Financial Reporting Standards and Papers

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exam notes
exam notes
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Professional Scheme financial accounting and auditing papers 1.1, 2.5, 2.6, 3.1 and 3.6
34
CAT Scheme financial accounting and auditing papers 1, 3, 6 and 8
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management accounting and financial management papers 1.2, 2.4, 3.3 and 3.7 43 management and IT papers 1.3, 2.1, 3.4 and 3.5 law paper 2.2 tax papers 2.3 and 3.2 44 46 48
management accounting and financial management papers 2, 4, 7 and 10 55 management and IT paper 5 tax paper 9 56 56
student accountant February 2004
PAPER 1.1 PREPARING FINANCIAL STATEMENTS (INT) INTERNATIONAL ACCOUNTING STANDARDS (IASs) No Title 1 Presentation of Financial Statements 2 Inventories 7 Cash Flow Statements (excluding groups and foreign currency) 8 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies 10 Events after the Balance Sheet Date 16 Property, Plant and Equipment 18 Revenue 35 Discontinuing Operations (Note 2) 37 Provisions, Contingent Liabilities and Contingent Assets (Note 3) 38 Intangible Assets (Note 4) OTHER STATEMENTS Title Framework for the Preparation and Presentation of Financial Statements (Note 1)
NOTES 1 The IASBs Framework for the Preparation and Presentation of Financial Statements is examinable at an introductory level. 2 The following paragraphs of IAS 35 are examinable in so far as they relate to disclosures previously in IAS 8 in relation to Discontinuing Operations: 27, 31, 41. 3 The following paragraphs of IAS 37 are examinable in so far as they relate to contingent liabilities and contingent assets: 10, 2735, 85-92, appendices A and B. The measurement rules in paragraphs 36-52 are not examinable. 4 The following paragraphs of IAS 38 are examinable in so far as they relate to research and development: 7, 39-47, 55, 79, 88, 107, 115. APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. Both sections will draw from all parts of the syllabus and will contain both computational and non-computational elements. Paper 1.1 can also be taken as a three-hour computer-based exam. The Study Guide provides more detailed guidance on the syllabus. Number of marks Section A: 25 compulsory multiple-choice questions (2 marks each) Section B: 5 compulsory questions (8-12 marks each) 50 50 100
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exam notes
Issue date Aug 1997 Dec 1993 Dec 1992 Dec May Sept Dec June 1993 1999 1998 1993 1998 Sept 1998 Sept 1998 Issue date July 1989 exam notes
ACCA applies a six-month rule. Questions requiring an understanding of new legislation will not be set until at least six calendar months after the last day of the month in which the legislation received Royal Assent. For other regulatory pronouncements such as FRSs and SASs, the relevant date is the date of issue. Therefore, for the June 2004 exams the relevant last day is 30 November 2003. This may be before the implementation date.
PAPER 1.1 PREPARING FINANCIAL STATEMENTS (GBR) ACCOUNTING STANDARDS STATEMENTS OF STANDARD ACCOUNTING PRACTICE (SSAPs) No Title Issue date 9 Stocks and long-term contracts (excluding long-term contracts) Sept 1988 13 Accounting for research and development Jan 1989 17 Accounting for post balance sheet events Aug 1980 FINANCIAL REPORTING STANDARDS (FRSs) No Title 1 Cash flow statements (excluding group cash flow statements) 3 Reporting financial performance (excluding group aspects) 12 Provisions, contingent liabilities and contingent assets (Note 1) 15 Tangible fixed assets (Note 2) 18 Accounting policies
Issue date Oct 1996 Oct 1992 Sept 1998 Feb 1999 Dec 2000
NOTES 1 The following paragraphs of FRS 12 are examinable in so far as they relate to contingent liabilities and contingent assets: 2, 3, 27-33, 91, 94, 96, 97 Appendix 2. The measurement rules in paragraphs 36-55 are not examinable. 2 The following paragraphs of FRS 15 are examinable in so far as they relate to tangible fixed assets: 1-7, 34-36, 42-46, 61, 63, 72, 77-82 and 93. In relation to paragraph 2, only the following definitions are examinable: current value; depreciable amount; depreciation; recoverable amount; residual value; tangible fixed assets and useful economic life. OTHER STATEMENTS Title Statement of Principles for Financial Reporting
Issue date Dec 1999
For students sitting Paper 1.1, Chapters 1, 2 and 3 of the Statement of Principles are examinable in detail. A detailed knowledge of the remainder of the Statement of Principles is not examinable. APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. Both sections will draw from all parts of the syllabus and will contain both computational and non-computational elements. Paper 1.1 can also be taken as a three-hour computer-based exam. The Study Guide provides more detailed guidance on the syllabus.
You are advised to bring a calculator to the exam hall for all papers. You are permitted to take a noiseless, cordless, pocket-sized, programmable or non-programmable calculator without printout or graphic/word display facilities. It is strongly recommended that you refer to articles published in student accountant as part of your study preparation for the exams.
Number of marks Section A: 25 compulsory multiple-choice questions (2 marks each) Section B: 5 compulsory questions (8-12 marks each) 50 50 100
NOTES 1 Statements marked * are also examinable, in whole or part, in Paper 1.1. 2 IAS 7 is examinable for Paper 2.5 but excluding group cash flow statements and cash flow statements involving foreign currency. 3 IAS 32 and IAS 39 are examinable to the extent that they deal with the presentation and measurement of equity, debt and convertible debt only. OTHER STATEMENTS Title * Framework for the Preparation and Presentation of Financial Statements
PAPER 2.5 FINANCIAL REPORTING (INT) INTERNATIONAL ACCOUNTING STANDARDS (IASs)/ INTERNATIONAL FINANCIAL REPORTING STANDARDS No Title Preface to Statements of IASs IAS 1* Presentation of Financial Statements IAS 2* Inventories IAS 7* Cash Flow Statements (Note 2) IAS 8* Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies IAS 10* Events after the Balance Sheet Date IAS 11 Construction Contracts IAS 12 Income Taxes IAS 14 Segment Reporting IAS 15 Information Reflecting the Effects of Changing Prices IAS 16* Property, Plant and Equipment IAS 17 Leases IAS 18* Revenue IAS 20 Accounting for Government Grants and Disclosure of Government Assistance IAS 22 Business Combinations IAS 23 Borrowing Costs IAS 24 Related Party Disclosures IAS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries IAS 28 Accounting for Investments in Associates IAS 31 Financial Reporting of Interests in Joint Ventures IAS 32 Financial Instruments: Disclosure and Presentation (Note 3) IAS 33 Earnings per Share IAS 34 Interim Financial Reporting IAS 35* Discontinuing Operations IAS 36 Impairment of Assets IAS 37* Provisions, Contingent Liabilities and Contingent Assets IAS 38* Intangible Assets IAS 39 Financial Instruments: Recognition and Measurement (Note 3) IAS 40 Investment Property IFRS 1 First-time Adoption of International Financial Reporting Standards Issue date July 1989
(IFRSs) Issue date Aug 1997 Dec 1993 Dec 1992 Dec May Dec Oct Aug Dec Sept Dec Dec Jan Sept Dec Jan 1993 1999 1993 1996 1997 1993 1998 1997 1993 1995 1998 1993 1995
Jan 1995 Sept 1998 Sept 1998 June Feb Feb June June 1995 1997 1998 1998 1998
INTERPRETATIONS OF THE INTERNATIONAL FINANCIAL REPORTING INTERPRETATIONS COMMITTEE (IFRIC) No Title Issue date SIC1 Consistency Different Cost Formulas for Inventories Dec 1997 SIC2 Consistency Capitalisation of Borrowing Costs Dec 1997 SIC3 Elimination of Unrealised Profits and Losses on Transactions with Associates Dec 1997 SIC9 Business Combinations Classification either as Acquisitions or Unitings of Interests July 1998 SIC10 Government Assistance No Specific Relation to Operating Activities July 1998 SIC14 Property, Plant and Equipment Compensation for the Impairment or Loss of Items Nov 1998 SIC16 Share Capital Reacquired Own Equity Instruments (Treasury Shares) Jan 1999 SIC17 Costs of an Equity Transaction Jan 2000 SIC18 Consistency Alternative Methods Jan 2000 SIC22 Business Combinations Subsequent Adjustment of Fair Values and Goodwill Initially Reported July 2000 SIC23 Property, Plant and Equipment Major Inspection of Overhaul Costs July 2000 APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. It will contain a mix of computational and discursive elements. Some questions will adopt a scenario/case study approach. Number of marks 25 75 100
Sept 1998 Sept 1998 Dec 1998 Apr 2000 June 2003
Section A: 1 compulsory question Section B: Choice of 3 from 4 questions (25 marks each)
The Study Guide provides more detailed guidance on the syllabus.
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exam notes
PAPER 2.5 FINANCIAL REPORTING (GBR) STATEMENTS OF STANDARD ACCOUNTING PRACTICE (SSAPs) No Title Issue date Foreword to Accounting Standards Jan 1993 4 Accounting for government grants July 1990 5 Accounting for Value Added Tax Apr 1974 9* Stocks and long-term contracts Sept 1988 13* Accounting for research and development Jan 1989 17* Accounting for post balance sheet events Aug 1980 19 Accounting for investment properties Nov 1981 21 Accounting for leases and hire purchase contracts Aug 1984 Segmental reporting June 1990 FINANCIAL REPORTING STANDARDS (FRSs) No Title 1* Cash Flow Statements (excluding group cash flow statements) (Note 2) 2 Accounting for Subsidiary Undertakings 3* Reporting Financial Performance (excluding group aspects) 4 Capital Instruments 5 Reporting the Substance of Transactions 6 Acquisitions and Mergers 7 Fair Values in Acquisition Accounting 8 Related Party Disclosures 9 Associates and Joint Ventures 10 Goodwill and Intangible Assets 11 Impairment of Fixed Assets and Goodwill 12* Provisions, Contingent Liabilities and Contingent Assets 14 Earnings per Share 15* Tangible Fixed Assets 16 Current Tax 18* Accounting Policies 19 Deferred Tax
OTHER STATEMENTS No Title Issue date Operating and Financial Review July 1993 Statement of Principles for Financial Reporting* Dec 1999 Financial Reporting Standards for Smaller Entities Dec 2001 IFRS 1 First-time Adoption of International Financial June 2003 Reporting Standards (Note 4) ABSTRACTS No UITF Abstract 4 UITF Abstract 5
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exam notes
UITF Abstract 15 Disclosure of substantial acquisitions UITF Abstract 37 Purchases and sales of own shares Feb 1999 Oct 2003 NOTES 1 Statements marked * are also examinable, in whole or part, in Paper 1.1. 2 FRS 1 is examinable for Paper 2.5 but excluding group cash flow statements and cash flow statements involving foreign currency. 3 Students should note that Chapters 1 and 3 of the Statement of Principles are examinable in Paper 1.1. At Paper 2.5, students are expected to be aware of the issues/reasons which have led to the publication of the Statement of Principles, and to be able to discuss the main thrust of the document. 4 Knowledge of International Accounting Standards other than IFRS 1 will not be examinable. APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. It will contain a mix of computational and discursive elements. Some questions will adopt a scenario/case study approach. The Study Guide provides more detailed guidance on the syllabus. Number of marks Section A: One compulsory question 25 Section B: Choice of 3 from 4 questions (25 marks each) 75 100 PAPER 2.6 AUDIT AND INTERNAL REVIEW (INT) ACCOUNTING STANDARDS The accounting knowledge that is assumed for Paper 2.6 is the same as that examined in Paper 2.5. Therefore, students studying for Paper 2.6 should refer to the International Accounting Standards listed under Paper 2.5. However, Paper 2.6 only assumes a detailed knowledge of accounting standards that are examinable in Paper 1.1. INTERNATIONAL STANDARDS ON AUDITING (ISAs) No Title Glossary of terms Preface to International Standards on Auditing and Related Services 100 Assurance Engagements 120 Framework of ISAs 200 Objective and General Principles Governing an Audit of Financial Statements 210 Terms of Audit Engagement 230 Documentation 240 The Auditors Responsibility to Consider Fraud and Error in an Audit of Financial Statements 250 Consideration of Laws and Regulations in an Audit of Financial Statements Issue date Oct 1996 June 1992 Oct Dec Apr Sept Sept Oct Nov Dec July Sept Oct Feb Dec Dec Dec 1992 1993 1994 1994 1994 1995 1997 1997 1998 1998 1998 1999 1999 2000 2000 Title Presentation of long-term debtors in current assets Transfers from current assets to fixed assets Issue date July 1992 July 1992 exam notes student accountant February 2004
260 300 310 320 400 401 402 500 501 505 510 520 530 540 560 570 580 610 620 700 710 720 910
Communications of Audit Matters with Those Charged with Governance Planning Knowledge of the Business Audit Materiality Risk Assessments and Internal Control Auditing in a Computer Information Systems Environment Audit Considerations Relating to Entities Using Service Organisations Audit Evidence Audit Evidence Additional Considerations for Specific Items External Confirmations Initial Engagements Opening Balances Analytical Procedures Audit Sampling and Other Selective Testing Procedures Audit of Accounting Estimates Subsequent Events Going Concern Management Representations Considering the Work of Internal Auditing Using the Work of an Expert The Auditors Report on Financial Statements Comparatives Other Information in Documents Containing Audited Financial Statements Engagements to Review Financial Statements
APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. The bulk of the questions will be discursive but some questions involving computational elements will be set from time to time. Section A is compulsory. The questions will cover the key elements of the syllabus relevant to both internal and external audit assignments. Section B requires candidates to answer two out of three questions. The questions will cover all areas of the syllabus. The Study Guide provides more detailed guidance on the syllabus. Number of marks Section A: 3 compulsory scenario-based questions (no single question will exceed 25 marks) Section B: Choice of 2 from 3 questions (20 marks each) 60 40 100
PAPER 2.6 AUDIT AND INTERNAL REVIEW (GBR) ACCOUNTING STANDARDS The accounting knowledge that is assumed for Paper 2.6 is the same as that examined in Paper 2.5. Therefore, candidates studying for Paper 2.6 should refer to the Accounting Standards listed under Paper 2.5. However, Paper 2.6 only assumes a detailed knowledge of accounting standards that are examinable for Paper 1.1. AUDITING STANDARDS AND GUIDELINES THE AUDITING PRACTICES BOARD (APB) Auditing Practices Board pronouncements are issued as Statements of Auditing Standards (SASs) or Practice Notes (PNs), the former being mandatory and the latter for guidance only, though they are indicators of best practice. Publication of SASs and PNs will be preceded by an Exposure Draft (ED), usually with a comment period of three months. EDs are not examinable at Paper 2.6. STATEMENTS OF AUDITING STANDARDS (SASs) No Title Glossary of terms 010 The Auditing Practices Board Scope and Authority of Pronouncements (Revised) 100 Objective and General Principles Governing an Audit of Financial Statements 110 Fraud and Error 120 Consideration of Law and Regulations 130 The Going Concern Basis in Financial Statements 140 Engagement Letters 150 Subsequent Events 160 Other Information in Documents Containing Audited Financial Statements (Revised) 200 Planning 210 Knowledge of the Business
exam notes
OTHER DOCUMENTS No Title IAPS 1000* Inter-bank Confirmation Procedures IAPS 1005 The Special Considerations in the Audit of Small Entities IAPS 1013 Electronic Commerce Effect on the Audit of Financial Statements IAPS 1014 Reporting by Auditors on Compliance with International Financial Reporting Standards Interim Terms of Reference and Preface to the International Standards on Quality Control, Auditing, Assurance and Related Service * Students will not be examined on the audit of banks. This document is relevant to the extent that it applies to the confirmation of financial and business relationships between banks and their non-bank customers. NOTE 1 Students are advised that questions will be based on the principles and good practice set out in the International Standards on Auditing. OTHER GUIDANCE ACCAs Rules of Professional Conduct Documents under Other Guidance are examinable only to the extent that they are relevant to topics specified in the Syllabus and Study Guide.
Issue date Apr 2003
Mar Jan Jan Nov Mar Mar
1995 1995 1995 1994 1995 1995
Oct 1999 Mar 1995 Mar 1995
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exam notes
220 230 300 400 410 420 430 440 450 470 480 500 520 600 601 610
Materiality and the Audit Working Papers Accounting and Internal Control Systems and Audit Risk Assessments Audit Evidence Analytical Procedures Audit of Accounting Estimates Audit Sampling Management Representations Opening Balances and Comparatives Overall Review of Financial Statements Service Organisations Considering the Work of Internal Audit Using the Work of an Expert Auditors Reports on Financial Statements Imposed Limitation of Audit Scope Communication of Audit Matters to Those Charged with Governance
Mar 1995 Mar 1995 Mar Mar Mar Mar Mar Mar Mar Mar Jan Mar Mar May Mar 1995 1995 1995 1995 1995 1995 1995 1995 1999 1995 1995 1993 1999
APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. The bulk of the questions will be discursive but some questions involving computational elements will be set from time to time. Section A is compulsory. The questions will cover the key elements of the syllabus relevant to both internal and external audit assignments. Section B requires candidates to answer two out of three questions. The questions will cover all areas of the syllabus. The Study Guide provides more detailed guidance on the syllabus.
Number of marks Section A: 3 compulsory scenario-based questions (no single question will exceed 25 marks) Section B: Choice of 2 from 3 questions (20 marks each) 60 40 100
June 2001
PAPER 3.1 AUDIT AND ASSURANCE SERVICES (INT) The accounting knowledge that is assumed for Paper 3.1 is the same as that examined in Paper 2.5. Therefore, candidates studying for Paper 3.1 should refer to the Accounting Standards listed under Paper 2.5. AUDITING STANDARDS AND PRACTICE STATEMENTS INTERNATIONAL STANDARDS ON AUDITING (ISAs) No Title Glossary of Terms Preface to International Standards on Auditing and Related Services 100 Assurance Engagements 120 Framework of ISAs 200 Objective and General Principles Governing an Audit of Financial Statements 210 Terms of Audit Engagement 220 Quality Control for Audit Work 230 Documentation 240 The Auditors Responsibility to Consider Fraud and Error in an Audit of Financial Statements 250 Consideration of Laws and Regulations in an Audit of Financial Statements 260 Communications of Audit Matters with Those Charged with Governance 300 Planning 310 Knowledge of the Business 320 Audit Materiality 400 Risk Assessments and Internal Control 401 Auditing in a Computer Information Systems Environment 402 Audit Considerations Relating to Entities Using Service Organisations 500 Audit Evidence 501 Audit Evidence Additional Considerations for Specific Items
AUDITING GUIDELINES No Title 405 Attendance at stocktaking OTHER DOCUMENTS No PN 13 PN 16 Bulletin 2001/02*
Issue date Oct 1983
Bulletin 2001/03 Briefing Paper Briefing Paper
Title Issue date The audit of small businesses July 1997 Bank reports for audit purposes Aug 1998 Revisions to the wording of auditors reports on financial statements and the interim review report Jan 2001 E-business: Identifying Financial Statement Risks Apr 2001 Providing assurance on the effectiveness of internal control July 2001 Effective communication between audit committees and external auditors Sept 2002
* Students will not be examined on those sections of this document that deal with the review report, or Stock Exchange requirements. NOTE 1 Students are advised that questions will be based on the principles and good practice set out in the Auditing Standards and Guidelines. OTHER GUIDANCE ACCAs Rules of Professional Conduct Documents under Other Guidance are examinable only to the extent that they are relevant to topics specified in the Syllabus and Study Guide.
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exam notes
exam notes
ACCA applies a six-month rule. Questions requiring an understanding of new legislation will not be set until at least six calendar months after the last day of the month in which the legislation received Royal Assent. For other regulatory pronouncements such as FRSs and SASs, the relevant date is the date of issue. Therefore, for the June 2004 exams the relevant last day is 30 November 2003. This may be before the implementation date.
505 510 520 530 540 545 550 560 570 580 600 610 620 700 710 720 800 810 910 920 930
External Confirmations Initial Engagements Opening Balances Analytical Procedures Audit Sampling and Other Selective Testing Procedures Audit of Accounting Estimates Auditing Fair Value Measurements and Disclosures Related Parties Subsequent Events Going Concern Management Representations Using the Work of Another Auditor Considering the Work of Internal Auditing Using the Work of an Expert The Auditors Report on Financial Statements Comparatives Other Information in Documents Containing Audited Financial Statements The Auditors Report on Special Purpose Audit Engagements The Examination of Prospective Financial Information Engagements to Review Financial Statements Engagements to Perform Agreed-Upon Procedures Regarding Financial Information Engagement to Compile Financial Information
IFACs Code of Ethics for Professional Accountants The Combined Code (of the Committee on Corporate Governance) IAASB Paper Financial Reporting on the Internet: Responsibilities of directors and management NOTES 1 Students are advised that questions will be based on the principles and good practice set out in the International Standards on Auditing. 2 Topics of EDs are examinable. However, detailed knowledge of the content of EDs is examinable to the extent that relevant articles are published in student accountant. 3 Documents under Other Guidance are examinable only to the extent that they are relevant to topics specified in the Syllabus and Study Guide. APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. Questions in both sections will be almost entirely discursive. However, candidates will be expected, for example, to be able to assess materiality and calculate relevant ratios where applicable. The Study Guide provides more detailed guidance on the syllabus. Number of marks Section A: 3 compulsory questions 70 Section B: Choice of 2 from 3 questions (15 marks each) 30 100 PAPER 3.1 AUDIT AND ASSURANCE SERVICES (GBR) The accounting knowledge that is assumed for Paper 3.1 is the same as that examined in Paper 2.5. Therefore, candidates studying for Paper 3.1 should refer to the Accounting Standards listed under Paper 2.5. AUDITING STANDARDS AND GUIDANCE STATEMENTS OF AUDITING STANDARDS (SASs) No Title Glossary of terms 010 The Auditing Practices Board Scope and authority of pronouncements (Revised) 011 The Auditors Code 100 Objective and general principles governing an audit of financial statements 110 Fraud and error 120 Consideration of law and regulations 130 The going concern basis in financial statements 140 Engagement letters 150 Subsequent events 160 Other information in documents containing audited financial statements (Revised) 200 Planning 210 Knowledge of the business
INTERNATIONAL AUDIT PRACTICE STATEMENTS (IAPSs) No Title 1005 The Special Considerations in the Audit of Small Entities 1010 The Consideration of Environmental Matters in the Audit of Financial Statements 1013 Electronic Commerce: Effect on the Audit of Financial Statements 1014 Reporting by Auditors on Compliance with International Financial Reporting Standards EXPOSURE DRAFTS (EDs) Title Preface to the International Standards on Quality Control, Auditing, Assurance and Related Services Audit Risk Amendment to ISA 200 Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement The Auditors Procedures in Response to Assessed Risks Audit Evidence Revised ISA 240 The Auditors Responsibility to Consider Fraud in an Audit of Financial Statements Revision to Code of Ethics for Professional Accountants OTHER GUIDANCE (Note 3) ACCAs Rules of Professional Conduct
Issue date Apr 2003 Feb 1996 Mar Jan Jan Nov Mar Mar 1995 1995 1995 1994 1995 1995
Issue date Oct 2002 Oct 2002 Oct 2002 Oct Oct Oct Aug 2002 2002 2002 2003
Nov 2003
Oct 1999 Mar 1995 Mar 1995
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exam notes
220 230 240 300 400 410 420 430 440 450 460 470 480 500 510 520 600 601 610
PRACTICE NOTES (PNs) No Title Issue date PN 8 Reports by auditors under company legislation in the United Kingdom Aug 1994 PN 13 The audit of small businesses July 1997 PN 16 Bank reports for audit purposes Aug 1998 Statement 913 Access to working papers by investigating accountants DISCUSSION PAPERS (Note 2) No Title Prospective financial information: challenging the assumptions Fraud and audit: choices for society Independent professional review Aggressive earnings management Briefing Paper Providing assurance on the effectiveness of internal control BULLETINS No B99/4 B99/5
B99/6 2001/01
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exam notes
Materiality and the audit Working papers Quality control for audit work (Revised) Accounting and internal control systems and audit risk assessments Audit evidence Analytical procedures Audit of accounting estimates Audit sampling Management representations Opening balances and comparatives Related parties Overall review of financial statements Service organisations Considering the work of internal audit The relationship between principal auditors and other auditors Using the work of an expert Auditors reports on financial statements Imposed limitation of audit scope Communication of audit matters to those charged with governance Mar 1995 Mar 1995 Sept 2000 Mar Mar Mar Mar Mar Mar Mar Nov Mar Jan Mar Mar Mar May Mar 1995 1995 1995 1995 1995 1995 1995 1995 1995 1999 1995 1995 1995 1993 1999 June 2001 Issue date Apr Nov May June 1998 1998 2000 2001 July 2001 Title Review of interim financial information The Combined Code: Requirements of auditors under the listing rules of the London Stock Exchange The auditors statement on the summary financial statement The electronic publication of auditors reports Issue date July 1999 Nov 1999 Dec 1999 Jan 2001 exam notes
2001/02
2001/03
Revisions to the wording of auditors reports on financial statements and the interim review report E-business: Identifying financial statement risks
Jan 2001 Apr 2001
STATEMENT OF STANDARDS FOR REPORTING ACCOUNTANTS (SSRA) Title Issue date Audit Exemption Reports Oct 1994 EXPOSURE DRAFTS (EDs) Title Issue date Draft Ethical Standards for Auditors Nov 2003 ES1 Integrity, objectivity and independence ES2 Financial, business, employment and personal relationships ES3 Long association with the audit engagement ES4 Fees, economic dependence, remuneration and evaluation policies, litigation, gifts and hospitality ES5 Non-audit services provided to audit clients OTHER GUIDANCE Title Issue date ACCAs Rules of Professional Conduct IFACs Code of Ethics for Professional Accountants The Combined Code (of the Committee on Corporate Governance) IAPS 1014 Reporting by Auditors on Compliance with International Financial Reporting Standards Mar 2003 NOTES 1 Students are advised that questions will be based on the principles and good practice set out in APB pronouncements. 2 Topics of Discussion/Consultation Papers/Exposure Drafts are examinable to the extent that relevant articles about them are published in student accountant. 3 Documents under Other Guidance are examinable only to the extent that they are relevant to topics specified in the Syllabus and Study Guide. APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. Questions in both sections will be almost entirely discursive. However, candidates will be expected, for example, to be able to assess materiality and calculate relevant ratios where applicable. Number of marks 70 30 100
Section A: 3 compulsory questions Section B: Choice of 2 from 3 questions (15 marks each)
PAPER 3.6 ADVANCED CORPORATE REPORTING (INT) * Students should note that items denoted by an asterisk are also examinable in Paper 2.5. INTERNATIONAL ACCOUNTING STANDARDS (IASs)/ INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) No Title Issue date IAS 1* Presentation of Financial Statements Aug 1997 IAS 2* Inventories Dec 1993 IAS 7* Cash Flow Statements (including groups and foreign currency) Dec 1992 IAS 8* Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies Dec 1993 IAS 10* Events after the Balance Sheet Date May 1999 IAS 11* Construction Contracts Dec 1993 IAS 12* Income Taxes Oct 1996 IAS 14* Segment Reporting Aug 1997 IAS 15* Information Reflecting the Effects of Changing Prices Dec 1993 IAS 16* Property, Plant and Equipment Sept 1998 IAS 17* Leases Dec 1997 IAS 18* Revenue Dec 1993 IAS 19 Employee Benefits May 2002 IAS 20* Accounting for Government Grants and Disclosure of Government Assistance Jan 1995 IAS 21 The Effects of Changes in Foreign Exchange Rates (including financial statements of foreign operations) Dec 1993 IAS 22* Business Combinations Sept 1998 IAS 23* Borrowing Costs Dec 1993 IAS 24* Related Party Disclosures Jan 1995 IAS 27* Consolidated Financial Statements and Accounting for Investments in Subsidiaries Jan 1995 IAS 28* Accounting for Investments in Associates Sept 1998 IAS 29 Financial Reporting in Hyperinflationary Economies Jan 1995 IAS 31* Financial Reporting of Interests in Joint Ventures Sept 1998 IAS 32* Financial Instruments: Disclosure and Presentation June 1995 IAS 33* Earnings per Share Feb 1997 IAS 34* Interim Financial Reporting Feb 1998 IAS 35* Discontinuing Operations June 1998 IAS 36* Impairment of Assets June 1998 IAS 37* Provisions, Contingent Liabilities and Contingent Assets Sept 1998 IAS 38* Intangible Assets Sept 1998 IAS 39* Financial Instruments: Recognition and Measurement Dec 1998
IAS 40* Investment Property IAS 41 Agriculture IFRS 1* First-time Adoption of International Financial Reporting Standards OTHER STATEMENTS Title *Framework for the Preparation and Presentation of Financial Statements
Apr 2000 Feb 2001 June 2003
Issue date July 1989
INTERPRETATIONS OF THE INTERNATIONAL FINANCIAL REPORTING INTERPRETATIONS COMMITTEE (IFRIC) No Title Issue date SIC1* Consistency Different Cost Formulas for Inventories Dec 1997 SIC2* Consistency Capitalisation of Borrowing Costs Dec 1997 SIC3* Elimination of Unrealised Profits and Losses on Transactions with Associates Dec 1997 SIC5 Classification of Financial Instruments Contingent Settlement Provisions May 1998 SIC6 Costs of Modifying Existing Software June 1999 SIC7 Introduction of the Euro May 1998 SIC9* Business Combinations Classification Either as Acquisitions or Unitings of Interest July 1998 SIC10* Government Assistance No Specific Relation to Operating Activities July 1998 SIC11 Foreign Exchange Capitalisation of Losses Resulting from Severe Currency Devaluations July 1998 SIC12 Consolidation Special Purpose Entities Nov 1998 SIC13 Jointly Controlled Entities Non-monetary Contributions by Venturers Nov 1998 SIC14* Property, Plant and Equipment Compensation for the Impairment or Loss of Items Nov 1998 SIC15 Operating Leases Incentives Nov 1998 SIC16* Share capital Required Own Equity Instruments (Treasury Shares) Jan 1999 SIC17* Equity Costs of an Equity Transaction Jan 2000 SIC18* Consistency Alternative Methods Jan 2000 SIC19 Reporting Currency Measurement and Presentation of Financial Statements under IAS 21 and IAS 29 July 2000 SIC20 Equity Accounting Method Recognition of Losses July 2000 SIC21 Income Taxes Recovery of Revalued Non-Depreciable Assets July 2000 SIC22* Business Combinations Subsequent Adjustment of Fair Values and Goodwill Initially Reported July 2000 SIC23* Property, Plant and Equipment Major Inspection or Overhaul Costs July 2000 SIC24 Earnings per Share Financial Instruments and other Contracts that may be Settled in Shares Nov 2000
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exam notes
SIC25 Income Taxes Changes in the Tax Status of an Enterprise or its Shareholders SIC27 Evaluating the Substance of Transactions in the Legal Form of a Lease SIC28 Business Combinations Date of Exchange and Fair Value of Equity Instruments SIC29 Disclosure Service Concession Arrangements SIC30 Reporting Currency Translation from Measurement Currency to Presentation Currency SIC31 Revenue Barter Transactions Involving Advertising Services SIC32 Intangible Assets Website Costs SIC33 Consolidation and Equity Method Potential Voting Rights and Allocation of Ownership Interests
EDS, DISCUSSION PAPERS AND OTHER DOCUMENTS Candidates sitting Paper 3.6 are expected to be aware of the issues/ reasons which have led to the publication of the following documents, indicated as examinable in the list below, and to appreciate the main thrust of these documents. Title ED 2 ED 3 ED 4 Issue date Nov 2002 Dec 2002 July 2003 July 2003 May 2002
Share-based Payment Business Combinations Disposal of Non-Current Assets and Presentation of Discontinued Operations ED 5 Insurance Contracts Improvements to International Accounting Standards Amendments to IAS 39, Financial Instruments: Recognition and Measurement, and IAS 32, Financial Instruments: Disclosure and Presentation PAPER 3.6 ADVANCED CORPORATE REPORTING (GBR)
* Students should note that items denoted by an asterisk are also examinable in Paper 2.5. STATEMENTS OF STANDARD ACCOUNTING PRACTICE (SSAPs) No Title Issue date * Foreword to Accounting Standards Jan 1993 4* Accounting for government grants July 1990 5* Accounting for valued added tax Apr 1974 9* Stocks and long-term contracts Sept 1988 13* Accounting for research and development Jan 1989 17* Accounting for post balance sheet events Aug 1980 19* Accounting for investment properties Nov 1981 Amendment to SSAP 19 July 1994 20 Foreign currency translation (including aspects on consolidation financial statements) Apr 1983 21* Accounting for leases and hire purchase contracts Aug 1984 25* Segmental reporting June 1990
42
exam notes
July 2000 Feb 2000 Feb 2001 May 2001 May 2001 Aug 2001 July 2001 Aug 2001 FINANCIAL REPORTING STANDARDS (FRSs) No Title 1* Cash Flow Statements (including group cash flow statements) 2* Accounting for Subsidiary Undertakings 3* Reporting Financial Performance (including group aspects) 4* Capital Instruments 5* Reporting the Substance of Transactions 6* Acquisitions and Mergers 7* Fair Values in Acquisition Accounting 8* Related Party Disclosures 9* Associates and Joint Ventures 10* Goodwill and Intangible Assets 11* Impairment of Fixed Assets and Goodwill 12* Provisions, Contingent Liabilities and Contingent Assets 13 Derivatives and other Financial Instruments: Disclosures 14* Earnings per Share 15* Tangible Fixed Assets 16* Current Tax 17 Retirement Benefits 18* Accounting Policies 19* Deferred Tax OTHER STATEMENTS Title *Operating and Financial Review *Statement of Principles for Financial Reporting Interim reports Financial Reporting Standards for smaller entities (FRSSE) Issue date Oct 1996 June 1992 Oct 1992 Dec 1993 Apr 1994 Sept 1994 Sept 1994 Oct 1995 Nov 1997 Dec 1997 July 1998 Sept 1998 Sept 1998 Oct 1998 Feb 1999 Dec 1999 Nov 2000 Dec 2000 Dec 2000 June 2002 Issue date July 1993 Dec 1999 Sept 1997 Dec 2001 URGENT ISSUES TASK FORCE (UITF) ABSTRACTS Students sitting Paper 3.6 are expected to be aware of the issues/ reasons which have led to the publication of a UITF abstract indicated as examinable in the list below, and their principal requirements. * Documents denoted by an asterisk are also examinable in Paper 2.5. No UITF Abstract 4* UITF Abstract 5* UITF Abstract 9 UITF Abstract 11 UITF Abstract 13 Title Issue date Foreword to UITF Abstracts Feb 1994 Presentation of long-term debtors in current assets July 1992 Transfers from current assets to fixed assets July 1992 Accounting for operations in hyperinflationary economies June 1993 Capital Instruments: issuer call options Sept 1994 Accounting for ESOP Trusts June 1995 exam notes student accountant February 2004
Professional Scheme
management accounting and financial management papers
UITF Abstract 15*Disclosure of substantial acquisitions Feb UITF Abstract 19 Tax on gains and losses on foreign currency borrowings that hedge an investment in a foreign enterprise Feb UITF Abstract 21 Accounting issues arising from the proposed introduction of the Euro Mar UITF Abstract 21 Appendix Aug UITF Abstract 23 Application of the transition rules in FRS 15 May UITF Abstract 24 Accounting for start-up costs June UITF Abstract 25 National Insurance contributions on share option gains July UITF Abstract 27 Revision to estimates of the useful economic life of goodwill and intangible assets Dec UITF Abstract 28 Operating lease incentives Feb UITF Abstract 29 Website development costs Feb UITF Abstract 30 Date of award to employees of shares or rights to shares Mar UITF Abstract 31 Exchanges of businesses or other non-monetary assets for an interest in a subsidiary, joint venture or associate Oct UITF Abstract 32 Employee benefit trusts and other intermediate payment arrangements Dec UITF Abstract 33 Obligations in capital instruments Feb UITF Abstract 34 Pre-contract costs May UITF Abstract 35 Death-in-service and incapacity benefits May UITF Abstract 36 Contracts for sales of capacity Mar UITF Abstract 37*Purchases and sales of own shares Oct
1999
1998 1998 1998 2000 2000 2000 2000 2001 2001 2001
FRED 24 The Effects of Changes in Foreign Exchange Rates. Financial Reporting in Hyperinflationary Economies May FRED 25 Related Party Disclosures May FRED 26 Earnings Per Share May FRED 27 Events After the Balance Sheet Date May FRED 29 Property, Plant and Equipment Borrowing Costs May FRED 30 Financial Instruments: Disclosure and Presentation, Recognition and Measurement June IASB Proposals to Amend Certain International Accounting Standards (consultation paper) IASB Proposals on Business Combinations, Impairment and Intangible Assets DISCUSSION PAPERS AND OTHER DOCUMENTS Title Year-end Financial Reports: Improving communication The Combined Code on Corporate Governance Revenue recognition IFRS 1* First-time Adoption of International Financial Reporting Standards
2002 2002 2002 2002 2002 2002
May 2002 Dec 2002
Issue date Feb 2000 July 2003 July 2001 June 2003
2001 2001 2002 2002 2002 2003 2003
FRRP PRONOUNCEMENT Candidates sitting Paper 3.6 need to understand the role of the FRRP which is to examine companies accounts to determine whether, in its opinion, the accounts should be revised. The FRRP has reviewed the accounts of a number of companies and students should be aware of the comments issued by the FRRP . APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper divided into two sections. The Study Guide provides more detailed guidance on the syllabus. Number of marks 25 75 100
FINANCIAL REPORTING EXPOSURE DRAFTS (FREDs), DISCUSSION PAPERS, FINANCIAL REPORTING REVIEW PANEL (FRRP) PRONOUNCEMENTS AND STATEMENTS Candidates sitting Paper 3.6 are expected to be aware of the issues/ reasons which have led to the publication of a DP or FRED, indicated as examinable in the list below, and to appreciate the main thrust of these documents. FINANCIAL REPORTING EXPOSURE DRAFTS (FREDs) No Title FRED 22 Revision of FRS 3 Reporting Financial Performance FRED 23 Financial Instruments: Hedge Accounting FRED 31 Share-based Payment FRED 32 Disposal of Non-Current Assets and Presentation of Discontinued Operations
Section A: 1 compulsory question Section B: Choice of 3 from 4 questions (25 marks each) Issue date Dec 2000 May 2002 Nov 2002 July 2003 PAPER 1.2 FINANCIAL INFORMATION FOR MANAGEMENT
APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. Both sections will draw from all parts of the syllabus and will contain both computational and discursive elements.
FRED 24-30 and IASB Proposals to change international accounting standards will be examined on the basis of the effect of the main changes proposed to existing UK requirements.
43
exam notes
Section A: 25 compulsory multiple-choice questions (2 marks each) Section B: 5 compulsory short-form questions (10 marks each)
Candidates will be provided with a formulae sheet, which will be published in the resources section of the March issue of student accountant. Paper 1.2 can also be taken as a three-hour computerbased exam. The Study Guide provides more detailed guidance on the syllabus. PAPER 2.4 FINANCIAL MANAGEMENT AND CONTROL APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper in two sections. Financial management issues will always, but not exclusively, be examined in Section A. The Section A question will typically be a scenario-based question. Most of the Section B questions will contain a mix of computation and discursive elements although it is intended that at least one question will be entirely discursive. The balance between computation and discursive elements will remain largely constant from one examination to the next. Number of marks 50 50 100
Section A: 1 compulsory scenario-based question Section B: Choice of 2 from 4 questions (25 marks each)
The formulae for Linear Regression and Economic Order Quantity will be provided in the examination. Present Value and Annuity tables will also be provided. The Study Guide provides more detailed guidance. PAPER 3.3 PERFORMANCE MANAGEMENT APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper constructed in two sections. The Section A questions will normally be in the form of a case study or case scenario. Section B questions will comprise at least one question that is purely discursive and other(s) will incorporate both computational and discursive components. Number of marks Section A: 2 compulsory questions (no question will exceed 45 marks) Section B: Choice of 2 from 3 questions (20 marks each) 60 40 100
44
exam notes
Number of marks 50 50 100 exam notes
Professional Scheme
management and IT papers
Present Value and Annuity tables will be provided in the examination as required. The Study Guide provides more detailed guidance on the syllabus. PAPER 3.7 STRATEGIC FINANCIAL MANAGEMENT APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour paper comprising a mix of computational and discursive elements. The compulsory questions will normally be in the form of a case study or case scenario. Key areas of the syllabus will always be tested in the compulsory questions, and may be tested in the elective questions. Number of marks 70 30 100
Section A: 2 compulsory questions Section B: Choice of 2 from 4 questions (15 marks each)
As well as the formulae sheet, candidates will also be provided with Present Values tables, Annuity tables and Standard Normal Distribution Tables. The Study Guide provides more detailed guidance on the syllabus. PAPER 1.3 MANAGING PEOPLE APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour written paper in two sections, A and B. Section A consists of a brief scenario with one compulsory question worth 40 marks, comprising a range of 6-7 requirements each carrying between 5-10 marks. Candidates should apply relevant theoretical knowledge from the main areas of the syllabus to the information contained within the scenario to achieve the highest marks. Section B consists of five essay-type questions assessing knowledge acquired from all five main areas of the syllabus. Each question carries 15 marks and candidates must attempt four questions, giving a possible total of 60 marks for that section. Candidates should be aware that although questions in Section B may have several parts, answers should be presented in essay form. Candidates need to show a conceptual understanding of each topic area, and not simply list points. Candidates should also be aware that although the course may be taught as a number of discrete topics, individual examination questions may combine or integrate more than one area. The Study Guide provides more detailed guidance on the syllabus. Number of marks 40 60 100
Section A: 1 compulsory scenario-based question Section B: Choice of 4 from 5 questions (15 marks each)
exam notes
PAPER 2.1 INFORMATION SYSTEMS APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour written paper in two sections, A and B. Section A consists of a scenario with three compulsory questions selected from the breadth of the syllabus, closely linked to the scenario. Each question is worth 20 marks, giving a total of 60 marks for this section. Candidates should properly apply their theoretical knowledge to the information contained within the scenario to achieve the highest marks in this section. Section B consists of three independent questions, one question from each of the main areas of the syllabus. Each question carries 20 marks. Candidates must attempt two questions, giving a possible total of 40 marks for Section B. Number of marks Section A: 3 compulsory 20-mark scenario-based questions 60 Section B: Choice of 2 from 3 20-mark questions 40 100 The examination does not assume the use of any particular systems development methodology. Practical questions will be set in such a way that they can be answered by any methodology. The Study Guide provides more detailed guidance on the syllabus. OTHER GUIDANCE Documenting and modelling user requirements Paper 2.1 Study Guide Sessions 12, 13 and 14 require candidates to briefly describe different approaches to modelling and to describe and apply in detail one notation (each) for processes, static structures and events. Until now, no specific guidance has been given on which models to teach. However, it is now clear that tutors, publishers and candidates require clarification. Session 12 Session 12 requires candidates to describe and apply a process model. The prescribed models for this session are data flow diagrams and flowcharts. Either of these may be learnt in detail and applied in the examination. Data flow diagrams have symbols for processes, data stores, external entities (sources and sinks) and data flows. They also have certain rules of construction. For example, one data store cannot be directly connected to another and data cannot flow directly from an external entity to a data store (or vice versa). A popular notation is that of SSADM, but alternatives such as the Yourdon/de Marco notation and the Gane & Sarson notation are perfectly acceptable. Candidates should understand how the data flow diagram is decomposed into lower-level data flow diagrams but they will not be expected to undertake such decomposition (or annotate it) in an examination. Flowcharts are well-established process models. They usually have symbols for showing processes, decisions, data stores, documents and
flows. The symbols used in Microsoft Word templates for flowcharts, together with arrow-headed lines for flows, should be sufficient for examination purposes. The Unified Modeling Language (UML) includes the activity diagram, which is essentially a flowcharting model. This notation has symbols for initial and final states, action states, branches and concurrency. It is an acceptable alternative to the traditional flowchart. There is no requirement to show sub-activity states. Like most flowcharts, activity diagrams allow the symbols to be organised in swimlanes to show who is handling the information. Swimlanes may be organised horizontally or vertically. Session 13 Session 13 requires candidates to describe and apply a business structure model. The prescribed models are Entity-relationship models (Logical Data Models) and class models. Either one of these may be learnt in detail and applied in the examination. Entity-relationship models have symbols for entities, the relationships between the entities and the cardinalities (degree) of those relationships (i.e. 1:1, 1:many, many:many). Learning entity sub-types and super-types bring these models more into line with the class models discussed below. A common sense allocation of attributes to entities should also be understood. These attributes may be described within the entity or, perhaps more easily, in a simple list showing which attributes are in each entity. A formal approach to normalisation, the definition of foreign keys and the naming of relationships are not required. However, candidates should learn the decomposition of a many:many relationship to assist them in the allocation of attributes to appropriate entities. The UML has an extensive notation for class models. Candidates should be able to identify classes, attributes within classes, simple associations and their cardinalities (i.e. multiplicities). Generalisation (inheritance) of attributes should also be learnt, as should association classes. However, it is unnecessary for candidates to handle composition and aggregation. Furthermore, operations, polymorphism, abstraction and association naming are also outside the scope of the syllabus. Session 14 This session requires candidates to describe and apply a business event model. The prescribed models are statechart diagrams (state transition diagrams) and entity life histories. Either one of these may be learnt in detail and applied in the examination. The UML statechart diagram has symbols for initial state, final state, states, transitions, events and actions. The nesting of states should be learnt but there is no requirement for showing decomposition of states or the modeling of guards. Entity life histories have a notation for showing the entity, the sequence of events affecting that entity, the iteration of events and the selection of events. There is no requirement for showing parallel events. Operations should be taught (as these make the entity life history clearer) but there is no need to show operations for forming or breaking relationships with other entities or for showing state indicators.
45
exam notes
Professional Scheme
law paper
PAPER 3.4 BUSINESS INFORMATION MANAGEMENT APPROACH TO EXAMINING THE SYLLABUS The examination is a three-hour written paper in two sections, A and B. Section A is based on a business scenario. It contains three compulsory questions from across the syllabus which relate to the scenario. Students are expected to discuss and apply the theory specifically to the material within the scenario to attract the highest marks. Each question in Section A attracts 20 marks, giving a total of 60 for the section. Section B contains three independent questions drawn from the breadth of the syllabus, which are not related to the scenario in Section A. Each question is worth 20 marks. Candidates must answer two questions, giving a total of 40 marks for Section B. Number of marks Section A: 3 compulsory scenario-based 20-mark questions 60 Section B: Choice of 2 from 3 20-mark questions 40 100 The paper examines various business information management and strategic models and relevant analytical tools and techniques. The paper also examines generic strategic and planning models adapted and applied from a business information management perspective. OTHER GUIDANCE The new Study Guide has been amended to slightly reorganise the content and to specify more assessable models and topics. The points to take into account are as follows: Session 2 Expert Systems is specifically mentioned so there are now seven major types of Information Systems under 2(a). Sessions 3/4 An additional requirement (f) has been added Explain Earls IS, IT and IM strategies. Session 10 An additional requirement (d) has been added Apply Porters Five Forces models to scenarios. Session 11 Michael Earls Three Leg Analysis has been added in Session 11b (Discuss the alignment of business strategy) this topic was examined in the December 2002 examination. The requirements 26 (c), (d) and (e) of the previous Study Guide have been moved to the end of Session 11. Sessions 15/16 Rich Pictures have been specifically added after CATWOE under (b) and a requirement (c) has been added Evaluate the differences between hard and soft systems approaches. Session 20 A new requirement (c) has been added Apply McLaughlins SWOT approach to scenarios. Session 24 Lewins Three Stage change process has now been specified under (g). Session 25 A new requirement (f) has been added Explain the importance of commitment, coordination and communication (The Three Cs) to the change process.
PAPER 3.5 STRATEGIC BUSINESS PLANNING AND DEVELOPMENT APPROACH TO EXAMINING THE SYLLABUS This paper examines the practical application of the strategic aspects of business planning and development from an integrated perspective. Operational activities will only be introduced where they impinge upon strategic considerations. The examination is a three-hour paper in two sections, A and B. Section A will be in the format of one major case study question, usually with three to four parts worth between 10 and 20 marks each, giving a total of 60 marks for this section. The case study question is compulsory and focuses on the core areas within the syllabus linked to the material included within the case. Candidates should properly apply their theoretical knowledge to the information contained within the case study to achieve the highest marks in this section. The questions in Section A will be mainly discursive, although some financial or quantitative data usually needs to be analysed. Section B consists of three independent questions worth 20 marks each, not linked to the case study in Section A. Candidates are required to attempt two questions, giving a possible total of 40 marks for Section B. Number of marks Section A: 1 compulsory 60-mark scenario-based question 60 Section B: Choice of 2 from 3 20-mark questions 40 100 OTHER GUIDANCE As clarification for students and tuition providers, the examiner wishes to make it clear that Section 5d of the Syllabus and Session 19d (ii) of the Study Guide, covering the management of information systems development, will not be assessed in this paper. This area is already covered in operational terms in Paper 2.1, Managing Information Systems. This paper will only examine strategic aspects of information systems and human resource management to the extent that these functional areas support a wider business and marketing strategy. While these areas still remain in the current Syllabus and Study Guide of Paper 3.5, these sections will be removed from the next version of the Syllabus and Study Guide to be published in June 2004. The Study Guide provides more detailed guidance on the syllabus. PAPER 2.2 CORPORATE AND BUSINESS LAW The following points are applicable to all variants of this examination. EXAMINABLE LEGISLATION ACCA applies a six-month rule. Questions requiring an understanding of new legislation will not be set until at least six calendar months after the last day of the month in which the legislation received Royal Assent or similar procedure in any of the variant paper countries.
46
exam notes
Therefore, for the June 2004 examination the relevant last day was 30 November 2003. Number of marks 60 40 100
Section A: 6 (out of 8) questions of 10 marks each Section B: 2 (out of 4) questions of 20 marks each
are registered in a country other than Malta, in Malta. The Minister also issued regulations on the continuance of companies registered in Malta in an overseas jurisdiction. The regulations provide for the procedure to be followed to bring such continuation of corporate existence into effect in Malta and in the overseas jurisdiction which may be selected for such continuation. Companies Act In virtue of Act IV of 2003 (Set-Off and Netting on Insolvency Act, 2003) various amendments were introduced to the Companies Act, which amendments came into force on 1 June 2003. Such amendments include provisions on the duties of directors, limited partnerships engaged in the collective investment of funds, and company recoveries. Company Recovery Procedure Where a company is unable to pay its debts or is imminently likely to become unable to pay its debts, an application may be made to the courts to place the company under Company Recovery Procedure and to issue a Company Recovery Order in terms of which a Special Controller shall be appointed to take over and manage the business of the company. Once appointed, the company shall continue to carry out its normal activities under the supervision of the Special Controller. Employment and Industrial Relations Previously, employment law emanated principally out of the Conditions of Employment (Regulations) Act and The Industrial Relations Act. These two pieces of legislation have now been repealed and have been replaced by the Employment and Industrial Relations Act 2002. The new law now regulates both employment relations and industrial relations. The main provisions dealing with employment relations regulate contracts of employment. Provisions include: the minimum amount of information to be given to employees in the absence of a contract of service or of a contract which fails to provide for the prescribed conditions of employment the protection of wages the protection from harassment and victimisation gender equality and the termination of employment. Complementing these provisions are various regulations which have been brought into force by Legal Notices covering areas such as collective redundancies, parental leave, fixed-term contracts and the guarantee fund. The Act also regulates the settlement of trade disputes providing for the different modes of settlement and the procedure to be adopted in each case. It is pertinent to note that the powers of the Industrial Tribunal have been extended and the Tribunal is featured as the principal mode of dispute settlement. It should also be noted that while the new law introduces various new concepts bringing Maltese legislation in line with modern employment and labour legislation, law is also transposed from previous legislation (updating where required)
exam notes
Section A will contain short, knowledge-based questions. Questions in Section B will be problem-based and will test communication skills and the ability to appraise and analyse information. PAPER 2.2 (ENG) AND PAPER 2.2 (SCT) The Companies Act You are expected to answer questions in accordance with the Companies Act 1985 as amended by the Companies Act 1989. Knowledge is also required of the Business Names Act 1985, the Company Directors Disqualification Act 1986, the Insolvency Act 1986, the Criminal Justice Act 1993 in relation to insider dealing, and the Financial Services and Markets Act 2000. Partnerships As regards partnerships, knowledge will be required of the Partnership Act 1890, the Limited Partnerships Act 1907, and the Limited Liability Partnerships Act 2000. Employment Employment law notice should be taken of the fact that the main legislation is now the Employment Rights Act 1996 but knowledge will also be expected of the Disability Discrimination Act 1995, the Race Relations Act 1976, the Sex Discrimination Act 1975, and the Equal Pay Act 1970. Contract Contract law candidates will be expected to have a knowledge of the Unfair Contract Terms Act 1977, the Unfair Terms in Consumer Contracts Regulations Act 1999, and the Contracts (Rights of Third Parties) Act 1999. It should be remembered that neither frustration nor misrepresentation will be examined as they are no longer contained in the syllabus. English Legal System Knowledge of the Human Rights Act 1998 is expected. PAPER 2.2 (MLA) Continuance of companies In terms of article 425(4) of the Companies Act 1995, the Minister issued regulations on the continuance of companies in Malta which
47
exam notes
Professional Scheme
tax papers
including several features of employment and industrial law. These are still deemed applicable and relevant despite the passage of time. PAPER 2.3 BUSINESS TAXATION EXAMINABLE LEGISLATION ACCA applies a six-month rule in that questions requiring an understanding of new legislation will not be set until at least six calendar months after the last day of the month in which the legislation received Royal Assent or similar procedure in any of the variant paper countries. Therefore, for the June 2004 examinations the relevant last day was 30 November 2003. The same rule applies to the effective date of the provisions of an Act introduced by Statutory Instrument. PAPER 2.3 (GBR) Please note the following notes refer to the UK taxation paper only. FINANCE ACT The latest Finance Act which will be examined in Paper 2.3 (GBR) at the June 2004 session is the Finance Act 2003. With regard to prospective legislation when, for example, provisions included in the Finance Act will only take effect at some date in the future, such legislation will not normally be examined until such time as it actually takes effect. TAX LIABILITY AND TAX PAYABLE The following standardised terms will be used in the requirements of examination questions on income tax: Tax Liability: The total income tax liability after deducting any allowances or reliefs, and adding any basic rate tax retained from charges on income (such as patent royalties). Tax Payable: The tax liability after deducting credits for any tax already suffered. Payments on account under self-assessment should only be taken into account if a question specifies that this is to be done. Otherwise, they can be ignored. TAX RATES AND ALLOWANCES The following tax rates and allowances will be reproduced in the examination paper for Paper 2.3 (GBR). In addition, other specific information necessary for candidates to answer individual questions will be given as part of the question. For example, in the case of corporate chargeable gains the relevant retail prices index for particular dates will be given. Income Tax Starting rate Basic rate Higher rate 1 to 1,960 1,961 to 30,500 30,501 and above % 10 22 40
Personal Allowance Personal allowance Car Benefit Percentage The base level of CO2 emissions is 155 grams per kilometre. Car Fuel Benefit The base figure for calculating the car fuel benefit is 14,400.
4,615
Personal Pension Contribution Limits The maximum contribution that can be made without evidence of earnings is 3,600. Age at start of tax year Up to 35 36 to 45 46 to 50 51 to 55 56 to 60 61 or more Subject to an earnings cap of 99,000 Capital Allowances % Plant and machinery Writing-down allowance First-year allowance - Plant and machinery - Information and communication technology equipment (until 31 March 2004) - Low emission motor cars Long-life assets Writing-down allowance Industrial buildings allowance Writing-down allowance Corporation Tax Financial year Starting rate Small companies rate Full rate Starting rate lower limit Starting rate upper limit Lower limit Upper limit Marginal relief fraction Starting rate Small companies rate 25 40 Maximum % 17.5 20 25 30 35 40
100 100 6 4
2001 10% 20% 30% 10,000 50,000 300,000 1,500,000 1/40 1/40
2002 nil 19% 30% 10,000 50,000 300,000 1,500,000 19/400 11/400
2003 nil 19% 30% 10,000 50,000 300,000 1,500,000 19/400 11/400
48
exam notes
exam notes
The latest Finance Act which will be examined in Paper 2.3 (GBR) at the June 2004 session is the Finance Act 2003. With regard to prospective legislation when, for example, provisions included in the Finance Act will only take effect at some date in the future, such legislation will not normally be examined until such time as it actually takes effect.
Marginal Relief (M - P) x I/P x Marginal relief fraction Value Added Tax Registration limit Deregistration limit Rates of Interest Official rate of interest Rate of interest on underpaid tax Rate of interest on overpaid tax Capital Gains Tax: Annual Exemption Individuals Capital Gains Tax: Taper Relief Complete years after Gains on 5 April 1998 for business which asset held assets 1 50% 2 25% 3 25% 4 25% 5 25% 6 25% 7 25% 8 25% 9 25% 10 or more 25% 56,000 54,000
APPROACH TO EXAMINING THE SYLLABUS Number of marks 55 45 100
Section A: 2 compulsory questions Section B: 3 (out of 5) questions of 15 marks each
The following approach will be adopted in setting the June 2004 paper. 5.0% 6.5% (assumed) 2.5% (assumed) SECTION A Only core topics will be examined in Section A. A non-core topic may form part of a question (such as a chargeable gain in a corporation tax computation), but this will account for a maximum of 10 marks. Question 1 will be on a corporate business (for approx. 30 marks). Question 2 will be on an unincorporated business and/or employees (for approx. 25 marks). At least 40 of the 55 available marks in Section A will be of a computational nature. SECTION B Question 3 will be on VAT (either for an incorporated business or an unincorporated business). Question 4 will be on capital gains (either for an incorporated business or an unincorporated business). Question 5 will be on either groups of companies or overseas aspects. Question 6 will be on one of the six listed tax planning topics. Question 7 will be on any area of the syllabus, but will typically deal with a core topic that has not been covered in Section A. The questions in Section B will be a mix of computational and written, and could include the minimisation or deferral of tax liabilities by the identification and application of relevant exemptions and reliefs. Candidates are reminded that they can attempt any three of the five optional questions, and that the questions do not need to be attempted in sequence. Knowledge of section numbers will not be needed to understand questions in this paper, nor will students be expected to use them in their answers. If students wish to refer to section numbers in their answers they may do so and will not be penalised if old, or even incorrect, section numbers are used. PERSONAL ALLOWANCES AND RELIEFS For Paper 2.3 (GBR) the only personal allowance that is examinable is the personal allowance of 4,615 for people aged under 65. The working families tax credit and the childrens tax credit are not examinable. TAX LAW REWRITE The latest section of legislation to be rewritten as part of the tax law rewrite project concerns the taxation of employees. Although the new legislation does not in any way change existing legislation, it uses the
7,900
Gains on non-business assets 100% 100% 95% 90% 85% 80% 75% 70% 65% 60%
National Insurance Contributions (not contracted out rates) Class 1 Employee 1 - 4,615 per year 4,616 - 30,940 per year 30,941 and above per year 1 - 4,615 per year 4,616 and above per year 2.00 per week 1 - 4,615 per year 4,616 - 30,940 per year 30,941 and above per year Nil 8.0 1.0 % Nil 11.0 1.0 Nil 12.8
Class 1 Employer
Class 2 Class 4
Calculations and workings need only be made to the nearest . All apportionments may be made to the nearest month. All workings should be shown.
49
exam notes
term earnings instead of emoluments and the term benefits instead of benefits in kind. In addition, the term Schedule E is no longer used. The legislation instead uses employment income or some other appropriate description. Only the new plain English terms will be used in the examination. PAPER 3.2 ADVANCED TAXATION EXAMINABLE LEGISLATION ACCA applies a six-month rule in that questions requiring an understanding of new legislation will not be set until at least six calendar months after the last day of the month in which the legislation received the Royal Assent or similar procedure in any of the variant paper countries. Therefore, for the June 2004 examinations the relevant last day was 30 November 2003. The same rule applies to the effective date of the provisions of an Act introduced by statutory instrument. PAPER 3.2 (GBR) FINANCE ACT The latest Finance Act which will be examined in Paper 3.2 at the June 2004 session is the Finance Act 2003. With regard to prospective legislation when, for example provisions included in the Finance Act will only take effect at some date in the future, such legislation will not normally be examined until such time as it actually takes effect. TAX RATES AND ALLOWANCES The following tax rates and allowances will be reproduced in the examination paper for Paper 3.2. In addition, other specific information necessary for candidates to answer individual questions will be given as part of the question. Income Tax See page 48 Income Tax Personal Allowance Personal allowance Personal allowance 65 to 74 Personal allowance 75 and over Married couples allowances 65 to 74 Married couples allowances 75 and over Maximum married couples allowances where income exceeds the limit Income limit for age-related allowances Blind persons allowance Car Benefit Percentage See page 48 Car Benefit Percentage Car Fuel Benefit See page 48 Car Fuel Benefit
50
exam notes
4,615 6,610 6,720 5,565 5,635 2,110 18,300 1,510 exam notes
The latest Finance Act which will be examined in Paper 3.2 (GBR) at the June 2004 session is the Finance Act 2003. With regard to prospective legislation when, for example provisions included in the Finance Act will only take effect at some date in the future, such legislation will not normally be examined until such time as it actually takes effect.
Personal Pension Contribution Limits See page 48 Personal Pension Contribution Limits Capital Allowances See page 48 Capital Allowances Corporation Tax See page 48 Corporation Tax Marginal Relief See page 49 Marginal Relief Value Added Tax See page 49 Value Added Tax Inheritance Tax 1 to 255,000 Excess Rates of Interest See page 49 Rates of Interest Capital Gains Tax: Annual Exemption Individuals Trusts (divided by number of qualifying settlements created by the same settlor, on the same day to a minimum of one fifth) Capital Gains Tax: Taper relief See page 49 Capital Gains Tax: Taper relief National Insurance Contributions (not contracted out rates) See page 49 National Insurance Contributions (not contracted out rates) Stamp Duty Ad Valorem duty Property (other than shares) 60,000 or less 60,001 to 250,000 250,001 to 500,000 500,001 or more Shares Fixed Duty
Nil 40%
7,900
3,950
Rate Nil 1% 3% 4% 0.5% 5
Calculations and workings need only be made to the nearest . All apportionments may be made to the nearest month. All workings should be shown.
APPROACH TO EXAMINING THE SYLLABUS The format of the exam is as follows: Number of marks 50 50 100
A question will not be set that exclusively examines the taxation of trusts or overseas taxation aspects although these may feature as part of a question. SECTION B The 25-mark format adopted in Section B will allow more developed optional questions. Questions can be set in any area of the syllabus within the broad overall guidelines mentioned above. The question focusing upon financial planning is likely to be scenario-based, including some taxation elements, with candidates required to analyse a particular set of circumstances and make sensible financial planning recommendations going forward. As a guide it is likely that the pure financial planning elements of this question will not exceed 60 to 70%. As a general rule, it is likely that Section B questions will examine letter or report writing skills to a greater extent than Section A. Two marks will always be allocated within one of the Section B questions covering these skills. Tax rates, allowances and relevant benefits will be given in the examination paper. TAX CREDITS The working and child tax credits introduced from 6 April 2003 are not examinable at Paper 3.2 (GBR). SHARE SCHEMES Company share option plans: NIC and PAYE Under these Inland Revenue approved share option schemes no Schedule E charge or employers or employees Class 1 NIC liability can arise on the grant. Nor can they exercise the share options, provided they are not exercised within three years of being first granted to the employee. Previously, if the options were exercised within this three-year period, a Schedule E charge (but not an NIC) liability arises for the employee. In addition, this Schedule E charge could only be collected under self-assessment provisions and not under the PAYE scheme. From 9 April 2003, however, gains on options exercised within three years of grant will be subject to NIC (including employers NIC) as well as income tax, and both will now be collected under PAYE arrangements. This is unless the exercise occurs because of the injury, disability, redundancy or retirement of the employee. In which case any option gains will retain their income tax and NIC exempt status. Exercise options within three years of a previous exercise It was formerly the case that if an option was exercised by an employee within three years of another option under the scheme being exercised, then the latter exercise could be subject to a Schedule E charge. This was the case even if the second exercise occurred more than three years after the option was granted. With effect from 9 April 2003, however, this rule is to be abolished.
Section A: 2 compulsory questions Section B: Choice of 2 from 4 25-mark questions
Paul Hindle, the Examiner for Paper 3.2, has produced guidance on his approach to examining Paper 3.2. The guidance is reproduced below. The examination is a three-hour paper divided into two sections. SECTION A Two compulsory scenario-based questions worth a total of 50 marks set in the following areas: Non-business income tax (although including employment income) Capital gains tax Inheritance tax Overseas aspects of income tax, inheritance tax and capital gains tax Taxation of trusts The detailed syllabus areas that may feature in Section A are those set out in italics within the Study Guide. These are primarily the syllabus areas new to Paper 3.2. SECTION B Four 25-mark scenario-based questions from which candidates will be required to select and answer two. One of these questions, at least, will focus upon business taxation. One of the questions in Section B will have as its main focus personal financial planning. The other question will be set on other areas of the syllabus. The following guidance should also be noted: SECTION A To assist in the transition from Paper 2.3 to Paper 3.2, the emphasis of compulsory questions, while being set within a scenario involving some elements of planning and tax interaction, will be on computation (approximately 50%). A mainly discursive question is therefore unlikely in Section A. Questions involving mainly financial planning will not feature in Section A. Note, however, that questions may involve the taxation elements of, for example, investment or pension products (for example calculating an individuals maximum permissible pension contributions). While no detailed questions will be set involving income tax aspects of businesses, this will not preclude the inclusion within questions of, for example, a Schedule D Case 1 figure (or possibly even series of figures). Candidates will, however, not be required to calculate those figures as part of Section A questions.
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CORPORATION TAX STATUTORY DEDUCTION For accounting periods beginning on or after 1 January 2003, a new relief has been introduced. It provides a statutory deduction for corporation tax purposes for the cost of providing shares (or share options) for employee share schemes. The relief applied where the employees are taxable in respect of the share acquired, or would be taxable were it not for the fact that the share scheme is Inland Revenue approved. The deduction will normally be based on the market value of shares at the time they are awarded or when the share option is exercised (whichever is applicable) less any contribution made by the employee in respect of the shares. PERSONAL SERVICE COMPANIES Domestic workers (e.g. nannies and butlers), who provide their services via a personal service company are brought within the scope of the IR35 provisions. Under these provisions, workers who would be employees, if engaged directly, rather than through a company, are taxed (and charged to Class 1 NIC) as if they were employees. Because of the implications of transitional rules, no questions will be set in June or December 2004 on the extension of IR35 to domestic workers. PERMANENT ESTABLISHMENTS The rule regarding the UK taxation of non-UK resident companies has been that such companies are generally liable to corporation tax, if they carry on a trade through a branch or agency in the UK. To bring UK legislation more into line with internationallyrecognised characteristics the phrase branch or agency is replaced with the term permanent establishment. This means that a non-UK resident company is now chargeable to UK corporation tax if it carries on a trade in the UK through a permanent establishment in the UK. This takes effect for accounting periods beginning on or after 1 January 2003. A definition of permanent establishment is provided within the legislation for this purpose. A company will be regarded as having a permanent establishment if (1) it has a fixed place of business through which the business is conducted or (2) an agent acting on behalf of the company has (and habitually exercises) authority to do business on behalf of the company. The following can be classified as a fixed place of business: a place of management, a branch, an office, a factory, a workshop, an installation for the exploration of natural resources, a mine, an oil or gas well, a building site or construction project. A company will not be regarded as having a permanent establishment if the activities performed are regarded as preparatory or auxiliary in nature. This includes the storage, display or delivery of goods, holding stock for these purposes or for processing by another company, buying stock or collecting (e.g. marketing) information. A permanent establishment will also not exist if the only business performed is through an independent agent acting in the ordinary course of his own business. If a permanent establishment is chargeable to UK corporation tax it will be chargeable on all of its worldwide profits wherever they arise.
52
exam notes
exam notes
CAT Scheme
financial accounting and auditing papers
The legislation also makes it clear that the profits attributable to the permanent establishment are those which would have arisen if derived from a distinct and separate enterprise engaged in the same activity, completely independently, from the overseas parent. This is to counter the manipulation of profits liable to UK corporation tax and may lead to adjustments being made in the corporation tax return. STAMP DUTY Various anti-avoidance measures have been introduced with effect from 14 April 2003 to the stamp duty relief provisions. For the avoidance of doubt, only a knowledge of the basic stamp duty group relief provisions are required for the purposes of Paper 3.2. These anti-avoidance measures are therefore not examinable. STAMP DUTY LAND TAX Questions will not be set on this new tax until the June 2005 exam. VARIANT TAX PAPERS Exam notes for Papers 2.3 and 3.2 Hong Kong, Malaysia and Singapore will be published in the March 2004 issue of student accountant. Notes for other Paper 2.3 and 3.2 variants, including tax rates and allowances, will be published on the ACCA website as soon as they are available. CERTIFIED ACCOUNTING TECHNICIAN SCHEME PAPER 1 RECORDING FINANCIAL TRANSACTIONS (INT AND GBR) Number of marks 100
50 multiple-choice questions Time allowed: two hours
Paper 1 can also be taken as a two-hour computer-based exam. PAPER 3 MAINTAINING FINANCIAL RECORDS (INT) The examination is a two-hour written paper. It can be taken as a written paper or as a computer-based exam. The questions in the computerbased exam are objective test questions multiple-choice, number entry and multiple-response. The written exam consists of three sections. Number of marks Section A: 20 compulsory multiple-choice questions of 2 marks each Section B: Compulsory short-form questions of between 2 and 5 marks each Section C: 3 compulsory written questions of 15 marks each 40 15 45 100

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