises e.g. banks, insurance companies, investment companies, housing finance companies, employees retirement funds.
b.
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Final Examination
Advanced Auditing
b.
Sp ecify ing q uality cont rol proced ures : i. ii. iii. iv. v. the independence of the audit firm and audit personnel; the skills and competence of audit personnel; procedures for review of the audit documentation handling and safeguarding the audit documentation procedures to resolve technical disagreements which will be suitable for a specific audit firm and which shall be cost effective; vi. quality control reviews (internal and / or by ICAP); and vii. the concept of audit committees.
10. International Standards on Auditing Assurance, & Related Services, and International Auditing Practice Statements
Students will be required to apply the standards and statements mentioned below to meet the learning outcomes of Syllabus contents in paragraphs 1 to 9 above. a. b. c. Detailed knowledge of International Standards on Auditing sufficient knowledge of International Standards on Review Engagements general awareness of International Auditing Practice Statements, International Standards on Assurance Engagements and International Standards on Related Services
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Final Examination
Advanced Auditing
Recommended Reading
2.
Part B of the Code covers the related topics of syllabus. The book contains provisions related to appointment, removal, report etc. of auditor of limited companies. The book contains important material useful to deal with various issues of audit and related services.
3.
4.
89