Syllabus_2009_10

Contents INTRODUCTION

3

FOUNDATION

5

Module A Paper A1 Functional English Paper A 2 Quantitative Methods

7 9

Module B Paper B 3 Introduction to Economics and Finance Paper B 4 In I ntroduction to Financial Accounting Paper B 5 Mercantile Law INTERMEDIATE

12 15 19 21

Module C Paper C 6 Financial Accounting Paper C 7 Taxation Pape Paperr C 8 Busi Busine ness ss Comm Commun unic icat atio ion n and and Beha Behavi viou oura rall Stud Studie ies s

23 26 29

Module D Paper Paper Paper Paper

D D D D

9 Company Law 10 Cost Accounting 11 Auditing 12 Information Technology

FINAL

32 34 37 40 49

Module E Paper Paper E 13 13 Inform Informati ation on Technolo echnology gy Manage Managemen ment, t, Audit Audit and Contr Control ol Paper E 14 Advanced Accounting & Financial Reporting Paper E 15 Corporate Laws Paper E 16 Business Management

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

The Institute of Chartered Accountants Accountants of Pakistan

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.

LAYOUT OF THE BOOKLET Syllabus The syllabus for each subject is bifurcated into: o Introduction o Indicative Grid o Contents Please note that the weightages given in the indicative Grid are ar e for guidance purposes only and some deviations in setting of paper could be expected.

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 the edition is latest latest and covers the syllabus syllabus contents. contents.

     N      O      I      T      A      D      N      U      O      F

Challenges are what make life interesting; overcoming them what makes life meaningful. (Joshau J. Marine)

Foundation Foundation Examination

Functional Functional English

Module A PAPER A 1: Functional E ngl ish ish

(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.

Indicative Grid Syllabus Content Area

Weightage

1.

Vocabulary

10

2.

Practical use of Grammar

40

3.

Composition and Comprehension

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. Fr Freq equen uentl tly y conf confus used ed wo word rds s b. Fr Freq equen uentl tly y misu misuse sed d wor words ds

c. Phrases Phrases,, syn synony onyms, ms, ant antonym onyms, s, idi idioms oms d. Ge Gene nera rall vo voca cabu bula lary ry

2. Practical Use of Grammar a.

b.

Grammar i. ii. iii . iv. v.

Nouns Pronouns Verbs Adjectives Adverbs

vi. vii. vi i. viii vi ii.. ix. x.

Prep epo osit itiion ons s Conj Co njun unct ctio ions ns Arttic Ar icle les s Interjec ecttio ion ns Tenses

The Institute of Chartered Accountants Accountants of Pakistan

Sentences i. ii. iii. ii i. iv.. iv v. vi.. vi vii. vi i.

Types of sentences Part rts s of sent nten enc ces Rules Ru les fo forr str struc uctu turi ring ng sent senten ence ces s Phra Ph rase ses s √ Typ Types es and and fu funct nction ions s Clau Cl ause ses s √ Typ Types es an and d fun funct ctio ions ns Direct Dir ect and In Indi dire rect ct Sp Spee eech ch Acti Ac tive ve & Pass Passive ive Voi oice ce

7

Foundation Foundation Examination

c.

Functional Functional English

d. Wri riti ting ng Me Mech chan anic ics s

Punctuation

Capitals, Abbreviations

Periods, Question Marks, Exclamation marks, Semicolons, Colons, Commas, Apostrophes, Quotation Marks

3. Composition and Comprehensio Comprehension n a. Story Story wr writ itin ing g fro from m out outlin lines es b. Lett Letter er wri writin ting g (inf (informa ormall and and form formal) al) c. Précis writ itiing

d. e.

Essay wr writing Com Co mprehens nsio ion n

Recommended Reading

PAPER A 1: Functional English About the Book

Book Name & Author 1.

High Scho High School ol √ En Engl glis ish h Gram Gramma marr & Composition by Wren and Martin.

2.

Learners Com Learners Compan panion ion Ser Series ies Vocab ocabular ulary y by George Davidson.

This is a very useful book on grammar and composition and helps a lot in building a strong foundation for the language.

} }

3.

Word Wo rd Po Power wer Mad Made e Easy Easy by by Norma Norman n Lewis Lewis..

4.

Understand & Communicate (book 2 and 3) published by FEP International (Pvt.)Ltd.

5.

Concept Conc epts s (book (book 3 and and 4) by P.C. Wr Wren. en.

These books are very useful on vocabulary and help immensely in vocabulary building.

These are very useful books on grammar and comprehension.

Supplementary Study Material 1.

Functional Functio nal English English Study Study Text Text and Revision Revision Series Series by AT Foulks Lynch Lynch Pakistan. Pakistan.

2.

Functional Functio nal English English Study Text Text and Revision Revision Series Series by Professi Professional onal Business Business Publication Publications s (PBP).

3.

Préci Pr écis s wri writi ting ng by R. Dh Dhill illon. on.

4.

System»s System» s Student Student Companion Companion Englis English h for lower lower secondary secondary schools schools by by Magdalene Magdalene Chew Chew & Surinder Kaur.

The Institute of Chartered Accountants Accountants of Pakistan

8

Foundation Foundation Examination

Quantitative Methods

Module A PAPER A 2: Quantitative Methods

(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.

Indicative Grid Syllabus Content Area

Weightage

Mathematics 1. 2. 3. 4.

Basic Mat Bas athe hem mat atic ics s Fina Fi nanc ncia iall Mat Mathe hema mati tics cs Calculus Matr Ma trix ix and and Det Deter ermi mina nant nts s

50

Statistics 5. 6. 7. 8.

Statis Stat isti tica call Me Meth thod ods s Method Met hods s of of Leas Leastt Squar Square e & Reg Regre ress ssion ion Proba Pr obabil bility ity & Pro Probab babili ility ty Dis Distri tribut bution ion Samp Sa mpliling ng & De Deci cisi sion on Ma Maki king ng

Total Note:

50

100

The weightages given above are for guidance purposes only and some deviations in setting  of papers could be expected.

The Institute of Chartered Accountants Accountants of Pakistan

9

Foundation 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; 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.

4. Matrix and Determinants Addition, subtraction, multiplication, multiplication, inverse of matrices. Solution of equations using matrix; inequalities, graphical presentation of inequalities; graphical method for linear programming; problems in graphical solutions such as no feasible solution, alternative optimum solution, unbounded solutions and redundant constraints.

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.

6. Methods of Least Square and Regression Scatter diagram, linear relationship, simple linear regression lines by method of least square. Simple linear correlation, Coefficient of correlation, determination and interpretation. Rank correlation

7. Probability and Probability Distribution Counting techniques, probability, addition law for mutually exclusive and not mutually exclusive events. Multiplicative laws for dependent and independent events. Binomial, Poisson, hypergeometric and normal distribut distribution. ion. (Note: The students should be able to use both formulas as well as mathematical tables)

8. Sampling and Decision Making Simple random sampling, sampling distribution of mean, standard error of mean. Sampling with and without replacement. Testing of hypothesis for population mean, difference between population means, The Institute of Chartered Accountants Accountants of Pakistan

10

Foundation 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 mea ns, 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

PAPER A 2: Quantitative Methods Book Name & Author

About the Book

Mathematics 1.

Mathematics Applied Mathematics for Business and for Finance Business, by Hamid A Hakeem Economics and the Social Sciences by Frank S. Budnick. Busines Bus iness s Math Mathemat ematics ics by M. M. M. Has Hasan an and and Mathem Mat M. A. hemati Mirza atics cs for Bus Busines iness s and and Fina Finance nce by Hamid A Hakeem.

Theabook It»s very covers useful book almost and all cover the topics most with of the easy examples topics of syllabus. and is a good question bank.

3.

Bushemati Mathem Mat Busines iness satics M Math cs athemat for ematics Busine Bus ics iness by ss M. and M.Eco Econom Hasan Has nomics an ics and by A. M. Robert Mirza. H. Nicholson.

The book book is is useful specifically for Finance writtenMathematics. for students of finance and management and covers the entire syllabus.

4.

Mathemati Mathem atics cs for Bus Busines iness s and and Eco Econom nomics ics by Robert H. Nicholson.

The book is useful for Financial Mathematics.

2. 2.

The book is specifically written for students of finance The book and covers management almost alland the covers topics with the easy entire syllabus. examples and is a good question bank.

Business Statistics 1. 5.

2. 6.

3. 7.

Mathematics Intro Int roduc ductory tory Sta Statis for tistic Business tics s for for and Economics Econom Finance ics by and The book covers the almost entire all syllabus the topics and with is very Hamid A Hakeem Management by Hamid A Hakeem. easy examples useful covering and theoretical is a good as question well as practical bank. aspects of statistics. Busines Bus iness s Math Mathemat ematics ics by M. M. M. Has Hasan an and and The book is specifically written for students of Statis Sta M. A. tistic tics Mirza s Conce Concepts pts and Met Method hods s by by The finance book and management is very useful and covers for conceptual the Khursheed Alam. entire syllabus. of statistics. understanding Introduc Mathem Mat Intro hemati duction atics tion cs to forStat SBus Busine tatist istics iness ics ss (Thir (and Third dEco Econom edinomics editio tion) n)icsby The book bookis useful is very for Finance useful Mathematics. especially for: by Robert Ronald E. Walpole. H. Nicholson. probability, normal distribution and hypothesis testing.

Supplementary Study Material 1.

Quantitative Quanti tative Methods Methods Study Study Text Text and Revision Revision Series Series by AT AT Foulks Lynch Lynch Pakistan. Pakistan.

2.

Quantitat ive Methods Study Text Text and Revision Series by Professio Professio nal Business Publications (PBP).

The Institute of Chartered Accountants Accountants of Pakistan

11

Foundation Foundation Examination

Introduction to Economics Economics & Finance

Module B PAPER B 3: Introduct Introduct ion to Economics & Finance

(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.

Indicative Grid Syllabus Content Area

Weightage

1.

Economic Concepts

10

2.

Microeconomics

40

3.

Macroeconomic

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. Ec Econ onom omic ic Con Conce cept pts s a. b. c. d. e. f.

Basic Basi c co conc ncep eptts; Naturall resour Natura resources, ces, labour labour,, capita capitall and and enterp enterprise; rise; Allocation Allocat ion of scarc scarce e resources resources √ producti production, on, distrib distribution ution and and consumpt consumption; ion; Production Prod uction possib possibility ility fron frontier tier and the opport opportunity unity cost; Key character characteristics istics of market market economy economy,, planned planned economy economy and mix mix economy; economy; Micr Mi croe oecon conom omic ics s and and Ma Macr croec oecono onomi mics cs..

2. Mi Micr croe oeco cono nomi mics cs a) Co Conc ncep eptt of of Mar Marke kett i. ii. iii.. iii iv.. iv v. vi.

Market Mark et fo forrce ces s of of dem deman and d and and su supp pply ly;; Demand and sup upp ply; Equi Eq uilib libri rium um of of dema demand nd and and sup suppl ply; y; Elast El astici icity ty of of dema demand nd and and sup suppl ply; y; Utili Ut ility ty ana analy lysi sis s and and indi indiff ffer eren ence ce cur curve ve;; Consum Con sumer er,, prod producer ucers s and and eff efficie iciency ncy of market.

The Institute of Chartered Accountants Accountants of Pakistan

b) Th Theo eory ry of th the e Fir Firm m i. ii.. ii iii. ii i. iv.. iv v. vi.

Produc Prod ucti tion on fu func ncti tion on an and d iso isoqu quan ants ts;; Cost Co st,, re reve venu nue e an and d pr prof ofit its; s; Maxi Ma ximi miza zati tion on of of prof profit its; s; Cost Co st an and d rev reven enue ue cur curve ves; s; Dist Di stin inct ction ion be betw tween een lo long ng ru run n and and sh short ort run assumptions; Equi Eq uilib libri rium um of firm firm un unde derr perf perfect ect competition, monopoly, oligopoly and monopolistic conditions.

12

Foundation Foundation Examination

Introduction to Economics Economics & Finance

c) Fa Fact ctor ors s of Pr Prod oduc ucti tion on i. ii.. ii iii. ii i.

Laws of returns; Pric Pr icin ing g of fac facto tors rs of of prod produc ucti tion on Marg Ma rgin inal al pro produ duct ctiv ivit ity y theor theory y.

3. Macroeconom Macroeconomics ics a.

National Inc Income i. ii. iii. iv.. iv v. vi.. vi

Cir irc cul ula ar flo flow w of of in incom ome; e; Measure Meas urement ment of nationa nationall income includi including ng knowled knowledge ge of basic basic concepts concepts like GDP, GNP, GNP, NNP; Margin Mar ginal al pr prope opensit nsity y to to cons consume ume and sav save; e; Consump Cons umptio tion, n, savi saving ng and and inve investm stment ent fun functio ctions; ns; Mult Mu ltip ipli lier er an and d acc accel eler erat ator or;; Equil Eq uilib ibri rium um of of nati nation onal al inc incom ome; e;

b. Go Gove vern rnme ment nt and and the the Eco Econo nomy my i. ii. iii. iv.. iv v.

c.

Fiscal Budget Unemployment; Inflation; Growt Gr owth, h, pri price ce sta stabil bility ity and emp employm loyment ent;; Recession

Fiscal Po Policy i. ii.. ii

Direc Dir ectt and and in indi dirrec ectt tax taxat atio ion; n; Prin Pr incip ciples les,, meth method ods s and and forms forms of tax taxat atio ion. n.

d. Mo Mone ney y & Mo Mone neta tary ry Po Poli licy cy i. ii. iii. ii i. iv.. iv v. vi.. vi vii.. vii

e.

Types of money; Value of money; Natur Nat ure e and and fu func ncti tion ons s of of mon money ey;; Definit Def inition ions s of banking banking,, banking banking syste system m and its insti institut tution ions; s; Fina Fi nanc ncia iall in inte term rmed edia iari ries es;; Role Ro le of St Stat ate e Ban Bank; k; The suppl supply y of money money and inte intere rest st rate rate policy policy..

Capital Role of the money and capital markets.

f.

Inte In tern rnat atio iona nall Tra rade de i. ii. iii. iii. iv.. iv v. vi.

Tra rade de an and d ba bala lanc nce e of pa paym ymen ents ts;; Foreign Foreig n exchange exchange rates (float (floating ing and and fixed fixed exchang exchange e rates) rates) their natur nature, e, function function and determination; Tra rade de an and d its its de dete termi rminan nants ts;; Market Mar kets s and and dema demand nd for for impo imports rts and exp exports orts;; Open Op en Ec Econ onom omy y (Ba (Basi sic c con conce cept pt)) Intro Int roduc duction tion to Worl World d Trad Trade e Organ Organiza izatio tion n

The Institute of Chartered Accountants Accountants of Pakistan

13

Foundation Foundation Examination

Introduction to Economics Economics & Finance

Recommended Reading

PAPER B 3: Introduction to Economics and Finance Book Name & Author

About the Book

1.

Mathematics Modern Economic for Business Theory by andK.Finance K. Dewett. by Hamid A Hakeem

2. 2.

Business Busines s Math Mathemat ematics ics by M. M. M. Has Hasan an and and Intro Int M.roduc A.duction Mirza tion to Eco Econom nomics ics & Finan Finance ce by by Abdul Haleem Khawaja.

3. 3.

Mathemati Mathem atics cs for Bus Busine iness ss and Eco Econom nomics ics Econom Eco by Robert nomics icsH.by Nicholson. Samuel Sam uelson son and Nor Nordha dhaus. us.

4.

Macro Eco Macro Econom nomics ics by Pau Paull Cromp Crompton ton,, Michael Swann, Sandra Hopkins, William A. McEachen.

This book covers the entire syllabus syllabus contents and includes case study questions which will help students in studying the subject with a practical point of view.

5.

The Mo Monet netary ary and Fi Finan nancia ciall Syst System em by by David Goacher.

The book discusses all the relevant topics at an introductory stage in simple language.

The book covers covers all almost topics allofthe syllabus, topics with written in easy examples simple and plain and language. is a good question It is especially bank. useful for micro economics. The book is specifically written for students of finance The book andismanagement specificallyand written covers forthe ICAP»s entire syllabus. students and contains all syllabus areas. It is especially recommended for macro economics. The book is useful for Finance Mathematics. The book covers almost all topics of syllabus in detail.

Supplementary Study Material 1.

Introduction Introducti on to Economics Economics & Finance Finance Study Study Text Text and Revision Revision Series Series by AT AT Foulks Lynch Lynch Pakistan.

2.

Introduction Introducti on to Economics Economics and Finance Finance Study Text Text and Revision Revision Series Series by Profess Professional ional Business Business Publications (PBP).

3.

First Principl Principles es of Economic Economics: s: by Richard Richard G Lipsey Lipsey and Colin Colin Hardbury Hardbury..

4.

Stanlak Sta nlake» e»s s Introd Introduct uctory ory Econom Economics ics:: by SJ Grant Grant..

The Institute of Chartered Accountants Accountants of Pakistan

14

Foundation Foundation Examination

Introduction to Financial Accounting

Module B PAPER B 4: Introduction to Financial Accounting

(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.

Indicative Grid Syllabus Content Area

Weightage

1. Introduction to business and accounting theory

10

2. Financial accounting practices

35

3. Receipt and payment accounts, income and expenditure accounts and preparation of accounts from incomplete records

20

4. Ot O ther specialized areas

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) Intro Introduc ductio tion n to busine business ss and and accoun accountin ting g theory theory i. Defi Defini niti tion on and and sco scope pe of of busi busine ness ss;; ii.. Ec ii Econ onom omic ic set setup up of of busi busine ness ss;; iii.. Or iii Orga ganiz nizat ation ion stru struct ctur ures es;; Sole proprietorship; Q Partnership (its merits and demerits); Q Limited Companies (their advantages Q and disadvantages);

The Institute of Chartered Accountants Accountants of Pakistan

iv.. Type iv ypes s of of finan finances ces inc includ luding ing Long term finance; Q Short term finance; Q

15

Foundation Foundation Examination

v. vi.. vi vii.. vii viii. ix.. ix

Commer Comm erci cial al Ba Bank nks; s; Stoc St ock k Ex Exch chan ange ge Insuran Ins urance ce Com Compan panies; ies; Procureme Proc urement nt and productio production n of goods; Mark Ma rket eting ing an and d sa sale les; s;

Introduction to Financial Accounting

x.

Mark Ma rket etin ing g ch chan anne nels ls;; Q Sole Distributors; Wholesalers and; Q Retailers. Q

b) Accounting Theory i

Fund Fu ndam amen enta tall accou account ntin ing g conce concept pts s inclu includi ding ng:: Q Q Q Q Q Q Q Q

Accrual basis Consistency True and fair view Materiality Prudence Completeness Going Concern Substance over form

ii

Fina Fi nanc ncia iall st stat atem emen entts; Q Q Q Q

iii

Components Responsibility Presentation Users of financial statements;

Asse As sett va valua luati tion on alt altern ernat ativ ives es;; Q Q Q Q

Historical cost; Fair value; Net realizable value; Replacement cost;

2. Fin Financ ancial ial acc accoun ountin ting g prac practic tices es a)

Acco Ac coun unti ting ng Re Reco cord rds s i. ii.

Petty Pett y cas cash h boo book k and and im impr pres estt sys syste tem; m; Cash Ca sh bo book oks s (in (incl clud uding ing tr trans ansac acti tions ons with banks and their documentation); iii.. Sa iii Sales les jo journ urnal al and and the the sal sales es led ledge ger; r; iv.. Pu iv Purc rchas hase e journ journal al and and the the pur purch chase ase ledger; v. General jo journal; vi. Gene nerral led ledg ger vii. vi i. Co Comp mput uter eriz ized ed Accou Account ntin ing g

b) Int Introd roduct uction ion to Do Doubl uble e Entr Entry y i. ii.. ii iii. iii. iv.. iv v. vi.. vi

Double Doub le en entr try y Sy Syst stem em,, Ac Acco coun unti ting ng Equation and Rules of Debit & Credit Conc Co ncep eptt of of cap capit ital al an and d rev reven enue ue expenditure; Conc Co ncep eptt of of lia liabi bili lity ty an and d inc incom ome e Effe Ef fect ct of of prof profit it or or loss loss on on capit capital; al; Bal alan anci cing ng of ac acco coun unts ts;; Tri rial al ba bala lanc nce; e;

The Institute of Chartered Accountants Accountants of Pakistan

c) Adj Adjust ustme ments nts befo before re Fina Finall Acc Accoun ounts ts i.

Metho hod ds and and rec eco ording of depreciation depr eciation on Fixed Assets; ii. Pr Prov ovis ision ions s for for ba bad d deb debts ts// wri write te of off; f; iii.. Pr iii Prov ovis ision ions s for for disco discount unts s on debt debtor ors; s; iv.. Pr iv Prep epay ayme ment nts s and ac accru crual als; s; v. Inv nven ento tory ry ad adju just stm men entts vi.. Ba vi Bank nk reco reconc ncili iliat ation ion an and d rel relat ated ed adjustments; vii. Con Contr trol ol accoun accounts ts recon reconcili ciliati ation on and and adjustments viii.. Err viii Errors ors in trial trial bal balance ance ix.. Sus ix uspe pens nse e acc accou ount nts s x. Other ad adjustments;

d) The Fin Final al Ac Accou counts nts of of Sole Sole Trad Traders ers & Partnership i. ii. iii. ii i.

Statem Stat emen entt of fi fina nanc ncia iall po posi siti tion on Statement of co com mprehansive income Cash Ca sh fl flow ows s st stat atem emen ents ts

16

Foundation Foundation Examination

Introduction to Financial Accounting

3. Recei Receipt pt and payment payment accounts accounts and and accounts accounts from from incomplete incomplete recor records ds a) b) c)

Receip Rece iptt and and paym paymen entt acco accoun unts ts;; Incom In come e and and ex expe pend ndit itur ure e acc accoun ounts ts;; Prepa Pr eparat ration ion of of accoun accounts ts from from inco incompl mplete ete re recor cords. ds.

4. Ot Othe herr spec specia ialilize zed d area areas s a) Accounting for inventories (IAS-2) i ii iii iv

Cost fo Cost formu rmulas las (L (LIF IFO/ O/ FI FIFO FO// wei weigh ghte ted d av aver erag age e cos cost) t);; Cost of inv invent entorie ories s (cost (cost of pur purchas chase, e, cost of con conver version sions, s, oth other er cost costs); s); Measur Mea suremen ementt of inven inventor tories ies (low (lower er of cos costt or Net Net reali realizab zable le value) value);; Prese Pr esenta ntatio tion n of of inve inventor ntories ies in fin financi ancial al sta statem tement ents. s.

(Note: Cost Cost Accountin Accounting g t echniques will not be tested at this stage) stage)

b) Accounting for property, plant and equipment (IAS-16) i ii iii iv

Initiall measur Initia measureme ement nt of pr prope operty rty,, plant plant & equ equipm ipment ent (com (compon ponent ents s of cost cost,, exchan exchange ge of assets); Subsequent co costs; Depre Dep reciat ciation ion √ Unit Unit of measu measure, re, depr depreci eciabl able e amount, amount, depr deprecia eciatio tion n period period and depreciation method Derecognition

c) Branch accounts (excluding foreign branches); d) Treatment of the following in partnership accounts: i ii ii i

Admission; Retirement Retir ement / 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.

The Institute of Chartered Accountants Accountants of Pakistan

17

Foundation Foundation Examination

Introduction to Financial Accounting

Recommended Reading

PAPER B 4: Introduction to Financial Accounting About the Book

Book Name & Author 1.

Accoun Accountin ting g √ The Basis Basis of Busine Business ss The book is very useful for conceptual Decisions by Meigs William Haka Bettner. understanding.

2.

Modern Modern Accoun Accountan tancy cy Mukherjee & Hanif.

3.

Busine Business ss Account Accounting ing by Frank 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.

4.

Grippi Gripping ng IFRS IFRS Vol.I

publis published hed by ICAP ICAP.

Chapters related to inventories (IAS-2) and fixed assets (IAS-16) may be studied from this book.

5.

Framework for the preparation and presentation of financial statements and International Accounting Standards(1, 2 and 16) issued issued by IASB IASB and is published published by by ICAP as IFRS Bound Volume 1.

The book contains detailed material including background, rationale and practical examples of various topics included in the syllabus.

(Volu (Volume me

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.

Supplementary Study Material 1.

Introducti Introduction on to Financial Financial Accounting Accounting Study Study Text Text and Revision Revision Series Series by AT AT Foulks Lynch Lynch Pakistan.

2.

Introducti Introduction on to Financial Financial Accounting Accounting Study Study Text Text and Revision Revision Series Series by Profe Professional ssional Business Business Publications (PBP).

The Institute of Chartered Accountants Accountants of Pakistan

18

Foundation Foundation Examination

Mercantile Law

Module B (100 marks)

PAPER B 5: Mercantile Law

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.

Indicative Grid Syllabus Content Area

Weightage

1. Intr Introd oduc ucti tion on to legal legal syst system em 2. Contract Act 1872

40

3. Part Partne ners rshi hip p Act Act 1932 1932 4. Nego Negotia tiabl ble e Inst Instru rume ment nts s Act Act 1881 1881

30

5. Sale Sale of Good Goods s Act Act 193 1930 0 6. Trust Act 1882 7. Carr Carria iage ge of of Goo Goods ds by by Sea Sea Act Act 192 1925 5

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. Int Intro roduc ductio tion n to to Lega Legall Syst System em Sources of law; process of legislation; and the legal system in Pakistan

2. Co Cont ntra ract ct Ac Actt 18 1872 72 All sections

3. Partnership Act 1932 All Sections

4. Neg Negoti otiabl able e Instr Instrume uments nts Act 188 1881 1

5. Sa Sale le of Go Good ods s Act Act 19 1930 30 All Sections

6. Tru rust st Act Act 192 1920 0 Duties and Liabilities of Trustees; Rights, powers and liabilities of the beneficiary; Revocation of Trust

7. Car Carria riage ge of Good Goods s by by Sea Sea Act Act 1925 1925 All Sections

All Sections The Institute of Chartered Accountants Accountants of Pakistan

19

     E      T      A      I      D      E      M      R      E      T      N      I

Clear your mind of can’t (Samuel Johnson)

Intermediate Examinations

Financial Accounting

Module C PAPER C 6: Financial Accounting

(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.

Indicative Grid Syllabus Content Area

Weightage

1. Accounts of limited companies

25

2. Specialized accounting treatments

40

3. Other accounting and reporting issues

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. Acco Accounts unts of limi limited ted com compani panies es 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.

2. Spe Special cialised ised accou accountin nting g treatm treatments ents a) Acco Account unting ing for for Inco Income me Taxe Taxes s i ii iii

Current year tax; Prior years tax; Deferred tax.

The Institute of Chartered Accountants Accountants of Pakistan

23

Intermediate Examinations

Financial Accounting

b) Accounting Accounting treatme treatment nt of tangible tangible and intangible intangible assets assets including including their their recognition recognition,, derecognition, depreciation / amortization and subsequent remeasurement (revaluation, impairment, fair value etc); c) Accounting Accounting treat treatment ment of continge contingent nt losses losses and conting contingent ent gains; gains; d) Rela Relate ted d party party discl disclos osur ures es;; e) Reve Revenu nue e Reco Recogn gnit itio ion n

3. Other accounting and reporting issues a) Conversion Conversion of partnerships partnerships to a limited limited company company and merger merger of firms; firms; b) Accounting Accounting treatm treatment ent of profit profit and loss for for the period including: including: i Changes in accounting policies; ii Changes in accounting estimates and errors; iii Events occurring after the balance sheet date; c) Recog Recognit nition ion of of borr borrow owing ing cos costs ts.. d) Acco Accoun unti ting ng for for lea lease ses s

The IFRS included in Syllabus are: IAS √ 1 IAS √ 12 IAS √ 24

IAS √ 2 IAS √ 16 IAS √ 36

IAS √ 7 IAS √ 17 IAS √ 37

IAS √ 8 IAS √ 18 IAS √ 38

IAS √ 10 IAS √ 23

Note: 1. 2. 3.

All items items included included in the syllabu syllabus s of Introducti Introduction on to Financial Financial Accounting Accounting paper of Module Module B may again be tested in the above paper. To encourage encourage proper proper underst understanding anding and applicatio application n of knowledge knowledge no questions questions requirin requiring g word by word reproduction of contents of IASs \ IFRS will be asked. Reference Reference to to local and internationa internationall pronouncem pronouncements ents shall shall be be deemed deemed to have been been changed changed whenever the same is replaced by a reporting standard.

The Institute of Chartered Accountants Accountants of Pakistan

24

Intermediate Examinationss Examinationss

Financial Accounting

Recommended Reading

PAPER C 6: Financial Accounting Book Name & Author

About the Book

1.

Grippi Gripping ng IFRS IFRS Vol.I Vol.I publish published ed by ICAP ICAP..

The book contains useful material on various IASs/IFRS with examples.

2.

Grippi Gripping ng IFRS IFRS Grad Graded ed Quest Question ion publish published ed by ICAP.

The book contains useful question bank on various IASs/IFRS.

3.

Framewor Framework k for for prep preparat aration ion and presen presentat tation ion of financial statements and International Accounting Standards (listed in syllabus) published by ICAP as IFRS Bound Volume 1.

The book contains detailed material including background, rationale and practical examples of various topics included in syllabus.

4.

IFRS IFRS Pract Practical ical Implem Implement entatio ation n Guid Guide e and and Workbook (Wiley Series) by Abbas Ali Mirza, Graham J. Holt and Magnus Orrell (Relevant topics).

It contains interpretation of IFRS with practical examples.

5.

Comp Compani anies es Ord Ordin inanc ance, e, 1984 1984;; (Fourt (Fourth h & Fifth Schedules and provision related to preparation of accounts of limited companies).

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.

6.

The followi following ng books books by Javed Javed H. H. Zube Zuberi: ri: i. Company Accounts ii. Preparation and interpretation of financial statements iii. Cash Flow Statements iv.. Accounting for leases iv

Each book explains the concerned topic in context of accounting treatment prescribed by IASs.

Supplementary Study Material 1.

Financial Financial Accounting Accounting Study Study Text Text and Revision Revision Series Series by AT AT Foulks Lynch Lynch Pakistan. Pakistan.

2.

Financial Financial Accounting Accounting Study Study Text Text and Revision Revision Series Series by Professio Professional nal Business Business Publication Publications s (PBP).

3.

Publis Published hed finan financial cial stat stateme ements nts of list listed ed compan companies ies..

The Institute of Chartered Accountants Accountants of Pakistan

25

Intermediate Examinations

Taxation

Module C PAPER C 7: Taxation

(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).

Indicative Grid Syllabus Content Area

Weightage

1. Incom ncomee Ta Tax a. Basic concepts of taxation

15

b. Heads Heads of of income income,, Comp Computa utation tion of incom income, e, Determination of tax liability

40

c. Types ypes of of perso persons ns and their their taxa taxatio tion n

10

d. Proce Procedur dures es and Admini Administr strati ation on e. Inco Income me Tax Rules Rules 2002 2002

10

2. Sales T ax Prescribe chapters of Sales Tax Act and Rules.

Total

25

100

The weightages given above are for guidance purposes only and some deviations in setting  of papers could be expected.

Note: a. Finance Act Act / Ordinance Ordinance,, Notification Notifications s and circulars circulars issued issued within within a period period of less than than 4 months from the date of examination shall not be tested b. Chapters, Chapters, Parts and and Divisions Divisions not mentioned mentioned here here specifically specifically are are excluded from from the syllabus 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 weightages given given above above are for for guidance guidance purposes purposes only and and some deviati deviations ons in setting setting of papers could be expected. d. Students Students are are not expected expected to remembe rememberr the tax rates. rates. Same Same if applicab applicable le shall be given given in the question paper.

The Institute of Chartered Accountants Accountants of Pakistan

26

Intermediate Examinations

Taxation

Contents: 1. Income Tax Ordinance 2001 a

Basic conc oncepts epts of taxa taxati tion on i. ii. iii .

Chapter I Chapter II Chapter IV IV

Preliminary (concepts of terms defined) Charge of tax (excluding section 7) Common rules (Part I & II)

b. Heads Heads of income, income, Comput Computation ation of of income, income, Determin Determinatio ation n of tax liabilit liability y

c.

i.

Chapter III

ii. iii. iv.

Chapter IX Chap hapter 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 ypes of pers persons ons and their their taxa taxatio tion n i. ii. ii. iii. iii. iv. iv.

Chapter Chap Chapte terr Chap Chapte terr Chap Chapte terr

V Part I V Part Part II - Div Div I V Part Part III VII VII Part Part II

Central concepts Individuals Association of persons Taxation of foreign-source income of residents

d. Proced Procedure ures s and and Admini Administr strati ation on i. ii. iii. iii. iv. iv. v. vi.

e.

Chapter Chapter Chap Chapte terr Chap Chapte terr Chapt apter Chap Chapte terr

X Part I X Part II II X Part Part III X Part Part IV X Part VIII XI Part art 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)

Inco Income me Tax Rule Rules s 200 2002 2

The rules related to the above chapters of the Income Tax Ordinance 2001 shall also be examined

2. Sa Sales les Tax Act Act 199 1990 0 i. ii. iii. iv. v.

Chap Chapte terr I Chapter II Chapter III Chapter IV Chapter V

vi.

The following rules (excluding annexure and forms) of the Sales Tax Rules √ 2006 related to to the relevant chapters of the Sales Tax Act may be examined. Rules other than the following shall not be examined at this stage:

Q

Chapter Chapter Chapter Chapter

Q Q Q

I II III IV

Preli Prelimi mina nary ry (conc (concep epts ts of terms terms defi defined ned)) Scope and payment of tax Registration Book keeping and invoicing requirements Returns

Registration, Voluntary registration and De-registration Filing of returns Credit and Debit Note and Destruction of Goods Apportionment of Input Tax

The Institute of Chartered Accountants Accountants of Pakistan

27

Intermediate Examinations

Taxation

Recommended Reading

PAPER C 7: Taxation About the Book

Book Name & Author

}

1.

Complete Complete Income Income Tax Tax Law Law by by S. A. Salam Salam..

2.

Law & Pra Pract ctic ice e of of Inco Income me tax tax by by Dr. Dr. Ikram-ul-Haq.

3.

Sales Sales Tax Tax Read Ready y Refer Reference ence by S. S. A.Sal A.Salam. am.

4.

Synops Synopsis is of taxati taxation on by Mirza Mirza Munawar Munawar Hussain.

}

5.

Pakist Pakistan an incom income e tax tax law Princip Principles les and Practice by Mian Safiullah & Kashif Aziz Jahangiri.

6.

Khalid Khalid Peti Petiwala wala»»s Notes Notes Income Income Tax Tax and and Sales Tax.

The Institute of Chartered Accountants Accountants of Pakistan

Bare Act, Rules, Notifications; Circulars etc. on syllabus topics are included in these books with brief explanations. Bare Act, Rules, Notifications; Circulars etc. on syllabus topics are included in the book with brief explanations. These books are very useful for understanding practical application of taxation.

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

Business Communication Communication & Behavioural Behavioural Studies

Module C PAPER PA PER C 8 : Business Communication & Behavioural Studies

(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.

Indicative Grid Syllabus Content Area

Weightage

1. Principles of Effective Business Communication

25

2. Communication methods and skills

40

3. Or O rganizational Behavior

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. Prin Principl ciples es of Effective Effective Busines Business s Communica Communication tion a.

Introduction i ii. iii. iii.

Conce Concept pts s and and benef benefit its s of effe effect ctiv ive e commu communic nicat atio ion n Compon Component ents s of commun communicat ication ion includi including ng eff effect ective ive listen listening ing Prob Proble lems ms of com commu muni nica cati tion on

b. Basic Basic Principl Principles es of Busin Business ess Communic Communicatio ation n Seven C»s of effective communication

c.

Inte Interp rper erso sona nall Comm Commun unic icat atio ion n (IPC) (IPC) i. ii. iii.

Universals of IPC Axioms of IPC Types of IPC

The Institute of Chartered Accountants Accountants of Pakistan

29

Intermediate Examinations

Business Communication Communication & Behavioural Behavioural Studies

2. Communication Methods and Skills a.

Busi Busine ness ss Me Mess ssag ages es i. ii. ii. iii. iii. iv. iv. v. vi. vii. vii. viii. viii. ix.

b.

Plan Planni ning ng bef befor ore e comm commun unic icat atio ion n Basi Basic c orga organi niza zati tion onal al plan plans s Appe Appear aran ance ce and and desi design gn Lett Letter ers s to cust custom omer ers s Circular le letters Job applica applicatio tion n and and Curri Curricula cularr Viat Viatea ea (Rés (Résumé umé)) Good Good news news messag messages es & bad bad news news messa messages ges Persua Persuasiv sive e messag messages es Busines Business s lett letters ers,, memos memos,, faxes faxes and e-mail e-mail

Meetings Preparation of Agenda, Notice and Minutes of meetings

c.

Repo Report rt and and pro propo posa sall wri writi ting ng i ii. iii.

Short report Long report Proposals

3. Organizational Behaviour (OB) a.

Introduction i. ii. ii. iii.

Appr Approa oach ches es to to Orga Organi niza zati tion onal al Beh Behav avio iour ur Defini Definiti tion ons s and and char charact acteri erist stics ics of OB Challenges Challenges faced faced by the manageme management nt √ Globalization Globalization,, Information Information Technology echnology, Diversity and Ethics

b. Orga Organi niza zati tion onal al proc proces esse ses s i. ii. iii.

c.

Organization Organizational al structu structure re & design design (principles (principles of organization, organization, different different ways of structuring structuring organization) Organiz Organizati ationa onall Change Change (natur (nature e of change change proc process ess,, resist resistance ance to to change) change) Organization Organizational al cultur culture e (concep (concept, t, dysfunctiona dysfunctionall aspect aspect of culture) culture)

Indi Indivi vidu dual al Beha Behavi viou ourr i. ii. iii. iii. iv.

Perception Attitude Job Job Satis atisfa fact ctio ion n Job St Stress

The Institute of Chartered Accountants Accountants of Pakistan

30

Intermediate Examinations

d.

Business Communication Communication & Behavioural Behavioural Studies

Motivation i. ii. ii. iii. iii. iv. iv. v.

Types of of Mo Motivation Theo Theori ries es of Moti Motiva vati tion on Appl Applic icat atio ions ns √ Job Job Des Desig ign n Goal Goal settin setting g and Manage Management ment by Obje Objecti ctives ves (MBO (MBO)) Mana Manage geme ment nt by Exce Except ptio ion n (MB (MBE) E)

e. Leadership i. ii. ii. iii. iii. iv. iv.

Type of Leadership Theo Theori ries es of Lead Leader ersh ship ip Applica Applicatio tions ns √ Role Roles, s, Activ Activitie ities, s, Skil Skills ls of Leader Leaders s Group Dynamics Dynamics and teamwork teamwork (types (types of group groups, s, group group formation, formation, group group structur structure, e, individual individual in groups, team work)

f. Conflict and Negotiation i. ii. iii. iii. iv. iv.

Levels of Conflict Conf onflic lict Res Resolution Negot Negotia iati tion on & Sta Stage ges s of Neg Negot otiat iation ion Pecu Peculia liarr Nego Negoti tiat atio ion n Situ Situat atio ions ns

Recommended Reading

PAPER C 8: Business Communication and Behavioural Studies Book Name & Author

About the Book

1.

The Effec Effectiv tive e Busin Business ess Communic Communicati ation on by by Herta A Murphy, Herbert Hildebrandt, Jane P. Thomas.

2.

Organiz Organizati ational onal Behavi Behavior or by by Steph Stephen en P. P. Robbins.

3.

Organiz Organizati ational onal Behavi Behavior or by by Fred Fred Luth Luthans ans..

}

The book covers substantial part of the syllabus area of business communication.

These are very useful books for understanding the theoretical and practical aspects of organizational behavior. behavior.

Supplementary Study Material 1.

Business Business Communicatio Communication n and Behavioral Behavioral Study Study Text Text and Revisio Revision n Series by Professi Professional onal Business Publications (PBP).

2.

Business Business Communication Communication and Behavior Behavioral al Study Text Text and Revision Revision Series Series by AT AT Foulks Lynch Lynch Pakistan.

The Institute of Chartered Accountants Accountants of Pakistan

31

Intermediate Examinations

Company Law

Module D PAPER D 9: COMPANY LAW

(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.

Indicative Grid Syllabus Content Area

Weightage

1. The Comp Companie anies s Ordin Ordinanc ance, e, 1984 1984 √ Sect Sections ions 1 to 51

20

2. The Secu Securit rities ies and and Excha Exchange nge Comm Commiss ission ion of of Pakist Pakistan an Act, 1997 3. The Compan Companies ies Ordin Ordinanc ance, e, 1984 1984 √ Section Sections s 52 to 136 136

25

4. The Comp Companie anies s Ordin Ordinanc ance, e, 1984 1984 √ Sect Sections ions 142 to to 262

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.

The Compa Companies nies Ordina Ordinance, nce, 1984 1984 √ Secti Sections ons 1 to 51

a. b. c. d. e.

Part I; Pre Prelim limina inary ry (conc (concept epts s of terms terms define defined) d) Part Part II; II; Jur Juris isdi dict ctio ion n of court courts s Part Part III III;; Sect Sectio ion n 12 and and Sect Section ion 13 Part IV; IV; Incorporati Incorporation on of compan companies ies and and matters matters inciden incidental tal thereto thereto First First sche schedul dule e to the the Compan Companies ies Ord Ordina inance nce,, 1984 1984

The Institute of Chartered Accountants Accountants of Pakistan

32

Intermediate Examinations

Company Law

2.

The Se Se cu curi ties ties and Exchange Commission of Pakistan Pakistan Act, 1997

3.

The Compa Companies nies Ordina Ordinance, nce, 1984 1984 √ Secti Sections ons 52 to 136

a. Part V; V; Prospectus Prospectus,, allotment, allotment, issue issue and transfer transfer of share shares s and debentur debentures, es, deposits deposits,, etc. b. Part VI; Share Share capital capital and debent debenture ures. s. c. Part VII; VII; Regi Registr strati ation on of mortg mortgage ages, s, charg charges es etc. etc. 4.

The Compa Companies nies Ordina Ordinance, nce, 1984 1984 √ Secti Sections ons 142 to 262 262

a. Part VIII Management Management and Administr Administration ation (exclud (excluding ing investig investigation ation & related related matters matters)) b. Third Third Sched Schedule ule to the the Comp Companie anies s Ordin Ordinanc ance, e, 1984 1984

Recommended Reading

PAPER D 9: Company Law Book Name & Author

About the Book

1.

Comple Complete te Compan Company y Law Law S. A. Salam Salam (Relevant topics).

Bare Law and brief explanation thereon are included in the book.

2.

Practi Practical cal Appr Approac oach h to the Compan Companies ies Ordinance, 1984 by Nazir Ahmed Shaheen (Relevant topics).

The book is useful for understanding practical application of law.

Supplementary Study Material 1.

Company Company Law Study Study Text Text and Revision Revision Series Series by A T Foulks Lynch Lynch Pakistan. Pakistan.

2.

Company Company Law Study Study Text Text and Revision Revision Series Series by by Professiona Professionall Business Business Publications Publications (PBP). (PBP).

The Institute of Chartered Accountants Accountants of Pakistan

33

Intermediate Examinations

Cost Accounting

Module D PAPER D 10: Cost Accounting

(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.

Indicative Grid Syllabus Content Area

Weightage

1. Cost Cost Conc Concept epts, s, Uses Uses and and Class Classifi ificat cation ion 2. Elem Elemen ents ts of Cost Cost Acco Accoun untin ting g i. material ii. labour iii. ii. overhead

40

3. Cos Costing ting Syst System ems s 4. Cost Be Behaviou iour

30

5. Plan Planni ning ng and and Cont Contrrol 6. Deci Decis sion ion Makin aking g

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 Conc Concepts epts,, Uses Uses and Class Classific ificatio ation n a. b.

The natur nature e and scope scope of Cost Cost Accoun Accountin ting; g; Sourc Sources es of Cost Cost data data Definition Definition of and distinction distinction between between financial financial accountin accounting, g, cost accounti accounting ng and managemen managementt accounting c. The conce concept pt of ≈Cos ≈Cost∆ t∆ for for differ different ent type types s of entit entities ies d. Cost Cost clas classi sifi fica cati tion on

The Institute of Chartered Accountants Accountants of Pakistan

34

Intermediate Examinations

Cost Accounting

2. Elements of Cost Accounting a.

Material i. ii. iii. iii. iv. iv.

Materi Material al purch purchasi asing, ng, recei receivin ving g and issu issuing ing proc procedu edures res and its its docume documenta ntatio tion n Invent Inventory ory record recording ing system system (Perpe (Perpetua tuall and and Peri Periodi odic) c) Basi Basis s of valu valuat ation ion √ Cos Costt form formul ulas as Stock taking, taking, Reconciliati Reconciliation on of Bin Bin Card and Stock Stock Card, Card, and adjustments adjustments for inventory inventory differences v. Valuat aluatio ion n of inv invent entory ory at at lowe lowerr of Cos Costt and and NRV NRV vi. Econom Economic ic Ord Order er Quant Quantity ity and Invent Inventory ory Levels Levels vii. Segregatio Segregation n of material material for for selective selective control control (ABC (ABC Plan) Plan)

b.

Labour i. ii. iii. iv. iv. v.

c.

System an and do documen umenttation ion Basis for Labour Cost Control Labour Labour turnove turnoverr, Product Productivi ivity ty and Effici Efficiency ency measur measureme ement nt Account Accounting ing entri entries es for for payroll payroll and and statut statutory ory deduc deductio tions ns Wage Wage incent incentive ive plans plans (pie (piece ce work work plan, plan, bonus bonus and gro group up bonus bonus plans plans))

Overheads i. ii. ii. iii. iv. iv.

Manu Manufa fact ctur uring ing expe expens nses es √ act actua uall and and appl applie ied d Over Over or unde underr app appli lied ed over overhe head ad Concept Concept of produ producti ction on & Serv Service ice Departm Departments ents Basis of apportionm apportionment ent and allocation allocation of service department department overhead overheads s to produc production tion department

3. Costing Systems a. b. c. d. e. f. g. h.

Fundam Fundament entals als of Cost Cost Accou Accounti nting ng Informa Informatio tion n System System Manufa Manufactu cturing ring Cost Cost Accou Accounti nting ng Cycle Cycle Char Chartt of acco accoun unts ts Factory Factory Ledger Ledger and accounti accounting ng entries entries Reconci Reconciliat liation ion of of Cost Cost and and Finan Financial cial account accounts s Job order Cos Costing ing Proces ocess s cos costi ting ng Treatme reatment nt of Joint Joint Prod Product ucts s and By-Pr By-Produ oducts cts

4. Cost Behaviour a. b. c. d. e. f.

Analys Analysis is of fixed fixed,, variabl variable e and semi semi variab variable le expens expenses es Dire Direct ct cos costt and and Indi Indire rect ct cos costt Cost estimation estimation using using high-low high-low points method and linear linear regres regression sion analysis analysis Margin Marginal al cost costing ing and Absorp Absorption tion costin costing g Prod Produc uctt cos costt and and Peri Period od cost cost Brea Breake keve ven n ana analy lysi sis s and and char charts ts

The Institute of Chartered Accountants Accountants of Pakistan

35

Intermediate Examinations

Auditing

Module D PAPER D 11: Auditing

(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.

Indicative Grid Syllabus Content Area

Weightage

1. General concepts & principles of audit

25

2. Performance of audit

35

3. Audit conclusions and reporting

20

4. Specific areas

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.. iv v. vi. vii.

Objective and general principal governing an audit Responsibility for the financial statements Auditor»s 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

The Institute of Chartered Accountants Accountants of Pakistan

37

Intermediate Examinations

Auditing

2. Performance of audit i. Planning an audit ii. Assessment of audit risk iii. Audit materiality

iv. Audit evidence v. Audit sampling vi. Substantive procedures

vii. Test of controls viii. Analytical procedures ix. Documentation

3. Audit conclusions and reporting i. ii.

Nature of different audit opinions (Students will only be expected to understand the form and implications of audit qualifications) Form of audit reports under the Companies Ordinance, 1984

4. Audit conclusions and reporting i. ii. iii. iv. vi. vii.

External confirmation Subsequent events Management representation Consideration of related parties Using the work of another auditor, internal auditor and expert Review of interim financial statements by the independent auditor

Candidates are expected to respond examination questions with reference to international and local pronouncements issued by any relevant standard setting body. The standards related to syllabus outline are prescribed as under: ISA-200 ISA-315 ISA-550 ISA-700

ISA-210 ISA-320 ISA-560 ISA-701

ISA-220 ISA-500 ISA-580 ISRE-2410

ISA-230 ISA-505 ISA-600

ISA-240 ISA-520 ISA-610

ISA-300 ISA-530 ISA-620

Institute of Chartered Accountants of Pakistan has a practice to publish periodically the bound volumes of updated auditing pronouncements. All pronouncements related to the areas covered in the syllabus and published in such bound volumes are deemed applicable for examination purposes (irrespective of their applicability date in practice) unless ICAP specifically notifies tha t the same will not be adopted. However, pronouncements and revisions published by ICAP within less than six months from the date of examination shall not be tested.

Note: Reference to ISAs shall be deemed to have been changed whenever the same is replaced by another standard.

The Institute of Chartered Accountants Accountants of Pakistan

38

Intermediate Examinations

Cost Accounting

5. Planning and Control a. b. c. d. e. f.

Prin Princi cipl ples es of of Budg Budget etin ing g Cash Budgets Reve Revenu nue e Budge udgetts Flex Flexib ible le Bud Budge getts Projec Projected ted Income Income stat statemen ementt and Balance Balance Sheet Sheet Stan Standa dard rd Cost Costin ing g con conce cept pts s

6. Decision Making a. b. c. d. e. f. g.

Oppor pporttunit unity y Cost Cost Relevant ant Cos Costt Make Make or buy buy dec decis isio ions ns Prici Pricing ng for for spe speci cial al orde orders rs Furth Further er proce process ssin ing g deci decisi sions ons Util Utiliz izat atio ion n of spar spare e capa capaci city ty Decision Decision with with limiting limiting factors factors (excludi (excluding ng linear linear programmin programming) g)

Recommended Reading

PAPER D 10: Cost Accounting Book Name & Author

About the Book

1.

Cost Cost Accou Accountin nting, g, Planni Planning ng and and Contro Controll by Matz and Uzry.

The book covers almost all the parts of the syllabus and ensures concept building by giving examples on related topics especially good for variances analysis and process costing.

2.

Manage Managemen mentt and and Cost Cost Acco Account unting ing by Colin Drury. Drury.

The book covers almost all the parts of the syllabus and ensures concept building by giving a variety of questions for each topic.

3.

Cost Cost acc accoun ounti ting ng by by T. T. Lucey Lucey..

It is a very useful book especially for theoretical theoretical aspects of costing.

Supplementary Study Material 1.

Cost Accounti Accounting ng Study Study Text Text and Revision Revision Series Series by A T Foulks Lynch Lynch Pakistan. Pakistan.

2.

Cost Accounting Accounting Study Study Text Text and Revision Revision Series Series by Professio Professional nal Business Business Publications Publications (PBP). (PBP).

The Institute of Chartered Accountants Accountants of Pakistan

36

Intermediate Examinations

Auditing

Recommended Reading

PAPER D 11: Auditing Book Name & Author 1.

About the Book

Interna Internatio tional nal Standa Standard rds s on Audi Auditin ting, g, International Framework for Assurance Engagements and International Standards on Review Engagement issued by IAASB & IAPC and published by ICAP as Handbook. (ISAs and ISRE mentioned in syllabus).

The book covers all topics of syllabus except for Laws and Regulations contained in Companies Ordinance, 1984.

2.

Code Code of Ethics Ethics for Charter Chartered ed Accou Accounta ntants nts issued and included in Handbook given at (1) above.

Part B of the Code covers the topics of client acceptance and continuance procedure.

3.

Comp Compan anies ies Ordi Ordinan nance ce,, 198 1984. 4.

Provisions related to Appointment, Removal, Report etc. of auditor of limited companies are also governed by the Companies Ordinance 1984.

4.

Advance Advanced d Audi Auditing ting by Dr. Dr. Khawaja Khawaja Amjad Saeed.

5.

Practi Practical cal Auditi Auditing ng by by Javed Javed H. Zuba Zubairi. iri.

}

It contains detailed material including background, rationale and practical examples of each subject of the syllabus.

These books contain almost all syllabus areas and explain various topics in context with the ISAs.

Supplementary Study Material 1.

Auditing Auditing Study Study Text Text and Revision Revision Series Series by A T Foulks Lynch Lynch Pakistan. Pakistan.

2.

Auditing Auditing Study Study Text Text and Revision Revision Series Series by by Professiona Professionall Business Business Publications Publications (PBP). (PBP).

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39

Intermediate Examinations

Information Technology

Module D PAPER D 12: Inform Inform ation ation T echnology

(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.

Comp Comput uter er hard hardwa ware re and and sof softw twar are. e. Importa Important nt element elements s and concep concepts ts of informa informatio tion n systems systems.. Basic Basic princ principl iples es of of compu computer ter progr programm amming ing Comp Comput uter er softw softwar are e applic applicat ation ion.. IT Secur Securit ity y and and cont contro rols ls . Practical Practical experien experience ce on performing performing various general procedure procedures s and use of standard standard packages packages

Indicative Grid Syllabus Content Area

Weightage

1. Computer Hardware and Related Matters

10

2. Information Systems

10

3. Computer Programming and Software Applications

20

4. System Development and Internal Controls

20

5. Computer Practical Examination

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 Parts and accessor accessories ies of computer computer i.

Recen Recentt deve develop lopme ment nts s in compu compute terr hard hardwa ware re

1. 1.2 2 Netw Networ orki king ng i. ii. ii. iii. iii.

Netw etwork orking ing comp omponent ents Netw Networ ork k conf config igur urat atio ion n and and desi design gn Types ypes of netw networ orks ks

The Institute of Chartered Accountants Accountants of Pakistan

iv. iv. Use Use of of commu communic nicat atio ion n dev device ices s vi. vi. Trans ransmi miss ssio ion n med mediu ium m vii. vii. Network Network adminis administra tratio tion n and contro controls ls

40

Intermediate Examinations

Information Technology

2. In Inform format ation ion Sy Syste stems ms:: a.

Fundam Fundament entals als of Info Informa rmatio tion n Syste Systems ms i. ii. ii.

General sy system co concep cepts Sys System tem arch archit itec ectu turres

b. Organ Organiza izatio tional nal Info Inform rmati ation on Syste Systems ms i. ii. ii. iii. iii. iv. iv. v. vii. vii. viii. viii. ix. ix.

c.

Info Inform rmat atio ion n flo flow w in in an an org organ aniz izat atio ion n Mana Manage geme ment nt Inf Infor orma mati tion on Sys Syste tem m Trans ransact actio ion n Proce Process ssin ing g Syste Systems ms Finan Financia ciall repo report rting ing syst system ems s Order Order proce processi ssing ng and invent inventory ory contro controll syst systems ems Pers Person onne nell syst system ems s Sales Sales and market marketing ing syst systems ems Inte Integr grat ated ed syst system ems s

Comm Common only ly used used ERPs ERPs

d. Know Knowle ledg dge e Bas Based ed Sy Syst stem ems s i. ii. ii. iii. iii.

e.

Deci Decisi sion on Supp Suppor ortt Sys Syste tem m (DS (DSS) S) Exec Execut utiv ive e Inf Inform ormat atio ion n Sys Syste tem m (EI (EIS) S) Exp Expert ert Sys Syste tem m (E (ES)

Transacti ransaction on processi processing ng in business business and and accounting accounting appli applicati cations ons i. ii. iii. iii. iv. iv. v. vi. vii. vii. viii. viii. ix. ix. x. xi.

Gene Genera rall appl applic icat atio ion n proc proces essi sing ng y/ capturing / editing Data entr Mast Master er file ile up update date Repo Report rtin ing g and and quer querie ies s Proces cessing modes Batc Batch h proc proces essi sing ng On-l On-lin ine e proc proces essi sing ng Real Real time time proces processin sing g Dist Distri ribu bute ted d proc proces essi sing ng Multi tasking Mult Multii proc proces essi sing ng

3. Computer Programming and Software Applications: a.

Intr Introd oduc ucti tion on to Com Compu pute terr Progr Program ammi ming ng Basic principles and concepts of program writing

b.

Flow Charts i. ii. ii.

Bene Benefi fits ts and and lim limit itat atio ion n of of flo flowc wcha hart rts s Types ypes of flowc lowcha hart rts s

The Institute of Chartered Accountants Accountants of Pakistan

41

Intermediate Examinations

c.

Information Technology

Deci Decisi sion on Table ables s i. ii.

Benef Benefit its s and and limi limita tati tion on of deci decisi sion on tabl tables es Types of decision tables

d. Computer Computer Aided Aided Softwa Software re Engineer Engineering ing (CASE) (CASE) Types of CASE tools, their applications and advantages

e.

Oper peratin ting Sys System tem Introduction to commonly used operating systems including DOS, Windows, Novell NetWare, Unix and Linux

f.

Utility So Software Compression utilities, disk maintenance utilities, antivirus programs and audio and video software etc., their features, benefits and limitations

g. Comm Commun unic icat atio ion n Sof Softw twar are e Features, benefits and limitations of Internet browsers, email software, chatting programs, telephony via Internet and video conferencing etc.

h.

E-Commerce Basic concepts covering: i. ii. ii. iii. iii. iv. iv. v. vi.

Cur Current ent tr trends ends in e-co e-comm mmer erce ce E - comme commerc rce e Too Tools ls and tech technol nolog ogie ies s Elec Electr tron onic ic dat data a capt captur ure e Pub Publish lishin ing g sys systems tems Comm Commun unic icat atio ion n sys syste tems ms E-commerce E-commerce services services for example example electr electronic onic trading, trading, online banking banking and online online information information services etc. vii. vii. Electr Electronic onic Paymen Paymentt System Systems s viii viii.. Paym Paymen entt opti option ons s ix. ix. Secu Securi rity ty tech techno nolo logi gies es

i.

Web Host Hostin ing g and and Surf Surfin ing g i. ii. ii. iii. iii.

Website hosting Down Downlo load adin ing g sof softw twar are e fr from web web Use Use of sear search ch engi engine nes s

The Institute of Chartered Accountants Accountants of Pakistan

42

Intermediate Examinations

Information Technology

4. Introduction to System Development and Control Activities a.

System Sys tems s Deve Develop lopme ment nt Life Life Cycl Cycle e (SDLC (SDLC)) i. ii. iii. iii. iv. v.

Feasibi Feasibilit lity y study study base based d on inves investig tigati ation on and and analys analysis is of existin existing g syste systems ms Struct Structure ured d systems systems analy analysis sis,, planning planning,, designi designing ng and imple implemen mentat tation ion Evalua Evaluation tion and and contr control ol of Info Informat rmation ion Syst Systems ems and and needs needs Docu ocumentation Post Post impl implem emen enta tati tion on revi review ew

b. Data Data orga organiz nizati ation on and and acce access ss Meth Methods ods i. ii. ii. iii. iii.

c.

Data Data str struc uctu turres and and fil file e orga organi niza zati tion ons s Acces Access s meth method ods s and and file file maint mainten enanc ance e Types ypes of data data file files s

Datab Databas ase e Manag Manageme ement nt Sys System tem (DBMS) (DBMS) Introduction to commonly used DBMS like Oracle and SQL Server etc. (their characteristics, advantages and limitations)

d. Cont Contro roll Acti Activi viti ties es Introduction to: i. ii. iii. iii. iv.

e.

Control Control over over Data Data Integr Integrity ity,, Privacy Privacy,, and Securi Security ty i. ii. ii. iii. iii. iv. iv. v.

f.

Control design General controls ols Preve Preventiv ntive, e, dete detecti ctive ve and and corr correct ective ive cont control rols s Audit tr trails

Logi ogical cal ac acces cess co controls Phys Physic ical al acc acces ess s cont contrrols ols Prog Progra ram m secu securi rity ty techn techniq ique ues s Data Data secur securit ity y and and pub public lic netw networ orks ks Monit Monitor oring ing and surv survei eilla llanc nce e techn techniq ique ues s

Disa Disast ster er Reco Recove very ry Plan Planni ning ng i. ii. ii. iii. iii. iv. iv.

Thr Threat eat and and risk risk mana manag gemen ementt Soft Softwa ware re and and dat data a bac backu kup p tech techni niqu ques es Alterna Alternativ tive e proc process essing ing facilit facility y arrang arrangeme ements nts Disast Disaster er rec recov overy ery pro proce cedu dura rall plan plan

The Institute of Chartered Accountants Accountants of Pakistan

43

Intermediate Examinations

Computer Practical Examination

5. Computer Practical Examination ICAP will conduct a practical examination of 2 hours duration to test hands on e xperience covering 40% credit of the course. Theory paper of Information Technology will cover 60%. The result shall be based on the combined marks obtained at practical and theory examinations. The computer practical examination will be held soon after the Intermediate examination.

Contents: Microsoft Windows and Internet a.

Window s A cc cce ss ss or orie s i. ii. ii. iii. iii.

b. c.

Windows Keyb Keybo oard Sh Sho ortcuts tcuts Basi asic Netwo tworking Task asks i. ii. ii.

d.

Shar Sharin ing g driv drives es,, fold folder ers s and and devi device ces s Prot Protec ecti ting ng fil files es and and fold folder ers s on a netw networ ork k

Cor e Windows Tas ks ks i. ii. ii. iii. iii. iv. iv. v.

e.

System Tools Comm Commun unic icat atio ion n & Ente Entert rtai ainm nmen entt Acce Access ssib ibil ilit ity y

Cust Custom omiz izin ing g Des Deskt ktop op and and Sta Start rt Men Menu u Work Workin ing g with with fil files es and and fol folde ders rs Mana Manag ging ing Wind Window ows s Log Logging ging on and and off off Sear Search chin ing g for for info inform rmat atio ion n

Pr otecting your computer computer i. ii. ii. iii iii

Lock ocking the com computer Scr Screen een Sav Saver er pass passwo worrd Pass Passwo worrd reset eset disk disk

f.

Window s F irew a ll

g.

Internet i. ii. ii. iii. iii. iv. iv. v.

Internet br browsing Maki Making ng a dia diall-up up conn connec ecti tion on Inte Intern rnet et expl explor orer er Commonly Commonly used used Internet Internet search search engines engines and web web based based email services services Voice oice and and vid video eo chat chatti ting ng

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44

Intermediate Examinations

Computer Practical Examination

Microsoftt Excel Microsof Excel a.

Orga nizing and Analyzing nalyzing Data i. ii. iii. iv. iv. v. vi. vii.

b.

For ma tti ng Data and Contents Contents i. ii. ii. iii. iii.

c.

Prot Protect ectin ing g cell cells, s, wor works kshe heet ets, s, and and wor workb kboo ooks ks Sharing ing wor workbooks Merg Mergin ing g work workbo book oks s Tracking, racking, acceptin accepting, g, and and rejectin rejecting g changes changes to workbook workbooks s

Mana ging D at ata and Workbooks i. ii.

e.

Creat Creating ing and modi modify fying ing cust custom omis ised ed dat data a forma formats ts Usin Using g cond condit itio iona nall form format atti ting ng Forma Formatt ttin ing g chart charts s and and diag diagra rams ms

S ha ring and Security Security i. ii. iii. iii. iv. iv.

d.

Cons Constr truc ucti tion on and and applic applicat atio ion n of custo customi mise sed d formu formula las s Appl Applic icat ation ion of adva advance nced d filt filter ers s Performi Performing ng data data analy analysis sis using using automat automated ed tools tools Creat Creating ing Pivot PivotT Table able and PivotC PivotChart hart repo reports rts Applica Application tion of built built in functi functions ons and formulas formulas Use of Tools menu menu commands commands like Goal Goal Seek Seek and Formula Auditing Auditing etc etc Defining, Defining, modifying, modifying, and using named ranges

Impo Importi rting ng and expo exporti rting ng dat data a to and and fro from m Exc Excel el Creat Creating ing and edit editin ing g temp templat lates es

C us tomi zing Excel i. ii.

Cust Custom omiz izin ing g tool toolba bars rs and and men menus us Creat Creating ing,, edit editing ing,, and and runn running ing macr macros os

Microsoftt Word Microsof a.

For ma tti ng Contents Contents i. ii. iii.

b.

Organizing Contents Contents i. ii. iii. iii. iv. iv.

c.

Creat Creating ing custo custom m style styles s for for text text,, tabl tables es,, and and list lists s Inse Inserti rting ng and modi modify fying ing obje object cts s Creating Creating and and modifyin modifying g diagrams diagrams and charts charts using using data data from from other other sources sources

Sort Sortin ing g con conte tent nts s in list lists s and and tab table les s Perfo Performi rming ng calcul calculat atio ions ns in tabl tables es Modi Modify fyin ing g tabl table e forma formats ts Preparing Preparing letters, letters, labels labels and envelopes envelopes using using mail mail merge merge tools

For ma tti ng Documents Documents i. ii. iii.

Creat Creating ing and modi modify fying ing docu docume ment nt back backgr grou ound nd Creat Creating ing and and modif modifying ying docume document nt index index and and table table of of content contents s Inserting and modifying modifying endnotes, footnotes, footnotes, captions, and cross-refer cross-references ences

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45

Intermediate Examinations

d.

Mana anaging Word Documents i. ii. ii. iii. iii. iv. iv. v.

e.

Computer Practical Examination

Appl Applic icat atio ion n of Track rack Cha Chang nges es tool tool Publ Publis ishi hing ng and and edi editi ting ng Web Web docu docume ment nts s Manag Managing ing docu docume ment nt vers versio ions ns Prote Protectin cting g and and rest restrict ricting ing docume documents nts Ways Ways of viewi viewing ng a Wor Word d doc docum ument ent

Cus tomizing Micros Mic rosof oftt Word Word i. ii. ii.

Creat Creating ing,, edi editi ting ng,, and and runni running ng macr macros os Cust Custom omiz izin ing g menu menus s and and tool toolba barr

Microsof Micr osoftt P ow owerPoint erPoint a.

Cre at ating Conte nts i. ii. iii.

b.

Formatting Conte nt nts i. ii. iii. iii. iv. iv. v. vi. vi. vii.

c.

Creat Creating ing new pres present entat ation ions s from from templ templat ates es Inser Insertin ting g and and edit editing ing texttext-ba based sed conte contents nts Inserting and editing tables, charts, diagrams, diagrams, pictures, pictures, shapes, graphics graphics and objects

Form Format atti ting ng text text-b -bas ased ed cont conten ents ts Forma Formatt ttin ing g pictu picture res, s, shap shapes es,, and gra graph phic ics s Form Format atti ting ng slid slides es Appl Applyi ying ng anim animat atio ion n sche scheme mes s Appl Applyi ying ng sli slide de tran transi siti tion ons s Cust Custom omiz izin ing g slid slide e temp templa late tes s Workin Working g with with slid slide e mast master er

Mana anaging and and Deli eliver vering ing Presen Presenta tattions i. ii. iii. iv. iv. v. vi. vii.

Tracking racking,, accept accepting ing,, and and reject rejecting ing chang changes es in a presen presentat tation ion Adding Adding,, editi editing, ng, and delet deleting ing comments comments in a pres present entati ation on Compar Comparing ing and mergin merging g presen presentat tations ions Settin Setting g up up slid slide e show shows s for for delive delivery ry Rehears arse timing Printi Printing ng slides slides,, outlines outlines,, handout handouts, s, and speak speaker er notes notes Exporting Exporting a presenta presentation tion to another another Microso Microsoft ft Office Office program program

Microsoftt Access Microsof a.

S tructuring Databases Databases i. ii. iii. iv. iv.

Crea Creati ting ng and and modi modify fyin ing g tabl tables es Defi Defini ning ng and and mod modif ifyi ying ng fiel field d typ types es Creat Creating ing and modi modifyi fying ng one-toone-to-many many rela relation tionshi ships ps Creat Creating ing and and modify modifying ing queri queries, es, forms forms and and report reports s

The Institute of Chartered Accountants Accountants of Pakistan

46

Intermediate Examinations

b.

Computer Practical Examination

Mana gi ging Databa se ses i. ii. iii. iv. iv. v. vi. vi.

Ente Enteri ring ng,, edi editi ting ng,, and and dele deleti ting ng reco record rds s Importi Importing ng and exporti exporting ng data data to and and from from Access Access Compac Compactin ting g and repairi repairing ng databa databases ses Creating Creating and and modifyi modifying ng calculate calculated d fields fields and aggre aggregate gate functions functions Sorti rting reco ecords Filt Filter erin ing g recor ecords ds

Microsoftt Project Microsof a.

Tas k Management i. ii. iii. iii. iv. iv. v. vi. vii. vii. viii.

b.

Defini ining the project Defi Defini ning ng gene genera rall workin working g time times s List Listin ing g the the task tasks s in the the pro proje ject ct Orga Organi nizi zing ng task tasks s into into pha phase ses s Schedu edulin ling ta tasks Linking Linking to or attachi attaching ng more more task task informa informatio tion n Adding Adding column columns s of customis customised ed informa informatio tion n Setting Setting deadlines deadlines and constraints constraints

Re so sourc e Manage me ment i. ii. iii. iii. iv. iv. v.

c.

Specif Specifyin ying g reso resourc urces es (peo (people ple and equipm equipment ent)) for for the the proje project ct Definin Defining g worki working ng time time and availab availabilit ility y of resour resources ces Assi Assign gning ing reso resour urce ces s to task tasks s Linking Linking to to or attachi attaching ng more more resou resource rce info informat rmation ion Addi Adding ng colu column mns s of cust custom omise ised d inform informat ation ion

P roje ct Tr ac king i. ii. iii. iv. iv.

d.

Savi Saving ng a base baseli line ne to to comp compar are e with with lat later er ver versi sions ons Incorp Incorporat orating ing progr progress ess informa informatio tion n into into the the proj project ect Checkin Checking g the the progr progress ess of the proje project ct Trackin racking g risks risks and issues issues associ associate ated d with a projec projectt

Vie View an and Re Report Pro Project ect Status Status i. ii. iii. iv. iv.

Selec Selecti ting ng and modi modify fying ing views views and repo reports rts Viewin Viewing g critica criticall tasks, tasks, alloca allocatio tion n of resour resources ces and and projec projectt costs costs Sharin Sharing g projec projectt informat information ion with with other other appli applicat cations ions Changi Changing ng the the look look or content contents s of the the Gantt Gantt chart chart

Microsoftt Outlook Microsof Outlook / Outlook Express Express a.

Mes sa sagi ng ng i. ii. ii. iii. iv. iv. v.

Origin Originati ating ng and and resp respond onding ing to e-mails e-mails and instant instant messag messages es Atta Attach chin ing g fil files es to mess messag ages es Creat Creating ing and modi modifyi fying ng a personal personal signa signatur ture e for messag messages es Modify Modifying ing e-mai e-maill message message setti settings ngs and and delivery delivery option options s Creat Creating ing and and edit editing ing conta contact cts s

The Institute of Chartered Accountants Accountants of Pakistan

47

Intermediate Examinations

b.

Sc heduling i. ii. iii.

c

Computer Practical Examination

Creat Creating ing and modify modifying ing appoint appointmen ments, ts, meetin meetings, gs, and events events Cust Custom omizi izing ng calend calendar ar sett setting ings s Creat Creating ing,, modif modifyin ying, g, and and assi assigni gning ng task tasks s

Orga nizing i. ii. iii. iii.

Creat Creating ing and modi modify fying ing dist distri ribu buti tion on lis lists ts Link Linking ing cont contact acts s to other other item items s Creat Creating ing and modi modify fying ing note notes s

Recommended Reading

PAPER D 12: Informatio Information n Technology Technology Book Name & Author

About the Book

1.

Manage Management ment Informa Informatio tion n Syst Systems ems Strate Strategy gy and Action by Charles Parker and Thomas Case.

The book is useful for understanding management information systems.

2.

Manage Managemen mentt Info Informat rmation ion System Systems s by by Geral erald d Gera Gerald ld V. Pos Postt and and Dav David id L. Anderson.

The book contains adequate material on MIS, networking, database management systems and e-business for CA Intermediate students.

3.

Manage Management ment Informa Informatio tion n Syst Systems ems (Sixth (Sixth edition) by James A. O» Brien.

The book gives good explanation of MIS, networking and e-business solutions along with real world case studies.

4.

Syst System em Ana Analy lysi sis s and and Desi Design gn by by Kenneth E. Kendall and Julie E. Kendall.

The book contains useful material on various types of information systems, system development life cycle, e-commerce, fundam fundament entals als of computer computer programming programming and computer aided software engineering.

Supplementary Study Material 1.

Information Information Technolo Technology gy Study Study Text Text and Revisio Revision n Series by by A T Foulks Lynch Lynch Pakistan. Pakistan.

2.

Information Information Technolo Technology gy Study Study Text Text and Revision Revision Series Series by Professio Professional nal Business Business Publications Publications (PBP).

3. Computers by Larry Long and Nancy Long.

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48

     L      A      N      I      F

There are two ways to meeting difficulties: You alter the difficulties, or you alter yourself to meet them (Phylis Bottome)

Final Examination

Information Technology Management, Audit and Control

Module E PAPER E 13: Information Technology Management, Audit and Control

(100 marks)

Introduction This syllabus aims to provide: a. b. c.

Essential Essential body body of of IT knowledge knowledge related related to business business information information system systems. s. IT security security,, control control and governance governance knowledg knowledge e related related to business business information information systems systems.. Application Application of knowledg knowledge e to manage the above above and evaluate evaluate IT. 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 knowledge knowledge /  skill area

Main t opic opic coverage coverage

Illustrative Illustrative sub-topics

IT strategy

Strategic considerations in IT development

Q Q Q Q Q Q

E-Business models

Q Q Q Q Q

Management of IT

Management of computer operations

Q Q Q Q Q Q

The Institute of Chartered Accountants Accountants of Pakistan

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 entity»s entity»s 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)

51

Final Examination

Information Technology Management, Audit and Control Q Q

Management of interorganizational computing

Management of end-user computing Financial analysis and control

Q

Collaborative computing Distributed system EDI and electronic commerce Outsourced services (ISPs, ASPs, etc.)

Q

Technology diffusion Information center, help desk End-user system security Support for end-user applications

Q Q Q Q Q Q Q

IT control objectives

Q Q Q Q Q Q

Software

E-business enabling software

Q Q Q Q Q

IFAC Guidelines /  discussion papers

Q Q Q Q Q

The Institute of Chartered Accountants Accountants of Pakistan

Software (systems, applications, utilities) Performance measurement (productivity, service quality)

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: Ì Availability and continuity (back-up, recovery) Ì Access controls (physical, logical) Ì Processing Processing integrity (completeness, accuracy, timeliness, authorization) Ì Data integrity Supply chain management (SCM) Enterprise resource planning (ERP) Sales force automation (SFA) Customer relationship management (CRM) Electronic commerce systems: Ì Brochure, catalog, order entry, payment processing, processing, fulfillment Ì Knowledge management systems Ì 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.

52

Final Examination

2.

Information Technology Management, Audit and Control

Information Inform ation Technolo echnology gy Securit Securityy, Control Control and Managem Management ent

Broad knowledge knowledge /  skill area

Main topic coverage

Illustrative Illustrative sub-topics

Control frameworks

Risks and exposures in computer-based information systems

Q

Q

Control Control objectives

IT control frameworks

Q

COBIT, ITCG, SysTrust, WebTrust, etc

Effectiveness, efficiency, efficiency, economy of operations

Q

Cost effectiveness of control procedures

Reliability of financial reporting

Q

Relevance, reliability, comparability /  consistency

Effectiveness of control (design, operation)

Q

At a point in time; during a period of time

IT asset safeguarding

Q

Evaluation of facilities management and IT asset safeguarding

Compliance with applicable laws and regulations

Q

Prevention/detection of fraud, error and illegal acts Privacy, Privacy, confidentiality, copyright issues

System reliability

Q

Q

Q Q

Data integrity

Q

Q

Layer of control

Societal Organizational environment Technology infrastructure Software Business process

Q

Q Q

Responsibility for control

Error, Error, fraud, vandalism/abuse, business interruption, competitive disadvantage, excessive cost, deficient revenues, revenues, statutory sanctions, social costs, etc. Effect of IT audit on organization, controls Economic, technical, operational, Ì behavioral considerations Cost/benefit Ì

Role and responsibilities of key parties

Q Q Q Q

The Institute of Chartered Accountants Accountants of Pakistan

Availability and continuity (back-up, recovery) Access control (physical, logical) Processing integrity (completeness, accuracy, accuracy, timeliness, authorization) Completeness, accuracy, currency /  timeliness, consistency/comparability consistency/comparability,, authorization, auditability, 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

53

Final Examination

Control environment

Information Technology Management, Audit and Control

External regulatory controls

Q

Record keeping, privacy, copyright, taxation, etc,

Board/audit committee governance

Q

Regulatory compliance, fiduciary obligations, IT governance, system reliability

Management philosophy and operating style

Q

Integrity and ethical values, commitment to competence

Q

Leadership for IT organization, organization of IT function, segregation of incompatible IT and user functions, partnership with other organizations

Method to communicate the assignment of authority and responsibility

Q

Business practices, codes of conduct, documentation of systems, operations, user responsibilities, reporting relationships

Management control methods

Q

Strategic planning, business system/IT integration planning, budgeting, performance measurement, monitoring, compliance with policies

Human resource policies and practices

Q

Hiring, training, evaluation, compensation of IT personnel, career paths

Financial policies and practices

Q

Budgeting process; Cost charge out methods;

Risk Categories

Q

Economic, technical, operational behavioral Main reason for failure of computer Projects Error, Error, fraud , vandalism/abuse, business interruption, competitive disadvantage, excessive cost, deficient revenues, statutory sanctions, social costs, etc.

Plans/structure of organization

Risk Assessment

Q Q

Probability of loss

Q

Quantitative / qualitative

Consequences

Q

Monetary, Monetary, non-monetar y Balancing costs of controls vs. costs of unmitigated risks

Q

The Institute of Chartered Accountants Accountants of Pakistan

54

Final Examination

Control activities

Information Technology Management, Audit and Control

Control design

Q Q Q Q Q Q Q

Control procedures

Q Q

Q Q Q

Q Q Q Q

Control over data integrity, integrity, privacy and security

Q Q Q Q Q Q Q Q Q

Control activities

Availability / continuity of processing, disaster recovery planning and control

Q

Q Q

The Institute of Chartered Accountants Accountants of Pakistan

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 (pr oblems of on-line systems, etc.) Alternate processing facility arrangements Disaster recovery procedural plan, documentation

55

Final Examination

Information Technology Management, Audit and Control Q Q Q

IS processing  /operations

Q

Q Q

Q

Q Q Q Q

Monitoring of control compliance

Roles of management, users, auditors (internal, external)

Q Q Q Q

Computer assisted audit techniques

The Institute of Chartered Accountants Accountants of Pakistan

Q

Integration with business continuity plans Periodic tests of recovery procedures Insurance Planning and scheduling; service levels; Risks Standards Infrastructure (hardware, facilities, Ì networks) Software Ì Human resources (skill sets and staffing Ì 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., Ì flowcharting package, review of program logic, etc.) System /program testing (e.g., test data Ì ,integrated test facility, parallel simulation etc.), Data integrity testing (e.g., generalized Ì audit software, utilities, custom programs, sampling routines, etc.) Problem solving aids (e.g. spreadsheet, Ì database. Online data bases, etc) Administrative aids (e.g., word Ì processing, audit program generation, work paper generators etc).

56

Final Examination

Information Technology Management, Audit and Control

Recommended Reading

PAPER E 13: Information Technology Technology Management, Audit and Control Book Name & Author

About the Book

1.

Informa Informatio tion n Syste Systems ms Cont Control rol and Audit Audit by Ron Weber.

The book is useful for gaining the understanding of information systems audit function. Management and application control framework have been explained in an effective manner. Ways to collect and evaluate the audit evidence are also explained in the book in detail.

2.

Strate Strategic gic Manage Managemen mentt & Systems by Wendy Robson.

Informa Informatio tion n

The book is useful for the topic of strategic management of information system.

3.

Auditi Auditing ng in in a Comp Compute uteriz rized ed Envi Environ ronmen mentt by Mohan Bhatia.

The book explains the fundamentals of information systems audit, business continuity management and the application of CAATs in an effective manner. manner.

Supplementary Study Material 1.

Information Information Technolog Technology y Management, Management, Audit Audit and Control Control Study Study Text Text and Revision Revision Series Series by A T Foulks Lynch Pakistan.

2.

Information Information Technolog Technology y Management, Management, Audit Audit and Control Control Study Study Text Text and Revision Revision Series Series by Professional Business Publications (PBP).

3.

Information Information Technolog Technology y Management Management Audit Audit & Contro Controll by Mohammad Mohammad Amjad Amjad Bhatti Bhatti and Muhammad Qaiser Sheikh.

4.

International International Information Information Technolog Technology y Guidelines Guidelines developed developed by IFAC» IFAC»s s IT Committee, Committee, available available at IFAC»s website.

5.

Useful information information is also available available at the website: website: www. www.isaca. isaca.org. org.

The Institute of Chartered Accountants Accountants of Pakistan

57

Final Examination

Advanced Accounting & Financial Reporting Reporting

Module E PAPER E 14: Advanced Accounting & Financial Reporting

(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.

Final Examination

Advanced Accounting & Financial Reporting Reporting

Module E PAPER E 14: Advanced Accounting & Financial Reporting

(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.

Indicative Grid Syllabus Content Area

Weightage

1. a. Fina Financ ncial ial Stat Statem emen ents ts and and Repo Reporti rting ng b. Interna Internation tional al Finan Financia ciall Reporti Reporting ng Stand Standar ards ds and and Statutory Requirements

30

2.

Specific Accounting Areas

45

3.

Analysis of Financial Statements

15

4.

Specialised Financial Statements

10

Total Note:

100 The weightages given above are for guidance purposes only and some deviations in setting  of papers could be expected.

The Institute of Chartered Accountants Accountants of Pakistan

58

Final Examination

Advanced Accounting & Financial Reporting Reporting

Contents: 1 a. Fi Fina nanc ncia iall Sta State teme ment nts s and and Re Repo port rtin ing g i. ii. iii. iv. iv. v. vi. vii vii viii. viii.

Preparatio Preparation n of financial financial statemen statements ts includin including g consolidat consolidated ed financial financial statements statements and their their disclosure. Accounting Accounting for investments investments in subsidi subsidiaries aries and associated associated undertakings undertakings Financi Financial al reporti reporting ng on intere interests sts in joint joint ventu venture re Inte Interim rim finan financi cial al repo reporti rting ng Repo Reporti rting ng on disc discont ontin inued ued ope opera rati tion ons s Prepa Preparat ration ion of statut statutory ory and direct directors ors»» report report Rela Relate ted d part party y tran transa sact ctio ion n Segmen Segmentt reporting reporting

b. Internat Internationa ionall Financial Financial Reporting Reporting Standar Standards ds (IFRSs) (IFRSs) and Statutory Statutory Requirem Requirements ents i.

Recognition, Recognition, measurement, measurement, accounting accounting treatment treatment and disclosure disclosure of various various transactions 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 Accounting treatment treatments s and disclosure disclosure requireme requirements nts under under the the Companies Companies Ordina Ordinance, nce, 1984 iii. Specific Specific departur departures es from from IFRSs under the local statutory statutory requir requirements ements

2. Sp Spec ecifi ific c Account Accounting ing Areas Areas a. b. c. d. e. f. g. h.

Accou Account ntin ing g of of tax taxes es on Inco Income me Acco Accoun unti ting ng for for lea lease ses s Account Accounting ing for constru constructi ction on contra contracts cts Retir Retiremen ementt benef benefits its cost costs s and pensio pension n plans plans Fore Foreig ign n curr curren ency cy tra trans nsac acti tions ons Busi Busine ness ss com combina binattions ions Accou Account ntin ing g for for Inve Invest stme ment nts s Accounting Accounting treatmen treatmentt on changes changes in accounting accounting policies policies and and estimate estimate including including fundamental fundamental errors i. Recogn Recogniti ition on and and measur measuremen ementt of of finan financial cial instrum instrument ents s j. Valua aluati tion on of of int intan angi gibl ble e asse assets ts k. Impa Impair irme ment nt of asse assets ts l. Prov Provis isio ions ns and and con conti ting ngen enci cies es m. Reve Revenue nue recog recognit nition ion

3. Anal Analysis ysis of Finan Financial cial Stat Statemen ements ts a. Needs Needs of various various users users of of financial financial state statement ments s and its its importan importance ce b. Tec echn hniq ique ues s for for anal analys ysis is i. Hori Horizo zont ntal al and and ver verti tica call anal analys ysis is ii. ii. Ratio analy alysis iii. iii. Comm Common on-s -siz ize e sta state teme ment nts s

c. Earn Earnin ing g per per shar share e (EPS (EPS)) d. Busine Business ss and share share valua valuatio tions ns The Institute of Chartered Accountants Accountants of Pakistan

59

Final Examination

Advanced Accounting & Financial Reporting Reporting

4. Spe Special cialized ized Fina Financia nciall Statem Statements ents a. Banks b. Leas Leasin ing g comp compan anie ies s c. Insu Insura ranc nce e comp compan anie ies s

d. Mutual Mutual funds funds and similar similar enterp enterpris rises es e. Empl Employ oyee ee ben benef efit it plan plans s

Recommended Reading

PAPER E 14: Advanced Accounting & Financial Reporting Book Name & Author

About the Book

1.

Interna Internatio tional nal Financia Financiall Report Reporting ing Standa Standard rds s (IFRS) Published by ICAP.

It is the primary source and explains the topics with illustrations and appendices.

2.

Grippi Gripping ng IFRS IFRS Vol. Vol. 1 publ publishe ished d by ICAP ICAP..

3.

Grippi Gripping ng IFRS IFRS Graded Graded Questi Question on publ publish ished ed by ICAP.

Contains useful material on various IASs and IFRSs with examples. Contains questions for practice on various IASs and IFRSs.

4.

Compa Companie nies s Ordi Ordinan nance ce 1984. 1984.

Schedule IV and V covers disclosure requirements for listed public companies and unlisted companies repectively. repectively.

5.

Insura Insurance nce Ordin Ordinance ance 2000 and Banking Banking Companies Ordinance 1962.

Contains disclosure requirements for financial statements of insurance and banking companies.

6.

IFRS IFRS √ Inte Interpr rpreta etation tion and Applica Applicatio tion n of International Accounting and Financial Reporting Standards (Wiley Series) by Barry J. Epstein and Abbas Ali Mirza.

The book contains detailed material and many practical examples of topics included in syllabus. Gives in-depth understanding of accounting issues in context with the IFRS and international pronouncements.

7.

IFRS IFRS Prac Practic tical al Impl Impleme ementa ntatio tion n Guide Guide and Workbook (Wiley) by Abbas Ali Mirza, Graham J. Holt and Magnus Orrel.

The concepts built by Interpretation of IFRS series are further explained with practical examples.

8.

Publis Published hed Financia Financiall State Statemen ments ts of Leas Leasing ing Companies, Mutual Funds, Banks and Insurance Companies.

Reading and understanding of these published information will help in the preparation of these specialized financial statements.

Supplementary Study Material 1. 2. 3. 4. Q Q

Advanced Advanced Accounting Accounting & Financial Financial Reportin Reporting g Study Study Text Text and Revision Revision Series by by A T Foulks Foulks Lynch Pakistan. Advanced Advanced Accounting Accounting & Financial Financial Reportin Reporting g Study Study Text Text and Revision Revision Series Series by Profes Professional sional Business Publications (PBP). Select Selected ed Opinion Opinions s and Techn Technical ical Relea Releases ses (Accoun (Accountin ting). g). The websites websites of following following audit firms firms provides provides free free online online financial financial reporting reporting tools tools for. for. understanding IFRS. The links can be viewed from the e-learning section of ICAP»s ICAP»s website: Deloitte IFRS e-learning EY Resource for IFRS

The Institute of Chartered Accountants Accountants of Pakistan

Q Q

KPMG issues and insight PWC research and publications

60

Final Examination

Corporate Laws

Module E PAPER E 15: Corporate Laws

(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 be comprehensive but for other Laws and regulations only general knowledge would suffice.

Indicative Grid Syllabus Content Area

Weightage

1. Comp Compan anie ies s Ordi Ordina nanc nce, e, 1984 1984

40

2. Various arious Rules Rules under under the the Compa Companie nies s Ordin Ordinanc ance e 3. Secr Secret etar aria iall Pra Pract ctic ices es 4. Othe Otherr laws laws and and reg regul ulat atio ions ns

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. Co Comp mpani anies es Ordin Ordinanc ance, e, 1984 1984 a.

Areas Areas of the Compan Companies ies Ordina Ordinance, nce, 1984 1984 covere covered d at Module Module D Examina Examination tion in Compa Company ny 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 Accountants of Pakistan

61

Final Examination

Corporate Laws

Law paper at Module D, however, the emphasis of testing at the Final Examination level would be application of those provisions from a practical viewpoint. Testing would focus on the level of understanding of those provisions and their application.

b.

Other Other special specialized ized are areas as of the Compa Companies nies Ordinanc Ordinance, e, 1984. 1984. i. Part VIII ii. ii. Part Part VIII III A iii iii. Part IX iv. Part X v. Part XI

Investigation and related matters. Non Non Bank Bankin ing g Fina Financ nce e Comp Compan anie ies s (NBF (NBFC) C) Provisions as to Establishment and Regulation of NBFC (Section 282 A to 282N) Arbitration, arrangements and recons onstruct uction ion. Prevention of oppression and mismanagement. Winding-up

Modes of winding-up, and provisions relating to contributories (sections 297 and 306) Winding-up by court; provisions relating to the following: Q Q Q Q Q

Cases in which companies may be wound-up by the court (section 305 and 306). Petition for winding-up (section 309 and 310). Commencement of winding-up by the Court (Section 311). Official liquidators (section 321 to 331, 333 and 334, 336 and 337, 339 to 341 and 346 to 350). Enforcement of court orders (section 355 to 357)

Note: For section 328 and 329, students are only required to be familiar with the contents of statement of affairs af fairs to be made to official liquidator and report by official liquidator. Voluntary winding-up (Sections 358 to 401) Provisions applicable to every mode of winding-up Q Q Q

Status of companies being wound-up (section 402) Proof and ranking of claims (Section 403 to 407) Supplementary provisions as to winding-up (Section 421, 422 and 431 to 434)

vi. Part XIII vii. vii. Part Part XIV XIV viii viii.Pa .Part rt XV ix. ix. Part Part XVI XVI

Windi ndingng-up of unre nregistered companies Comp Compan anie ies s esta establ blis ishe hed d outs outsid ide e Paki Pakist stan an (Sec (Secti tion on 450 450 to 462) 462) Reg Regist istrati ration on offi office ces s and and fees ees (se (sect ctio ion n 468 468 and and 469 469)) Gene Genera rall √ lega legall pr procee oceedi ding ngs, s, offe offenc nces es etc. etc. (Sec (Secti tion on 494 494 and and 496) 496)

Second Schedule Q

Salient features of disclosure requirements for prospectus or statement in lieu of prospectus and understanding of the reports and certificates to be included in the prospectus.

2. Various Rules under under the Companies Companies Ordin Ordinance ance a. b.

c. d. e.

Explana Explanatory tory pro provis visions ions only only of Compa Companie nies s Rules Rules 1985; 1985; knowled knowledge ge of the the content contents s of the Forms Forms is not expected. Capital Capital Issues Issues - The rules rules for for issue issue of of capital capital by companie companies, s, premi premium um on shares, shares, issue issue of shares shares for consideration other than cash and related aspects, covered by the Companies (Issue of Capital) Rules, 1996 and Stock Exchange Rules. Compa Companie nies s (App (Appoin ointm tment ent of of Legal Legal Advi Adviso sors rs)) Rules Rules,, 1975. 1975. Compa Companie nies s (Buy (Buy-b -bac ack k of of Shar Shares es)) Rul Rules es,, 199 1999. 9. Compan Companies' ies' Shar Share e Capita Capitall (Varia (Variatio tion n in Rights Rights and and Privi Privileg leges) es) Rules Rules,, 2000. 2000.

The Institute of Chartered Accountants Accountants of Pakistan

62

Final Examination

f. g. h.

Corporate Laws

NBFC Rules Rules issue issued d by SECP SECP on April April 01, 01, 2003, 2003, Chap Chapter ters s I to III and Schedu Schedules les I & IV only. only. Regulat Regulation ion 25 of d Non-ban Non-bankin king g Finance Finance Compan Companies ies and and Notifie Notified d Entitie Entities s Regulat Regulations ions,, 2008. Schedu Schedule le IX (Fit (Fit and Prope Properr Criteri Criteria) a) and Sched Schedule ule X (Long, (Long, Mediu Medium m and Sort Sort Term Term Financ Financing ing Facilities) of the Non-Banking Finance Companies and Notified Entities Regulations 2008.

3. Se Secr creta etaria riall practi practice ces s 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 Filing requi requirem rement ents, s, mainte maintenan nance ce of statut statutory ory books books and regi registe sters rs under under the Compa Companie nies s Ordinance, 1984. Meetings Meetings of shareholders shareholders and directors directors and all all proceedi proceedings ngs theret thereto, o, including including notices, notices, agenda, agenda, quorum, voting, poll, proxies, resolutions and minutes. Functio Functions ns and respo responsib nsibilit ilities ies of the Securi Securitie ties s and Exchang Exchange e Commissi Commission on of Pakista Pakistan n under under the SECP Act (Act No. XLII of 1997).

4. Oth Other er laws laws and and regu regulat lation ions s a.

Foreign Foreign Exchange Exchange Regulations Regulations - Foreign Exchange Exchange Manual 8th 8th Edition Edition i.

Chapt Chapter er XIX XIX Loa Loans ns,, ove overd rdra raft fts s and and guar guaran ante tees es Part A: Rupee loans Foreign exchange regulations relating to definition of foreign controlled companies, provisions for general permission for lending to foreign controlled companies for working capital, local borrowings by foreign controlled companies for capital expenditure. Part B: Foreign private loans Private foreign currency loans, repatriable foreign currency loans by foreign controlled companies for meeting working capital requirements, foreign currency loans (repatriable and non-repatriable basis) by Pakistani firms and companies functioning in Pakistan.

ii. ii.

Chap Chapte terr XX XX - Secur ecurit itie ies s Knowledge and application of provisions relating to rules and regulations governing acquisition and holding of foreign securities, issue, transfer and export of Pakistani securities to non-residents, general exemption from the restriction on transfer and issue of Pakistani securities to non-residents, procedure for issue of shares to non-residents, trading of quoted shares by non-residents, and special instructions regarding shares transferred under the Central Depository System - CDS of the Central Depository Company

b.

Stock Exchange Exchange Listing Rules and Guidelines Guidelines - especially especially those those relating relating to to secretarial secretarial matters matters,, public issue of shares, Code of Corporate Governance and Transfer Pricing.

The Institute of Chartered Accountants Accountants of Pakistan

63

Final Examination

Corporate Laws

Laws governing certain certain specialized institutions c.

Banking Banking Companies Companies Ordinance Ordinance,, 1962 - Sections Sections pertaining pertaining to to audit and and accounts, accounts, mainly mainly sections sections 34 to 38 of the Banking Companies Ordinance, 1962.

d.

The Central Central Depositorie Depositories s Act, 1997 1997 and Central Central Depository Depository Companie Companies s (Establishm (Establishment ent and Regulation) Rules 1996 - Understanding of provisions relating to: i. ii.

e.

Modaraba odaraba Companies and Modarabas Modarabas (Float (Floatation ation and Control) Control) Ordinance, Ordinance, 1980. i.

Prov Provis isio ions ns relat relating ing to the the follo followi wing ng::

Q Q Q

Definitions (Section 2) Registration of Modaraba Companies (Section 4 to 6) Provisions applicable to Modaraba (Section 7 to 23,33,37,41 and 42)

ii.

Moda Modara raba ba Comp Compan anies ies and and Moda Modara raba ba rule rules, s, 1981 1981

Q Q Q

Rules 2 to 4,7 to 13,16 to 20-B,23 and 25 to 28 First Schedule (Form (For m 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)

Q

f.

Cent Centra rall Dep Depos osit itor ory y Sys Syste tem; m; and and Effect Effect of the Central Central Depository Depository on provisions provisions of the the Companies Companies Ordina Ordinance, nce, 1984 1984 relating 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.

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 Securities and Exchange Exchange Ordina Ordinance nce 1969 and the Securities Securities and Exchange Exchange Rules, Rules, 1971√ provisions pertaining to issuance of shares and securities to the general public (mainly section 9 ) and Insider Trading.

h.

Competit ompetition ion Ord Ordinan inance ce and and Regulat Regulations The following topics will be covered: i. Competition Ordinance 2007 Chap Chaptter - I Prel Prelim imin inar ary y Chapter Chapter - II Prohibition Prohibition of abuse abuse of dominant dominant position, position, certain certain agreement agreements, s, deceptive marketing practices and approval of mergers. Chapter Chapter - IV Functions Functions and Powers Powers of of the Commiss Commission ion Chapte Chapterr - V Penalt Penalties ies and Appeals Appeals ii. iii.

Competition (Merger Control) Regulations 2007 excluding the Schedule Competition (Leniency) Regulations 2007

The Institute of Chartered Accountants Accountants of Pakistan

64

Final Examination

i.

Corporate Laws

Listed Listed Compa Companies nies (Subst (Substant antial ial Acqu Acquisit isition ion of votin voting g shares shares and and Takeo Takeover vers) s) Regula Regulatio tions, ns, 2008 .

Kj.

Listed Companies (Substantial Acquisition Acquisition of voting shares and Takeovers) Ordinance 2002

Rules Rules and and regu regulat lations ions framed framed by the the Feder Federal al Gove Governme rnment nt from from time time to time, time, as as may may be specifically notified by the Institute of Chartered Accountants of Pakistan for inclusion in the syllabus.

Note:

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

PAPER E 15: Corporate Laws Book Name & Author

About the Book

1.

Comple Complete te Compan Company y Law Law S. A. Salam Salam (Relevant topics).

Bare Law and brief explanation thereon are included in the book.

2.

Foreig Foreign n Exchan Exchange ge Manu Manual al (Lat (Latest est Editio Edition) n) by State Bank of Pakistan (Chapter No. XIX, XX only) available at www.sbp.org.pk.

Covers relevant part of the syllabus.

3.

Bankin Banking g Comp Compani anies es Ord Ordina inance nce,, 1962 1962 (Relevant sections only).

Covers relevant part of the syllabus.

4.

Insura Insurance nce Ordin Ordinanc ance, e, sections only).

Covers relevant part of the syllabus.

5.

Practi Practical cal Appr Approac oach h to the Compan Companies ies Ordinance, 1984 by Nazir Ahmed Shaheen (Relevant topics).

2000 2000 (Relev (Relevant ant

It is a useful book for understanding practical application of law.

Supplementary Study Material 1.

Corporate Corporate Laws Study Study Text Text and Revision Revision Series Series by AT AT Foulks Lynch Lynch Pakistan. Pakistan.

2.

Corporate Corporate Laws Study Study Text Text and Revision Revision Series Series by Professio Professional nal Business Business Publications Publications (PBP). (PBP).

3.

SECP Guide Series Series availabl available e at SECP» SECP»s s website website (www.secp (www.secp.gov .gov.pk). .pk).

4.

Relevant Relevant issues issues of Members Members»» Information Information and and Education Education Series Series issued issued by by ICAP. ICAP.

The Institute of Chartered Accountants Accountants of Pakistan

65

Final Examination

Business Management

Module E PAPER E 16: Busines Busines s Management

(100 marks)

Introduction The objective of this paper is that the individual indiv idual should be able to: • • • •

• • • • • •

Identi Identify fy the princ principl iples es and concep concepts ts in the theor theories ies and prac practic tices es of strate strategic gic busin business ess management; Asses the impact impact of environ environmental mental forces forces such such as global global microeconom microeconomic ic forces, forces, international international trade and financial system on organizational strategies and plans; Unders Understan tand d the importa importance nce of linkin linking g informat information ion syste systems ms develop developmen mentt and manage managemen mentt to business goals and needs; Understand Understand the interpl interplay ay of marketing marketing with with other other vital functional functional areas areas in business business management management and and to understand the accountant»s role in servicing the needs of marketing and other functions of business; Recogn Recognize ize the role role of global global market marketing ing and interna internatio tional nal busin business ess;; Assess the importan importance ce of human resources resources development development to organisa organisations tions and identif identify y methods methods of managing people effectively; Evaluat Evaluate e ways ways in which which chang change e can can be be manag managed ed success successful fully; ly; Appre Appreciat ciation ion of socia sociall and ethic ethical al implica implicatio tion n of strate strategic gic polici policies es in busin business ess;; Unders Understan tand d the aims aims of corpo corporat rate e codes codes of conduc conductt and their their role role in impr improved oved corp corpora orate te governance; and Understand Understand the manager manager»»s role role and and respons responsibilit ibilities ies in in relation relation to the the working working environment environment..

Case studies / scenario based questions will be set in the examination.

Indicative Grid Syllabus Content Area

Weightage

1. Stra Strate tegi gic c manag managem emen entt and pla plann nning ing 2. Corpor Corporate ate socia sociall respon responsib sibilit ility y and busine business ss ethics ethics

30

3. Huma Human n res resou ourc rce e man manag agem emen entt 4. Manage Managemen mentt of the workin working g envi enviro ronme nment nt

30

5. Marke arketi ting ng Mana Manage geme ment nt 6. Inte Intern rnat atio iona nall Busi Busine ness ss

20 20

Total Note:

100 The weightages given above are for guidance purposes only and some deviations in setting  of papers could be expected.

The Institute of Chartered Accountants Accountants of Pakistan

66

Final Examination

Business Management

Contents: 1. Str Strate ategic gic mana managem gement ent and and plann planning ing:: a. b. c.

The purpose purpose of strategi strategic c management management and business business planning planning and their inter relation relationship ship The methods methods which which organisati organisations ons use to plan for the future future including including the the role of information information technology Posit osition ion appra appraisa isall and and anal analy ysis: i. ii. iii.

Identifying Identifying the organization organization»»s stren strengths gths and weaknesses, weaknesses, opportunities opportunities and threats threats Identi Identific ficati ation on and and quant quantifi ificat cation ion of of the the planni planning ng gap gap Closing the planning planning gap gap through through the the identificati identification on and evaluat evaluation ion of alternati alternative ve courses courses of action: improved efficiency; improved product(s);or service(s); introducing new product; entering new markets; merging with or acquiring other organisations iv. iv. Use Use of altern alternat ativ ive e stra strate tegi gies es v. Qualit Quality y and a strateg strategic ic variab variable; le; its its impleme implementa ntatio tion n and manage managemen mentt vi. Performance Performance against against operational operational and strateg strategic ic targets; targets; flexibility» flexibility» economy economy,, efficiency efficiency and effectiveness vii. Performance Performance against that that of competitors; competitors; benchmark benchmarking; ing; use of inter-firm inter-firm comparisons comparisons;; the limitations of external data viii. Performance Performance of costs, profit profit and investment investment centres using financial financial and non-financial non-financial measures ix. Problems Problems of measuring measuring divisional divisional and and subsidi subsidiary ary company company performance performance x. International International and multinat multinational ional trading trading;; transfer transfer pricing pricing of goods and services services and their their impact on trading results xi. Impact Impact of changing changing price level level on curren currentt performance performance and the future future projec projections tions xii. Customer Customer outlets, outlets, including including customer customer profitab profitability ility analysis analysis

d.

The effect of external environment on strategy and plans and appraising the environment: i. ii. iii. iv. iv.

v.

Scannin Scanning g the envi environ ronmen mentt of the the organis organisati ation on and and the cont context ext in in which which it is set for for changes, developments and opportunities Forecasting Forecasting trends trends and developments developments in relevant relevant areas through through the the use of relevant relevant quantitative and qualitative analysis Future Future basing (i.e (i.e Anticipati Anticipating ng long-term long-term prospect prospects s for the busines business s and its likelihoo likelihood d of survival) and other scenario-building techniques Impact Impact on the the organisati organisation on of changing changing national national and and internation international al influences: influences: demography; technology (progressional alternative / acceptability); economic resources; social attitudes and aspirations; legislation and regulation; political forces; government and other agencies, including pressure groups Comp Compet etit itiv ive e adva advant ntag age: e: 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

The Institute of Chartered Accountants Accountants of Pakistan

67

Final Examination

Business Management

vi.

Use of renewabl renewable e and non-renew non-renewable able resour resources ces including including the the ethical implications implications of such use; the effect of the environment on corporate performance vii. External External sources sources of information, information, including including databases databases,, both private private and public, public, and their their usefulness to the organisation viii. Impact Impact of innovation, substitut substitution ion and obsolescence obsolescence on business process process (including (including marketing and production) ix. Impact Impact of internationa internationall market integration integration on the the transfer transfer of goods, goods, services services and labour labour x. Comparative Comparative organizationa organizationall performanc performance: e: market share production production capacity capacity e.

Method Methods s of gain gaining ing supp support ort and and commi commitme tment nt for for strat strategi egies es

f.

Establ stablis ishi hing ng the the cor corp porate orate ob objecti jectiv ves: i. ii. iii iii iv v.

Organi Organizat zationa ionall mission missions, s, aims, aims, goals goals and object objectives ives Long-term Long-term (strategic) (strategic) and short-term short-term (operational) (operational) objectives: objectives: quantitative quantitative and qualitative evaluation Appl Applic icat atio ion n of deci decisi sion on the theor ory y Probl Problems ems of achie achieving ving balance balanced d growt growth h and develo developme pment nt Internal Internal and external factors factors effect effecting ing decisions; decisions; implication implication of «short-t «short-termism» ermism»

g.

Formulating Formulating and and evaluating evaluating plans with an an awareness awareness of of the various techniques techniques availabl available e to managers

h.

Understandin Understanding g and managing managing the risk of of a propo proposed sed business business plan for for the plan itself itself and for for all the aspects of business which it will influence

i.

Reviewi Reviewing ng strat strategy egy for for the the effec effectt it will will have have on the the organis organisati ation on and the local local and and globa globall community

2. Corp Corporate orate socia sociall respon responsibili sibility ty and and busines business s ethics ethics a.

Understandin Understanding g of obligation obligation toward towards s society society by business business organisat organisations ions and and the individuals individuals associated with it, in carrying out the business and professional activities

b.

Understandin Understanding g ethical ethical and social implications implications of business business strategic strategic policies policies and decisions decisions and their impact on the stockholders; consideration thereof in the formulation and implementation of strategic planning and management decisions

c.

Disclo Disclosu sure re and and conf confid iden enti tial alit ity y

d.

Profi Profitt motiv motives es vers versus us othe otherr corpor corporate ate object objective ives s

e.

Goal Goal congr congruenc uence e and and corp corpora orate te perfo performan rmance ce measu measurem rement ent

f.

The role role of of profe professi ssional onal bodies bodies in in regul regulati ating ng the the activ activitie ities s of memb members ers

The Institute of Chartered Accountants Accountants of Pakistan

68

Final Examination

Business Management

3. Hum Human an re resou sourc rce e man manage agemen mentt a. b. c. d. e. f. g. h. i.

The purpose purpose and forms forms of personnel personnel specifica specifications tions in the recruitment recruitment of personnel personnel Methods Methods of identifying identifying competencies competencies and other attributes attributes required required Speci Specify fying ing per perso sonn nnel el requ requir irem emen ents ts Evaluating Evaluating and and determining determining the benefit benefits s and costs of new or additiona additionall personnel personnel Identi Identifyi fying ng and determ determinin ining g suitabl suitable e methods methods of recr recruitm uitment ent Sele Select ctio ion n met metho hods ds and and the their ir use use Method Methods s of motiva motivatin ting g and and suppo supportin rting g perso personnel nnel Staff Staff apprais appraisals als and and the the asses assessme sment nt of compet competence ence Warning Warning and and dismiss dismissing ing personne personnel: l: legal legal and organizationa organizationall policies policies and procedures procedures;; the the role role of internal and external specialists in the process j. The role role of of emplo employee yee group group in prom promoti oting ng the the welf welfare are of pers personne onnell k. National National legislation legislation which affec affects ts recruitm recruitment, ent, selectio selection, n, employme employment nt and dismissal dismissal of personnel l. The manage managemen mentt of organi organizat zationa ionall and and person personal al changes changes m. Concepts Concepts and principles of human resource resource develop development ment i. ii. iii. iv. iv.

n.

The role role which which indiv individu idual al and team team devel developm opment ent can can play in in growth growth and and develop development ment The differ different ent concept concepts s and and mode models ls of of compe competenc tence e Methods Methods of encouragin encouraging g and support supporting ing individua individuals ls and teams teams to to grow and develop develop The effec effectt of internal internal and and external external facto factors rs on develop developmen mentt

Huma Human n rela relati tion ons s mana manage geme ment nt

4. Man Manage agemen mentt of the worki working ng envir environm onment ent a. b. c. d.

Interpretat Interpretation, ion, applying applying and monitorin monitoring g best practices practices for for managing managing the working working environment environment Nationa Nationall Legislat Legislation ion which which affec affects ts the worki working ng enviro environme nment nt The role role and purpose purpose of health health , safety safety and securit security y requireme requirements, nts, procedur procedures es and guideline guidelines s Roles and respons responsibilit ibilities ies of management management for for managing managing and improv improving ing the the working working environment

5. Ma Mark rket etin ing g Man Manag agem emen entt An introduction to marketing principles, the purpose of marketing philosophy and concepts in providing for customer needs. Areas include: a. Strategy Strategy in in the market market place i. ii. iii. iv. iv.

v.

Assess Assessing ing threa threats ts and oppo opportun rtuniti ities es to the the market marketing ing plan; plan; dete determin rmining ing the the need need for change in the planning area Develop Developmen mentt of marketi marketing ng strate strategie gies s to meet organ organisat isation ion object objective ives s Assessing Assessing the the nature nature and size size of the the market market using using internal internal records, records, market intelligence, intelligence, market research The process process of creating creating,, reviewing, reviewing, selecting selecting and marketing marketing the the right product product in the the right place, to the right customer at the right time, while achieving the right price; relevance of the product life cycle The produ product ct portfol portfolio; io; formul formulati ation, on, manag manageme ement, nt, the the relevanc relevance e of branded merchandise

The Institute of Chartered Accountants Accountants of Pakistan

69

Final Examination

Business Management

vi. Consum Consumer er power power within within the the marketi marketing ng enviro environme nment nt vii. Strategic Strategic management management of markets markets through through mergers, mergers, acquisitions acquisitions and divestment divestments s viii. Problems Problems associated associated with the acquisition acquisition of the foreign foreign subsidiaries subsidiaries especially especially in respect of performance appraisals b.

Analyzing Analyzing the impact of globaliz globalization ation on market marketing ing to assess assess competitive competitive advantage advantage

c.

Techniques echniques for analyzing analyzing the market, market, choosing choosing the target market and the appropriat appropriate e marketing mix, distribution channels, promotions, and developing a marketing plan

6. In Inte terna rnati tion onal al Bu Busi sine ness ss a.

The environme environment nt of global global marketi marketing, ng, global global opportuni opportunities ties and threats; threats; diffi difficulties culties in International business and alternative approaches to managing the process

b.

The developm development ent of multinat multinational ional organisations organisations and transnational transnational corporations corporations and their role in the world economy

c.

Internat nternationa ionall financial financial management management decisions decisions i. ii. iii.

Alte Alterna rnati tive ve met method hods s of finan financin cing g impo imports rts and and expo exports rts The working workings s of international international money and capital capital markets markets and the the opportunit opportunities ies that that they they offer to companies as a source of finance and as a repository for the investment of funds The manage managemen mentt of financi financial al resour resources ces within within a group group of compa companies nies includ including ing:: • • • • •

iv. iv.

paym paymen ents ts betw betwee een n com compa panie nies s cash ash man mana agement tran transf sfer er prici ricing ng judgin judging g the perfo performan rmance ce of comp compani anies es within within a grou group p the fina financia nciall contr control ol of a group group of of compan companies ies

The appraisal appraisal of internat international ional capital capital investment investments, s, applying applying the appro appropriat priate e techniques, techniques, and the consideration of the major issues in the decision-making process, including: • • • • • • •

stra strate tegi gic c obj objec ecti tive ves s the princip principle le of foreign foreign home home country country versus host country returns returns the form of foreign foreign investme investments, nts, includin including g the use use of branches branches versus versus subsidi subsidiaries aries the differ different ent method methods s of financing financing fore foreign ign invest investment ments s the effec effectt of taxatio taxation n on foreig foreign n investm investment ent decis decisions ions repatriation repatriation of sales sales amounts, amounts, earnings earnings and charges charges to foreign foreign operating operating companies companies poli politi tica call risk risk ana analy lysi sis s

The Institute of Chartered Accountants Accountants of Pakistan

70

Final Examination

Business Management

Recommended Reading

PAPER E 16: Business Management Book Name & Author

About the Book

1.

Strate Strategic gic Manage Managemen mentt Cases by Fred R. David.

and and

The book ensures concept building for the topics on strategic management.

2.

Princip Principles les of Mark Marketin eting g by by Kotle Kotlerr Armstr Armstrong ong..

The book gives an in-depth knowledge of the principles of marketing and a good explanation of basic marketing concepts.

3.

Huma Human n Resour Resource ce Mana Manage geme ment nt by by H. John John Bernardin.

The book is relevant for various syllabus topics under the mentioned grid.

4.

Manage Managemen mentt and Org Organi anizat zation ional al Behav Behaviou iourr by Laurie J. Mullins.

A comprehensive and detailed explanation of managerial practices is given in this book. The book is a good guide for concepts in the field of organizational behavior. behavior.

5.

Busines Business s Stud Studies ies by Dave Dave Hall Hall Rob Jones Jones and Carlo Raffo.

6.

Conc Concept epts s

}

AS Level Level and and A Level Level Busin Business ess Studie Studies s by by Peter Stimpson.

The books comprehensively cover the following topics: Business Strategy and environment, marketing and human resources.

Supplementary Study Material 1.

Business Business Management Management Study Study Text Text and Revision Revision Series Series by by AT AT Foulks Lynch Lynch Pakistan. Pakistan.

2.

Business Business Management Management Study Study Text Text and Revision Revision Series Series by by Professiona Professionall Business Business Publications Publications (PBP).

The Institute of Chartered Accountants Accountants of Pakistan

71

Final Examination

Management Accounting

Module F PAPER PAPE R F 17: Management Accounting

(100 marks)

Introduction The objectives of this syllabus are: • • • • •

The under understa standi nding ng of cost cost acco account unting ing in in relati relation on to manag manageme ement nt funct functions ions.. The applic applicati ation on of of finan financial cial informa information tion for control control purpos purposes. es. The develop developmen mentt and and inter interpr preta etatio tion n of data data for for decisi decision on maki making. ng. The techniq techniques ues for performa performance nce apprais appraisal al and and oper operati ationa onall resear research. ch. The candi candidat dates» es» abilit ability y to design design and and prese present nt plans plans and sche schemes mes to the the manage managemen ment. t.

The examinees are expected to possess comprehensive understanding of the subject over and above what they have lea rnt at the Intermediate stage. Topics 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.

Indicative Grid Syllabus Content Area 1. a. b. c. d.

Cost Cost accou accounti nting ng obje objecti ctives ves,, class classifi ificat cations ions and syste systems ms Cost concept concept in in decision decision making making Marginal Marginal costing costing and decision decision making making problems problems Pricing Pricing and output decisions decisions

Weightage 30

2. a. Stan Standa darrd Cost Costin ing g b. Budget Budgetary ary contr controls ols c. Management Management control control syste systems ms d. Activity Activity based costing costing e. Preparatio Preparation n and interpretatio interpretation n of financial forecasts forecasts f. Cos Cost con contr trol ol g. Total quality quality managem management ent h. Non financia financiall risk risk managem management ent

40

3. Work Workin ing g cap capit ital al mana manage geme ment nt

15

4. Quan Quanti tita tati tive ve tech techni niqu ques es a. Learn Learnin ing g curve curve b. Networ Network k planni planning ng c. Operational Operational resear research ch and cost cost reduction reduction d. Linear Linear progra programm mming ing

15

Total Note:

100 The weightages given above are for guidance purposes only and some deviations in setting  of papers could be expected.

The Institute of Chartered Accountants Accountants of Pakistan

72

Final Examination

Management Accounting

Contents: 1. a. Co Cost st ac acco coun unti ting ng 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.

Cost conce concept pt in in dec decisio ision n making making Relevant and apportioned costs; differential cost, incremental cost; opportunity costs, and break-even & cost volume profit analysis

c.

Margi argina nall cos costing ting Distinction between marginal costing and absorption costing; break-even analysis, cost volume profit analysis. Various decision making options.

d.

Pricin ricing g and out output decis decisions ions Full cost pricing policies, including ROI; pricing of new products; opportunity cost; full cost vs marginal cost; transfer pricing methods and optimisation.

2. a. St Stan anda darrd co cost stin ing g 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.

Managem gement con control systems 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 Accountants of Pakistan

73

Final Examination

d.

Management Accounting

Activ ity based costing Activity based costing for control and decision making purposes.

e.

Preparat reparation ion and and interp interpretat retation ion of financial financial fore forecast casts s Preparation of projected financial forecast and application of probability and regression analysis in preparation of estimates

f.

Cost Control Cost control as distinct from cost determination. Control Control over wastages, scrap, spoilages, and defects.

g.

Total otal qual qualit ity y mana manage geme ment nt Basic concepts and application of TQM

h.

Non fina financ ncia iall risk risk mana manag gement ement i. ii. iii. iv. iv.

Aspect Aspects s of risk, risk, such such as: as: politi political, cal, economi economic, c, social social,, technol technologi ogical cal and and fraud fraud Techniques echniques of minimisi minimising ng the risk risk of fraud, such as: fraud policy statements, statements, effective effective recruitment policies and good internal controls especially over procurement and cash Principle Principle of of diversif diversifying ying risk (no numerical numerical calculations calculations required) required) Risk of loss loss while goods are in in transit transit and and the risk of of litigation litigation

3. Wo Worki rking ng Cap Capita itall Man Manage agemen mentt a.

Work Workin ing g capita capitall- gener general al i. ii. ii. iii. iv. iv. v.

b.

Invent nventor ory y man manage agem ment ent i. ii. iii. iii. iv. iv. v. vi. vii. vii.

c.

Worki orking ng capi capita tall requ requir irem emen ents ts Shor Shortt ter term m fin finan anci cial al rati ratios os Working Working capita capitall and and the the oper operati ating ng cycle cycle Sourc Sources es of of short short and medium medium term finance finance Probl Problems ems relati relating ng to to worki working ng capi capital tal manage managemen mentt

Costs Costs asso associa ciated ted with with the the acqui acquisit sition ion and holding holding of inve invento ntories ries The deri derivat vation ion and and use use of the the economi economic c order order quant quantity ity (EOQ (EOQ)) model model Opti Optima mall pro produ duct ction ion plan plans s Finan Financi cial al rat ratios ios of inven invento tory ry Lead-t Lead-time, ime, buffer buffer stocks stocks and stockstock-out out costs costs Perpet Perpetual ual inven inventory tory and and conti continuou nuous s stockt stocktakin aking g Just-i Just-in-t n-time ime (JIT) (JIT) stock stock manag manageme ement nt

Debtor/c ebtor/cre red ditors itors manag managemen ementt i. ii. ii. iii. iii. iv. iv. v.

Colle llection polici icies Credi edit polic licies Cust Custom omer er eval evalua uati tion on Credi Creditt finan financing cing (includ (including ing factor factoring ing)) Finan Financi cing ng of import imports s and and expo exports rts

The Institute of Chartered Accountants Accountants of Pakistan

74

Final Examination

d.

Cash manag anagem emen entt

i. ii. ii. iii. iii. iv. iv. v.

Solvenc ency an and liliquidity Cash Cash flow flow for forecas ecasti ting ng Uncert Uncertai aint nty y in cash cash for forec ecast asting ing Short Short term invest investmen mentt opportu opportunit nities ies Cash Cash handl handlin ing g and and tran transm smis issi sions ons

Management Accounting

4. Qua Quanti ntitat tative ive Tech echniq niques ues a.

Learning curve The theory of learning curve and its effect in cost estimation

b.

Netw etwork ork pla plann nnin ing g 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.

Opera Operational tional resear research ch and and cost reductio reduction n Introduction to operational research, application concepts and i ts 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.

Line Linear ar progra rogram mming ing Introduction to mathematical programming and major forms of line ar programming, principles, formulation of problems, graphical solutions, limitations of linear programming and shadow price concept.

Note: Questions will not be set involving application of simplex or assignment techniques.

The Institute of Chartered Accountants Accountants of Pakistan

75

Final Examination

Management Accounting

Recommended Reading

PAPER F 17: Management Accounting Book Name & Author

About the Book

1.

Cost Cost Acco Account untin ing g by Mat Matz z and and Uzry Uzry..

The book covers almost all the parts of the syllabus and ensures concept building by giving examples on related topics especially good for variances analysis and process costing.

2.

Manage Management ment Account Accounting ing by Colin Colin Drury Drury..

The book covers almost all the parts of the syllabus and ensures concept building by giving a variety of questions for each topic.

3.

Financia Financiall Manag Manageme ement nt by by P.K. P.K. Jain Jain and M. Y. Khan.

The book is relevant for various syllabus topics and contains a large number of questions for practice.

Supplementary Study Material 1.

Management Management Accounting Accounting Study Text Text and Revision Revision Series Series by AT Foulks Lynch Lynch Pakistan. Pakistan.

2.

Management Management Accounting Accounting Study Study Text Text and Revision Revision Series Series by Professi Professional onal Business Business Publications Publications (PBP).

The Institute of Chartered Accountants Accountants of Pakistan

76

Final Examination

Business Finance Decisions

Module F PAPER F 18: Business Finance Decisions

(100 marks)

Introduction The aims of the syllabus are to provide a sound understanding of the conceptual principles and practical applications of modern ana lysis 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.

Indicative Grid Syllabus Content Area 1. a. b. c. d.

Sourc Sources es of local local finance finance International International financing financing and financial financial managem management ent Capital Capital structure, structure, interest interest rate risks risks and cost of capital capital The divi dividen dend d decisi decision on

2. a. Capita Capitall inve investm stment ent decisi decisions ons and proje project ct planni planning ng b. Inflation Inflation and financia financiall management management c. Risk and Returns, Returns, including including portfolio portfolio manageme management nt 3. a. Analys Analysis is and interp interpre retat tation ion of publis published hed financ financial ial statements b. Strate Strategic gic planni planning ng c. Valuat aluatio ion n d. Mergers, Mergers, amalgamatio amalgamations ns and acquisitions acquisitions e. Reports Reports to to manage managemen mentt

Total Note:

Weightage 30

40

30

100 The weightages given above are for guidance purposes only and some deviations in setting  of papers could be expected.

The Institute of Chartered Accountants Accountants of Pakistan

77

Final Examination

Business Finance Decisions

Contents: 1. a. So Sour urce ces s of lo loca call fi fina nanc nce e i. ii. iii. iii. iv. v. vi. vi. b.

Internat nternationa ionall financing financing and financial financial management management i. ii. iii. iii. iv. iv.

c.

Rais Raisin ing g inte intern rnat atio iona nall fina financ nce e Introduction to international financial management Excha Exchang nge e rate rate ris risk k mana manage geme ment nt Fore Foreig ign n excha exchang nge e trans transact action ions s

Capital apital structur structure, e, int interest erest rate risks risks and cost cost of cap capital ital i.

ii. iii.

d.

Cred Credit it,, mone money y and and capi capita tall mark market ets s in Paki Pakist stan an Raising Raising capital, capital, equity, equity, debt, debt, mezzanin mezzanine e debt, debt, convertibles convertibles,, factoring factoring,, warrants, warrants, term finance certificates, venture capital financing, project financing, short term finance. Fina Financ ncia iall leas leasin ing g Futures Paki Pakist stan anii stoc stock k mark market ets s Prud Pruden enti tial al regu regula lati tions ons

Capital Capital structur structure: e: business business and financia financiall risk, risk, financial financial gearing gearing and operating operating gearing, gearing, the the effect of taxes ( except calculations involving the effect of personal taxes on capital structure), and impact on earnings per share Intere Interest st rate rate risk mana managem gement ent includ including ing the the use of inter interest est rate rate swaps swaps Cost of capital, capital, equity equity,, debt, convertib convertibles, les, weighted weighted average average rate and and use of cost of of capital in investment appraisal.

The The divi divid dend end decis decisio ion n i. ii.

Dividend an and val valu uation Information content of dividend, clientele effect and other factors affecting dividend levels.

2. a. Capit Capital al inves investment tment decis decisions ions and pro project ject plan planning ning i.

Investment Investment appraisal appraisal techniqu techniques: es: NPV NPV,, IRR, IRR, payback payback,, ROI; ROI; and and compariso comparison n of NPV and ROI ii. Invest Investmen mentt appra appraisa isall under under inflati inflationar onary y condi conditio tions ns iii. iii. Rele Releva vant nt cos costs iv. iv. The effec effectt of taxatio taxation n upon inve investm stment ent appra appraisa isall v. Replacement Replacement decisions decisions using the equivalent equivalent annual cost method and deciding deciding replacement policy vi. The effect effect on accounting accounting profits profits and investo investorr ratios of of undertaking undertaking a particular particular investment investment decision vii. vii. Leas Lease e or buy buy deci decisi sion ons s viii. viii. Make Make or buy decisi decisions ons ix. Decisions Decisions under uncertain uncertainty ty,, including including expected expected values, values, sensitiv sensitivity ity analysis analysis and value value of information The Institute of Chartered Accountants Accountants of Pakistan

78

Final Examination

Business Finance Decisions

x.

Decisions Decisions under under constraint constraints, s, including including interpreta interpretation tion of the linear linear program programming ming output output including dual values (shadow prices an d opportunity costs), assumptions and limitations of linear programming, application of linear programming to capital rationing problems xi. Preparation Preparation of project project report report and evaluation evaluation of of proposal proposals s xii. xii. Social Social cost cost benef benefits its analysi analysis s xiii. xiii. Proje Project ct planning planning techniqu techniques es b.

Inflat nflation and and finan financia ciall manage managem ment Inflation and financial analysis; project appraisal under inflationary co nditions; relationship with interest interest rates

c.

Risk an and returns, including portfolio portfolio management i. ii. iii. iii. iv. iv.

Meas Measur ures es of risk risk and and ret return urn,, and the their ir rel relat ation ionsh ship ip Portfol Portfolio io analysi analysis; s; risk risk reduct reduction ion effec effects ts and diver diversif sifica ication tion Atti Attitu tud des to to risk risk Capital Capital asse assets ts prici pricing ng model model and and its its practi practical cal use use

3. a. Ana Analys lysis is and int interp erpre retat tation ion of pub publis lished hed sta statem tement ents s i. ii. ii. b.

Stra Strate tegi gic c plan planni ning ng i. ii. iii. iii. iv. iv. v. vi. vi. vii. vii. viii. viii. ix.

c.

Inter Inter-fi -firm rm and and intra intra-fi -firm rm compa comparis risons ons throug through h ratio ratio analysi analysis s Limi Limita tati tion ons s of rat ratio io ana analy lysi sis s

Objectives Produ Producti ction on functi functions ons and resour resource ce analysi analysis s Prod Produc ucti tion on str strat ateg egy y Manp Manpow ower er plan planni ning ng Fina Financ ncia iall strat trateg egy y Comp Compet etit itio ion n strat strateg egy y Info Informa rmati tion on stra strate tegy gy Busine Business ss and corpor corporate ate plans plans Implem Implement entati ation on of busine business ss plans plans

Valuat io ion i.

Valuat uation ion of of bu busine iness Q Q Q Q

ii. 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 natur e of executives incentive contracts)

Valua aluattion ion of of sha sharres Q Q

Earnings dividend and assets valuation models Valuing minority interests

The Institute of Chartered Accountants Accountants of Pakistan

79

Final Examination Q Q Q

d.

Business Finance Decisions

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.

Mergers ergers, amalgam amalgamation, ation, acquisit acquisition, ion, etc Amalgamation, reconstruction, takeovers and mergers, including devising schemes and advising management.

e.

Repor eports ts to mana manag gemen ementt i. ii. iii. iii.

The desig design n and and pre prese sent ntat atio ion n of pla plans ns and and rep report orts s Design Designing ing vario various us forms forms and report reports s for differ different ent levels levels of manag managemen ementt Speci pecifi fic c repo report rts s 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

PAPER F 18: Business Finance Decisions Book Name & Author

About the Book

1.

Financ Financial ial Manage Managemen mentt by Eugene Eugene F. Brigham and Michael C. Ehrhardt.

The book covers substantial part of the syllabus.

2.

Essen Essentia tials ls of Financ Financial ial Mana Managem gement ent by George E. Pinches.

The book covers substantial part of the syllabus.

3.

Financia Financiall Manag Manageme ement nt & Polic Policy y by by Jame James s C. Van Horne (Pearson Education).

The book covers substantial part of the syllabus.

4.

Modern Modern Invest Investmen ments ts and Securi Security ty Anal Analysi ysis s by Russel J. Fuller & James L. Farrel Jr.

The book is specifically written for security analysis. It is a good source for concept building.

5.

Foundat Foundation ions s of Finance Finance by Keow Keown, n, Pett Petty y, Scott & Martin.

The book covers substantial area of syllabus. Provides firm foundation for the subject.

Supplementary Study Material 1.

Business Business Finance Finance Decision Study Study Text Text and Revision Revision Series Series by AT AT Foulks Lynch Lynch Pakistan. Pakistan.

2.

Business Business Finance Finance Decision Decision Study Study Text Text and Revisio Revision n Series by Profess Professional ional Business Business Publications (PBP).

The Institute of Chartered Accountants Accountants of Pakistan

80

Final Examination

Advanced Taxation

Module F PAPER F 19: Advanced Taxation Taxation

(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 o n 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

The Income Tax Ordinance, 2001 The Sales Tax Act, 1990 The Sales Tax Ordinance, 2000 promulgated by the Provinces The Islamabad Ca pital Territory Territory (Tax on Services) Ordinance, 2001 The Federal Excise Act, 2005

Q

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 earlie r stage may or may not no t 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.

Indicative Grid Syllabus Content Area

Weightage

A comprehensive knowledge and practical applications in respect of: 1. Income Tax Laws 2. Sales Tax Laws

55 √ 65 25 √ 35

General knowledge in respect of : 3. The Federal Excise Act, 2005 (Chapters I & II only)

7 √ 15

Total Note:

100 The weightages given above are for guidance purposes only and some deviations in setting  of papers could be expected.

The Institute of Chartered Accountants Accountants of Pakistan

81

Final Examination

Advanced Taxation

Recommended Reading

PAPER F 19: Advanced Taxation About the Book

Book Name & Author 1.

}

Comple Complete te Inco Income me Tax Tax Law Law by by S.A. S.A. Salam Salam..

These books cover all topics of syllabus, regularly updated and also gives background of any changes made to the law.

2.

Law & Pra Pract ctic ice e of Inco Income me tax tax by by Dr. Dr. Ikram-ul-Haq.

3.

Sales Sales Tax Tax Read Ready y Refer Reference ence Act by S.A. S.A. Salam.

Bare Act, Rules, Notifications; Circulars etc on syllabus topics are included in the book with brief explanations.

4.

Federal Federal Excise Excise Act, Act, 2005 2005 includ including ing relevan relevantt notifications, circulars etc. by Tariq Najeeb Choudhry.

The book covers the related topics of syllabus.

5.

Practi Practical cal Hand Handboo book k of Inco Income me Tax Tax by by Dr. Dr. Ikram-ul-Haq.

6.

Synops Synopsis is of taxati taxation on by Mirza Mirza Munawar Munawar Hussain.

7.

Pakist Pakistan an income income tax law Princip Principles les and Practice by Mian Safiullah & Kashif Aziz Jahangiri.

The Institute of Chartered Accountants Accountants of Pakistan

}

These are very useful books for understanding practical application of taxation.

82

Final Examination

Advanced Auditing

Module F PAPER F 20: Advanced Auditing

(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 ac counting 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 a udit, 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.

The Institute of Chartered Accountants Accountants of Pakistan

83

Final Examination

Advanced Auditing

Indicative Grid Syllabus Content Area

Weightage

1. Practi Practical cal aspe aspects cts in resp respect ect of of areas areas of audit auditing ing covered at Intermediate stage. 2. Adva Advanc nced ed iss issue ues s in pla plann nnin ing g an audi auditt 3. Audi Auditt tech techniq nique ues s and and proc proced edur ures es 4. Eval Evalua uatio tion n of of cri criti tica call are areas as

35

5. Comple Completion tion stages stages and the repo reportin rting g functi function on 6. Special re reports rts 7. Special audits

25

8. Qual Quality ity cont contro roll for for aud audit it wor work k 9. Manage Managemen mentt of audit audit client clients s and clie client nt relat relation ionshi ships ps

10

10. International International Standard Standards s on Assurance, Assurance, Auditing Auditing & Related Related Services, and International Auditing Practice Statements 11. Professio Professional nal and ethical ethical consideratio considerations ns

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 Practical aspects aspects in respec respectt of areas of auditin auditing g covered covered at Intermedia Intermediate te stage 2. Adv Advanc anced ed issue issues s in plan plannin ning g an audi auditt a.

Consideration Consideration of laws laws and and regulat regulations ions in in the audit of financial financial statements. statements.

b.

Performance Performance of client acceptance acceptance proced procedures ures at the the time of accepting accepting new audit audit engagements and issuing engagement letters.

c.

Consideratio onsideration n of the effects effects on an audit when: i.

The financ financial ial statem statement ents s are are audit audited ed for the first first time; time; or

ii.

when the the financial financial statements statements for the the prior prior period period were were audited audited by another another auditor who has expressed an unqualified or a qualified opinion.

The Institute of Chartered Accountants Accountants of Pakistan

84

Final Examination

Advanced Auditing

d.

The examination examination of of prospecti prospective ve financial financial information information and and its effect effects s on differen differentt stages stages of audit. audit.

e.

Obtaining Obtaining knowledg knowledge e of business business and significa significant nt business business risks, risks, and using using it to develop develop overall overall audit approach plan.

f.

Consid onsideratio erations ns in usin using g the the work ork of: of: i. ii. iii. iii. iv. iv.

Interna rnal aud auditors; experts; anot anothe herr aud audit itor or;; and and audi auditt comm commit itte tees es..

g.

Determining Determining the components components of audit risk risk i.e. inherent inherent risk, risk, control control risk, detection detection risk risk and use use of this assessment to formulate overall audit plan in order to keep the audit risk to an acceptable low level.

h.

Relatio Relationsh nship ip betw between een mate materia rialit lity y and and audit audit risk. risk.

i.

Development Development of the the overall overall audit plan identifying identifying the significant/ significant/critica criticall audit audit areas. areas.

j.

Devel Develop opme ment nt of det detail ailed ed aud audit it prog progra ramm mmes es..

k.

Organising Organising and and planning planning complex complex audit audit situatio situations, ns, including including group audits, audits, joint audits, audits, multimultilocation engagements, special purpose engagements including due diligence reviews and related service engagements.

l.

Identificati Identification on of related related parties parties and effec effects ts of transactions transactions with related related parties parties on the the financial financial statements and auditors» opinion.

m. Security ecurity issu issues es in compu computeris terised ed syst systems: ems: (i) IFAC IFAC guidel guideline ine on Manag Managing ing Secur Security ity of Info Informat rmation; ion; and 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.

Time Time budge budgeti ting ng,, staf staffi fing ng and and costi costing ng..

o.

Changes Changes to overal overalll audit audit plan plan and and audit audit progr programm ammes. es.

p.

Mainten Maintenanc ance e and updati updating ng of of Perman Permanent ent audi auditt files. files.

3. Aud Audit it tech techniq niques ues and pr proce ocedur dures es Students should be able to identify objectives for particular audits, select and apply test of controls and substantive procedures to obtain appropriate evidence, evaluate the evidence, and draw reasonable conclusions including the following:

The Institute of Chartered Accountants Accountants of Pakistan

85

Final Examination

a.

Advanced Auditing

Id entif ying risks of material material misstatements misstatements in: i. ii. iii.

Existe Existence, nce, owners ownership hip / obligat obligation ion,, accuracy accuracy / measure measurement ment,, valuation valuation and and complet completenes eness s of assets and liabilities; appropriat appropriateness eness of accounti accounting ng policies policies and their consistent consistent application; application; and disclosures disclosures in in the financial financial statements statements of of an entity entity, including including additional additional informati information on relating relating to capital commitments and contingencies and effects of post balance sheet events.

b.

Selecting Selecting one or or more more analytical analytical procedur procedures es from from comparison comparison,, averaging, averaging, ratio analysis analysis and quantitative analysis (but excluding correlation, regression, time-series analysis and more advanced statistical techniques) to yield informative results relevant to identified risks.

c.

Applying Applying selected selected analytical analytical proced procedures ures to given given financial financial and other other data.

d.

Selecting Selecting one or more more tests of controls controls and and substantive substantive procedur procedures es (using CAA 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.

e.

Outlining Outlining the differenc differences es between between statisti statistical cal and non-sta non-statistic tistical al methods methods of sampling sampling and selecting samples from random, value-weighted, systematic, haphazard and block populations.

f.

Documentation Documentation of audit audit work alongwith alongwith evidenc evidence e of review review and conclusions conclusions drawn. Reporting Reporting of significant issues identified during the audit.

g.

Drawing straightfor straightforward ward conclusio conclusions ns regardin regarding g financial financial statements statements,, given the the results results of analytical procedures, audit tests and post balance sheet events.

These conclusions should: i. ii. iii.

Prese Present nt and and justif justify y a view view, where where ther there e is suff suffici icient ent evid evidence ence to to do so; so; identify identify and and justify justify requir requirements ements of further further evidence, evidence, where there is insuffic insufficient ient evidence evidence to form a view but such evidence could practicably be obtained; and state that it is not possibl possible e to form a view, view, where where there there is insuffici insufficient ent evidence evidence to do do so and such evidence could not practicably be obtained.

4. Eva Evalua luatio tion n of of crit critica icall are areas as a.

Approp Appropriat riatenes eness s of going going conce concern rn assu assumpt mption. ion.

b.

Ev aluating the the effects effects on reporting responsibilities of an auditor resulting from: i. ii. iii. iv. iv. v.

c.

pending le legal action; fraud and error; or; non-com non-compli plianc ance e with with laws laws and regula regulatio tions; ns; and and taxati taxation on and and tax tax relat related ed cont conting ingenc encies. ies. other other post post balan balance ce sheet sheet event events s

Audi Auditt of accou account nting ing esti estima mate tes. s.

The Institute of Chartered Accountants Accountants of Pakistan

86

Final Examination

Advanced Auditing

5. Comp Completio letion n stages stages and the rep reporting orting func function tion a.

Review of of financial financial statemen statements ts including including compara comparative tive information information,, directors directors report report and other other information included in documents containing audited financial statements to identify any departures from legal requirements and / or IFRSs, inadequacies in disclosures, internal inconsistencies and / or inconsistencies with other available information.

b.

Adequate Adequate disclosur disclosure e of events events occuring occuring after reporting reporting period period and their their effect effect on the the auditor» auditor»s s opinion.

c.

Management Management representa representations tions regarding regarding all significant significant matters. matters.

d.

Forming and justifying justifying an opinion opinion on financial financial statements statements in the light light of supervi supervisory sory reviews reviews and the results and conclusions from audit tests and procedures, which would comply with the requirements of the Companies Ordinance, 1984 or other laws related to special entities.

e.

Preparatio Preparation n of manageme management nt letters, letters, internal control control memoranda memoranda of entities entities which which include include clear clear and concise statements of facts, their potential effects and recommendations for actions relevant to the needs and nature of the entity.

6. Sp Spec ecia iall rep epor orts ts a. b. c. d. e. f. g. h. i. j. k. l.

Special Special purp purpose ose repo reports rts e.g. e.g. on forec forecast asts s and estim estimate ates s etc. Reporting Reporting and and related related service services s (compilat (compilation ion and and review engagements engagements). ). Repo Report rts s on on pro prosp spec ectu tuse ses. s. Certific Certificate ates s of audito auditors rs on on statu statutory tory report reports. s. Repo Reports rts relat relating ing to bonu bonus s issu issues es.. Repo Reports rts on on pros prospe pect ctiv ive e finan financia ciall inform informat ation ion.. Audit Audit repo reports rts on spec special ial purp purpose ose audit audit enga engagem gement ents. s. Special Special audi auditt reports reports relat relating ing to to forens forensic ic assign assignmen ments. ts. Repo Reporti rting ng on due due dili dilige genc nce e eng engag agem emen ents ts.. Reporti Reporting ng on on compl complianc iance e with with the the Code Code of Corporat Corporate e Govern Governanc ance. e. Report Report on compon component ent of financi financial al statem statements ents Certificates Certificates on breakbreak-up up value, value, net worth, worth, right issue, other matters matters as specified specified from time to time by Regulating authorities.

7. Spec ecia iall audi audits ts a.

Non statutory statutory audits, audits, cost audits, audits, management management audit, audit, system systems s audits, audits, operationa operationall audits, audits, forensic assignments (including money laundering aspects), due diligence reviews, internal audit functions (in house and outsourced).

b.

Audits of specialised specialised enterprises enterprises e.g. e.g. banks, banks, insuranc insurance e companies, companies, investm investment ent companies companies,, housing finance companies, employees» retirement funds.

8. Qua Qualit lity y contr control ol for for aud audit it work work a.

Quality co control policies and procedures: i. ii. ii.

at audi auditt fir firms ms (pee (peerr rev revie iews ws); ); and and at ind individ ividua uall aud audit its s.

The Institute of Chartered Accountants Accountants of Pakistan

87

Final Examination

b.

Advanced Auditing

Sp ecifying quality control procedures: i. ii. iii. iv. iv. v.

the indepe independe ndence nce of the audit audit firm and audit audit person personnel; nel; the skills skills and compete competence nce of audit audit person personnel; nel; proce procedur dures es for for review review of of the audi auditt documen documentat tation ion handli handling ng and safeg safeguar uardin ding g the audit audit docume documenta ntatio tion n procedure procedures s to resolve resolve technical technical disagree disagreements ments which will will be suitable suitable for a specific specific audit audit firm and which shall be cost effective; vi. qualit quality y contro controll reviews reviews (inte (internal rnal and and / or by ICAP) ICAP);; and vii. the conc concept ept of of audit audit commi committe ttees. es.

9. Mana Manageme gement nt of audit clien clients ts and and client client relatio relationship nships s a. b. c. d.

Managing Managing the audit clients, clients, including including compiling compiling and reviewing reviewing informat information ion on clients throughout the year. year. Managing Managing the audit audit relation relationship ship including including negotiating negotiating the the fee for for services services and discussion discussion of administration and results of audit Conf Confid iden enttiali iality ty.. Independ endenc ence.

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.

Detaile Detailed d knowled knowledge ge of Intern Internati ational onal Stan Standar dards ds on Audit Auditing ing sufficient sufficient knowledge knowledge of International International Standards Standards on Review Review Engagements Engagements general awareness awareness of International International Auditi Auditing ng Practice Practice Stateme Statements, nts, Internat International ional Standar Standards ds on Assurance Engagements and International Standards on Related Services

11.Professional and ethical considerations Knowledge of ICAP Ordinance and Bye-Laws and Code of Ethics, adherence thereto and its implementation and enforcement including but not limiting to the following: a.

Rules Rules of profess profession ional al cond conduct uct i. ii. iii. iv. iv. v. vi. vi.

inte integr grit ity y, objec objecti tivi vity ty and inde indepe pend nden ence ce prof profes essi siona onall dut duty y of conf confid iden ence ce changes changes in profe professi ssional onal appoint appointment ments s book books, s, docum document ents s and and pap paper ers s corp corpor orat ate e fin finan anci cial al advi advice ce conf confli lict cts s of int inter eres estt

The Institute of Chartered Accountants Accountants of Pakistan

b.

Professional rofessional responsib responsibility ility and liabilit liability y i. ii. ii.

fraud and error prof profes essi siona onall liab liabili ility ty (incl (includ udin ing g negligence) iii. miscond onduct iv. iv. expe expect ctat atio ion n gap gap v. prof profes essi siona onall ind indem emni nity ty insu insura rance nce vi. ins insider ider deal dealin ing g

88

Final Examination

Advanced Auditing

12.Case 12. Case studies studies Case studies will be based on the whole subject and kno wledge acquired during practical training. The candidates should be able to : a.

Select and apply apply analytic analytical al techniques techniques and methods methods from the syllabus syllabus according according to the requirements of a particular case.

b.

Prepa Prepare re recom recommen mendat dations ions for for action action in resp response onse to to the case. case.

Recommended Reading

PAPER F 20: Advanced Auditing Book Name & Author

About the Book

1.

Interna Internatio tional nal Standa Standard rds s on Auditi Auditing, ng, International Auditing Practice Statements, International Standards on Review Engagement, International Standard Standards on Assurance Engagement, International Standards on Related Services Issued by IAASB & IAPC, and is published by ICAP as Handbook.

The book covers all topics of syllabus except for Laws and Regulations related to auditing practice applicable in Pakistan. It contains detailed material including background, rationale and practical examples of each subject of the syllabus.

2.

Code Code of Ethics Ethics for Charter Chartered ed Acco Account untant ants s issued and included in Handbook given at (1) above.

Part B of the Code covers the related topics of syllabus.

3.

Compa Companie nies s Ord Ordina inanc nce, e, 1984 1984 by by Government of Pakistan.

The book contains provisions related to appointment, removal, report etc. of auditor of limited companies.

4.

Advanc Advanced ed Audi Auditin ting g by Dr. Dr. Khawa Khawaja ja Amjad Amjad Saeed.

The book contains important material useful to deal with various issues of audit and related services.

Supplementary Study Material 1.

Advanced Advanced Auditing Auditing Study Study Text Text and Revision Revision Series Series by AT AT Foulks Lynch Lynch Pakistan. Pakistan.

2.

Advanced Advanced Auditing Auditing Study Study Text Text and Revision Revision Series Series by Profes Professional sional Business Business Publicat Publications ions (PBP).

3.

Select Selected ed Opinion Opinions, s, Tech Technica nicall Releases Releases (Audit (Auditing ing). ).

4.

Relevant Relevant issues issues of Members Members»» Information Information and and Education Education Series Series issued issued by by ICAP. ICAP.

The Institute of Chartered Accountants Accountants of Pakistan

89