CA SYLLABUS

The Institute of Chartered Accountants of Pakistan INTRODUCTION 3 FOUNDATION 5 Module A Paper A1 Functional English 7 Paper A 2 Quantitative Methods 9 ModuleB Paper B 3 Introduction to Economics and Finance 12 Paper B 4 Introduction to Financial Accounting 15 Paper B 5 Mercantile Law 19 FINAL 49 Module E Paper E 13 Information Technology Management, Audit and Control 51 Paper E 14 Advanced Accounting & Financial Reporting 58 Paper E 15 Corporate Laws 61 Paper E 16 Business Management 66 Module F Paper F 17 Management Accounting 72 Paper F 18 Business Finance Decision 77 Paper F 19 Advanced Taxation 81 Paper F 20 Advanced Auditing 83 INTERMEDIATE 21 Module C Paper C 6 Financial Accounting 23 Paper C 7 Taxation 26 Paper C 8 Business Communication and Behavioural Studies 29 Module D Paper D 9 Company Law 32 Paper D 10 Cost Accounting 34 Paper D 11 Auditing 37 Paper D 12 Information Technology 40 Contents 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 tea chers at all levels of studies for prospective Chartered Accountants should ensure tha t 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: © Introduction © Indicative Grid © Contents Please note that the weightages given in the indicative Grid are 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: © Reference Books © Supplementary Study Materials Students are advised to take caution while studying from Supplementary Study Material that the edition is latest and covers the syllabus contents. INTRODUCTION FOUNDAT I O N Challenges are what make life interesting; overcoming them what makes life meani ngful. (Joshau J. Marine) PAPER A 1: Functional Engl ish (100 marks) Module A The objective of this syllabus is to help students communicate effectively in En glish language through proper usage of vocabulary & knowledge of English grammar. Objective Indicative Grid Syllabus Content Area Weightage 1. Vocabulary 10 2. Practical use of Grammar 40 3. Composition and Comprehension 50 Total 100 Contents: 1. Vocabulary a. Frequently confused words b. Frequently misused words c. Phrases, synonyms, antonyms, idioms d. General vocabulary 2. Practical Use of Grammar a. Grammar i. Nouns ii. Pronouns iii. Verbs iv. Adjectives v. Adverbs vi. Prepositions vii. Conjunctions viii. Articles ix. Interjections x. Tenses b. Sentences i. Types of sentences ii. Parts of sentences iii. Rules for structuring sentences iv. Phrases Ð Types and functions v. Clauses Ð Types and functions vi. Direct and Indirect Speech vii. Active & Passive Voice Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. The Institute of Chartered Accountants of Pakistan 7 Foundation Examination Functional English Foundation Examination The Institute of Chartered Accountants of Pakistan Functional English 8 c. Punctuation Periods, Question Marks, Exclamation marks, Semicolons, Colons, Commas, Apostrophes, Quotation Marks d. Writing Mechanics Capitals, Abbreviations 3. Composition and Comprehension a. Story writing from outlines b. Letter writing (informal and formal) c. Précis writing d. Essay writing e. Comprehension PAPER A 1: Functional English Book Name & Author About the Book 1. High School Ð English Grammar & Composition by Wren and Martin. 2. Learners Companion Series Vocabulary by George Davidson. 3. Word Power Made Easy by Norman Lewis. 4. Understand & Communicate (book 2 and 3) published by FEP International (Pvt.)Ltd. 5. Concepts (book 3 and 4) by P.C. Wren. This is a very useful book on grammar and composition and helps a lot in building a strong foundation for the language. 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 English Study Text and Revision Series by AT Foulks Lynch Pakistan . 2. Functional English Study Text and Revision Series by Professional Business Pu blications (PBP). 3. Précis writing by R. Dhillon. 4. System»s Student Companion English for lower secondary schools by Magdalene Che w & Surinder Kaur. Recommended Reading } } Foundation Examination The Institute of Chartered Accountants of Pakistan Quantitative Methods 9 PAPER A 2: Quantit ativ e Methods (100 marks) Module A The role of an accountant has changed over the years; it has become imperative f or him to have knowledge of various Mathematical and Statistical Techniques, which are being us ed 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 on ly in their later studies but throughout their career. Introduction 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. Objective Indicative Grid Syllabus Content Area Weightage Mathemat ics 1. Basic Mathematics 2. Financial Mathematics 3. Calculus 4. Matrix and Determinants 50 S tatistics 5. Statistical Methods 6. Methods of Least Square & Regression 7. Probability & Probability Distribution 8. Sampling & Decision Making 50 Total 100 Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Foundation Examination Contents: 1. Basic Mathematics Rates, ratios, percentages; discounts, markup, markdown; indices, exponential an d 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 economic s; simultaneous equations; quadratic equations; factorization of equations including factorization by compl etion of squares, arithmetic progression and geometric progression. 2. Financial Mathematics Simple interest, present and future values; discounting notes; bank discount; co mpound interest and annuities; sinking funds, present value; perpetuities; effective rate of interes t. (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 di fferentiation. 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, inverse of matrices. Solution of equation s 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, cha rts 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 in come. 6. Methods of Least Square and Regression Scatter diagram, linear relationship, simple linear regression lines by method o f 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 mu tually exclusive events. Multiplicative laws for dependent and independent events. Binomial, Poisson, hyp ergeometric and normal distribution. (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. S ampling with and without replacement. Testing of hypothesis for population mean, difference betwe en population means, Quantitative Methods The Institute of Chartered Accountants of Pakistan 10 Foundation Examination Quantitative Methods population proportion, difference between two population proportions, single pop ulation variance and test of association through z, t and Chi-square. Confidence interval for estimat ing population mean. Population and variance. Difference between means, proportion and difference bet ween proportion and population variance. Problems of determination of sample size for the study of p opulation mean and proportion. 1. Mathematics for Business and Finance by Hamid A Hakeem 2. Business Mathematics by M. M. Hasan and M. A. Mirza 3. Mathematics for Business and Economics by Robert H. Nicholson. The book covers almost all the topics with easy examples and is a good question bank. The book is specifically written for students of finance and management and covers the entire syllabus. The book is useful for Finance Mathematics. Applied Mathematics for Business, Economics and the Social Sciences by Frank S. Budnick. 2. Mathematics for Business and Finance by Hamid A Hakeem. Business Mathematics by M. M. Hasan and M. A. Mirza. 4. Mathematics for Business and Economics by Robert H. Nicholson. It»s a very useful book and cover most of the topics of syllabus. The book covers almost all the topics with easy examples and is a good question bank. is specifically written for students of finance and management and covers the entire syllabus. The book is useful for Financial Mathematics. Business Statistics Mathematics 1. Mathematics for Business and Finance by Hamid A Hakeem 2. Business Mathematics by M. M. Hasan and M. A. Mirza 3. Mathematics for Business and Economics by Robert H. Nicholson. The book covers almost all the topics with easy examples and is a good question bank. The book is specifically written for students of finance and management and covers the entire syllabus. The book is useful for Finance Mathematics. 5. Introductory Statistics for Economics and Management by Hamid A Hakeem. 6. Statistics Concepts and Methods by Khursheed Alam. 7. Introduction to Statistics (Third edition) by Ronald E. Walpole. the entire syllabus and is very useful covering theoretical as well as practical aspects of statistics. The book is very useful for conceptual understanding of statistics. book is very useful especially for: probability, normal distribution and hypothesis testing. Supplementary Study Material 1. Quantitative Methods Study Text and Revision Series by AT Foulks Lynch Pakist an. 2. Quantitative Methods Study Text and Revision Series by Professional Business Publications (PBP). Note: Although the use of scientific calculators is allowed, the use of programm able calculators/ devices is not allowed. (Refer our website ww.icap.org.pk for list of permissibl e calculators) Recommended Reading The Institute of Chartered Accountants of Pakistan 11 PAPER A 2: Quantitative Methods Book Name & Author About the Book Foundation Examination Introduction to Economics & Finance PAPER B 3: Introduct ion to Economics & Finance (100 marks) Module B The object of the course is to enable candidates to equip themselves with the ma in economic concepts and their use, relevance in economic analysis and as an introduction to the econ omic environment of trade, industry and banking as well as to methods of analysis relevant to the st udy of financial decisions. Introduction Indicative Grid Syllabus Content Area Weightage 1. Economic Concepts 10 2. Microeconomics 40 3. Macroeconomic 50 Total 100 Contents: 1. Economic Concepts a. Basic concepts; b. Natural resources, labour, capital and enterprise; c. Allocation of scarce resources Ð production, distribution and consumption; d. Production possibility frontier and the opportunity cost; e. Key characteristics of market economy, planned economy and mix economy; f. Microeconomics and Macroeconomics. 2. Microeconomics a) Concept of Market i. Market forces of demand and supply; ii. Demand and supply; iii. Equilibrium of demand and supply; iv. Elasticity of demand and supply; v. Utility analysis and indifference curve; vi. Consumer, producers and efficiency of market. b) Theory of the Firm i. Production function and isoquants; ii. Cost, revenue and profits; iii. Maximization of profits; iv. Cost and revenue curves; v. Distinction between long run and short run assumptions; vi. Equilibrium of firm under perfect competition, monopoly, oligopoly and monopolistic conditions. Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. The Institute of Chartered Accountants of Pakistan 12 Foundation Examination Introduction to Economics & Finance c) Factors of Production i. Laws of returns; ii. Pricing of factors of production iii. Marginal productivity theory. 3. Macroeconomics a. National Income i. Circular flow of income; ii. Measurement of national income including knowledge of basic concepts like GD P, GNP, NNP; iii. Marginal propensity to consume and save; iv. Consumption, saving and investment functions; v. Multiplier and accelerator; vi. Equilibrium of national income; b. Government and the Economy i. Fiscal Budget ii. Unemployment; iii. Inflation; iv. Growth, price stability and employment; v. Recession c. Fiscal Policy i. Direct and indirect taxation; ii. Principles, methods and forms of taxation. d. Money & Monetary Policy i. Types of money; ii. Value of money; iii. Nature and functions of money; iv. Definitions of banking, banking system and its institutions; v. Financial intermediaries; vi. Role of State Bank; vii. The supply of money and interest rate policy. e. Capital Role of the money and capital markets. f. International Trade i. Trade and balance of payments; ii. Foreign exchange rates (floating and fixed exchange rates) their nature, fun ction and determination; iii. Trade and its determinants; iv. Markets and demand for imports and exports; v. Open Economy (Basic concept) vi. Introduction to World Trade Organization The Institute of Chartered Accountants of Pakistan 13 The Institute of Chartered Accountants of Pakistan 14 Foundation Examination PAPER B 3: Introduction to Economics and Finance Book Name & Author About the Book 1. Mathematics for Business and Finance by Hamid A Hakeem 2. Business Mathematics by M. M. Hasan and M. A. Mirza 3. Mathematics for Business and Economics by Robert H. Nicholson. The book covers almost all the topics with easy examples and is a good question bank. The book is specifically written for students of finance and management and covers the entire syllabus. The book is useful for Finance Mathematics. Modern Economic Theory by K. K. Dewett. 2. Introduction to Economics & Finance by Abdul Haleem Khawaja. 3. Economics by Samuelson and Nordhaus. 4. Macro Economics by Paul Crompton, Michael Swann, Sandra Hopkins, William A. McEachen. 5. The Monetary and Financial System by David Goacher. all topics of syllabus, written in simple and plain language. It is especially useful for micro economics. The book is specifically written for ICAP»s students and contains all syllabus areas. It is especially recommended for macro economics. The book covers almost all topics of syllabus in detail. This book covers the entire syllabus contents and includes case study questions which will help students in studying the subject with a practical point of view. The book discusses all the relevant topics at an introductory stage in simple language. Supplementary Study Material 1. Introduction to Economics & Finance Study Text and Revision Series by AT Foul ks Lynch Pakistan. 2. Introduction to Economics and Finance Study Text and Revision Series by Profe ssional Business Publications (PBP). 3. First Principles of Economics: by Richard G Lipsey and Colin Hardbury. 4. Stanlake»s Introductory Economics: by SJ Grant. Recommended Reading Introduction to Economics & Finance Foundation Examination The Institute of Chartered Accountants of Pakistan 15 PAPER B 4: Introduct ion to Fi nancial Ac counti ng (100 marks) Module B 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. Objective 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 20 accounts and preparation of accounts from incomplete records 4. Other specialized areas 35 Total 100 Contents: 1. a) Introduction to business and accounting theory i. Definition and scope of business; ii. Economic setup of business; iii. Organization structures; w Sole proprietorship; w Partnership (its merits and demerits); w Limited Companies (their advantages and disadvantages); iv. Types of finances including w Long term finance; w Short term finance; Introduction to Financial Accounting Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Foundation Examination Introduction to Financial Accounting b) Accounting Theory v. Commercial Banks; vi. Stock Exchange vii. Insurance Companies; viii. Procurement and production of goods; ix. Marketing and sales; x. Marketing channels; w Sole Distributors; w Wholesalers and; w Retailers. i Fundamental accounting concepts including: w Accrual basis w Consistency w True and fair view w Materiality w Prudence w Completeness w Going Concern w Substance over form ii Financial statements; w Components w Responsibility w Presentation w Users of financial statements; iii Asset valuation alternatives; w Historical cost; w Fair value; w Net realizable value; w Replacement cost; 2. Financial accounting practices a) Accounting Records i. Petty cash book and imprest system; ii. Cash books (including transactions with banks and their documentation); iii. Sales journal and the sales ledger; iv. Purchase journal and the purchase ledger; v. General journal; vi. General ledger vii. Computerized Accounting b) Introduction to Double Entry i. Double entry System, Accounting Equation and Rules of Debit & Credit ii. Concept of capital and revenue expenditure; iii. Concept of liability and income iv. Effect of profit or loss on capital; v. Balancing of accounts; vi. Trial balance; c) Adjustments before Final Accounts i. Methods and recording of depreciation on Fixed Assets; ii. Provisions for bad debts/ write off; iii. Provisions for discounts on debtors; iv. Prepayments and accruals; v. Inventory adjustments vi. Bank reconciliation and related adjustments; vii. Control accounts reconciliation and adjustments viii. Errors in trial balance ix. Suspense accounts x. Other adjustments; d) The Final Accounts of Sole Traders & Partnership i. Statement of financial position ii. Statement of comprehansive income iii. Cash flows statements The Institute of Chartered Accountants of Pakistan 16 Foundation Examination Introduction to Financial Accounting 3. Receipt and payment accounts and accounts from incomplete records 4. Other specialized areas a) Accounting for inventories (IAS-2) i Cost formulas (LIFO/ FIFO/ weighted average cost); ii Cost of inventories (cost of purchase, cost of conversions, other costs); iii Measurement of inventories (lower of cost or Net realizable value); iv Presentation of inventories in financial statements. b) Accounting for property, plant and equipment (IAS-16) i Initial measurement of property, plant & equipment (components of cost, exchan ge of assets); ii Subsequent costs; iii Depreciation Ð Unit of measure, depreciable amount, depreciation period and depreciation method iv Derecognition c) Branch accounts (excluding foreign branches); d) Treatment of the following in partnership accounts: i Admission; ii Retirement / death of partner (excluding life insurance policies, annuities e tc); iii Goodwill. a) Receipt and payment accounts; b) Income and expenditure accounts; c) Preparation of accounts from incomplete records. (Note: Cost Accounting techniques will not be tested at this stage) Note: Reference to IAS shall be deemed to have been changed whenever the same is repla ced by a new reporting standard. The Institute of Chartered Accountants of Pakistan 17 Foundation Examination The Institute of Chartered Accountants of Pakistan Introduction to Financial Accounting 18 PAPER B 4: Introduction to Financial Accounting Book Name & Author About the Book 1. Accounting Ð The Basis of Business Decisions by Meigs William Haka Bettner. 2. Modern Accountancy (Volume 1) by Mukherjee & Hanif. 3. Business Accounting by Frank wood and Alan Sangster. 4. Gripping IFRS Vol.I published by ICAP. 5. Framework for the preparation and presentation of financial statements and International Accounting Standards(1, 2 and 16) issued by IASB and is published by ICAP as IFRS Bound Volume 1. The book is very useful for conceptual understanding. 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. The book contains almost all syllabus areas and is recommended for: accounting theory, financial accounting practices, branch accounts, syllabus topics of partnership etc. Chapters related to inventories (IAS-2) and fixed assets (IAS-16) may be studied from this book. The book contains detailed material including background, rationale and practical examples of various topics included in the syllabus. Supplementary Study Material 1. Introduction to Financial Accounting Study Text and Revision Series by AT Fou lks Lynch Pakistan. 2. Introduction to Financial Accounting Study Text and Revision Series by Profes sional Business Publications (PBP). Recommended Reading Foundation Examination The Institute of Chartered Accountants of Pakistan Mercantile Law 19 PAPER B 5: Mercanti le Law Module B The syllabus aims to enable the students to develop a professional approach towa rds matters connected with Mercantile Law in the performance of their duties as Chartered Ac countants. Objective Indicative Grid Syllabus Content Area Weightage 1. Introduction to legal system 2. Contract Act 1872 40 3. Partnership Act 1932 4. Negotiable Instruments Act 1881 30 5. Sale of Goods Act 1930 6. 7. Carriage of Goods by Sea Act 1925 30 Total 100 Contents: 1. Introduction to Legal System Sources of law; process of legislation; and the legal system in Pakistan 2. Contract Act 1872 All sections 3. Partnership Act 1932 All Sections 4. Negotiable Instruments Act 1881 All Sections 5. Sale of Goods Act 1930 All Sections 6. Trust Act 1920 Duties and Liabilities of Trustees; Rights, powers and liabilities of the beneficiary; Revocation of Trust 7. Carriage of Goods by Sea Act 1925 All Sections (100 marks) Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. I N T E R M E D I AT E Clear your mind of can’t (Samuel Johnson) Intermediate Examinations The Institute of Chartered Accountants of Pakistan Financial Accounting 23 PAPER C 6: Fi na nc ial Acc ounti ng (100 marks) Module C This course is designed to provide understanding of accounting methods and proce dures as followed by business organizations. It systematically covers the accounting process of cl assification, summarization, presentation in the light of established accounting practices and application of principles set out by International Accounting and Reporting Standards in the pr eparation 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 concept s. Objective 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 100 Contents: 1. Accounts of limited companies a) Accounting and preparation of Financial Statements of limited companies in li ne with the requirement of the Companies Ordinance, 1984 and International Financial Reporti ng Standards (referred to at the end of syllabus); (excluding liquidation. reconstr uction, merger and consolidation); b) Significant accounting ratios and their relationship. 2. Specialised accounting treatments a) Accounting for Income Taxes i Current year tax; ii Prior years tax; iii Deferred tax. Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Intermediate Examinations The Institute of Chartered Accountants of Pakistan Financial Accounting 24 b) Accounting treatment of tangible and intangible assets including their recogn ition, derecognition, depreciation / amortization and subsequent remeasurement (revalua tion, impairment, fair value etc); c) Accounting treatment of contingent losses and contingent gains; d) Related party disclosures; e) Revenue Recognition 3. Other accounting and reporting issues a) Conversion of partnerships to a limited company and merger of firms; b) Accounting treatment of profit and loss for the period including: i Changes in accounting policies; ii Changes in accounting estimates and errors; iii Events occurring after the balance sheet date; c) Recognition of borrowing costs. d) Accounting for leases The IFRS included in Syllabus are: IAS Ð 1 IAS Ð 2 IAS Ð 7 IAS Ð 8 IAS Ð 10 IAS Ð 12 IAS Ð 16 IAS Ð 17 IAS Ð 18 IAS Ð 23 IAS Ð 24 IAS Ð 36 IAS Ð 37 IAS Ð 38 Note: 1. All items included in the syllabus of Introduction to Financial Accounting pa per of Module B may again be tested in the above paper. 2. To encourage proper understanding and application of knowledge no questions r equiring word by word reproduction of contents of IASs \ IFRS will be asked. 3. Reference to local and international pronouncements shall be deemed to have b een changed whenever the same is replaced by a reporting standard. Intermediate Examinationss The Institute of Chartered Accountants of Pakistan Financial Accounting 25 PAPER C 6: Financial Accounting Book Name & Author About the Book 1. Gripping IFRS Vol.I published by ICAP. 2. Gripping IFRS Graded Question published by ICAP. 3. Framework for preparation and presentation of financial statements and International Accounting Standards (listed in syllabus) published by ICAP as IFRS Bound Volume 1. 4. IFRS Practical Implementation Guide and Workbook (Wiley Series) by Abbas Ali Mirza, Graham J. Holt and Magnus Orrell (Relevant topics). 5. Companies Ordinance, 1984; (Fourth & Fifth Schedules and provision related to preparation of accounts of limited companies). 6. The following books by Javed H. Zuberi: i. Company Accounts ii. Preparation and interpretation of financial statements iii. Cash Flow Statements iv. Accounting for leases The book contains useful material on various IASs/IFRS with examples. The book contains useful question bank on various IASs/IFRS. The book contains detailed material including background, rationale and practical examples of various topics included in syllabus. It contains interpretation of IFRS with practical examples. Preparation of financial accounts of a limited company is regulated by the Companies Ordinance 1984 and therefore it is necessary to study it to understand the disclosure requirements. Each book explains the concerned topic in context of accounting treatment prescribed by IASs. Supplementary Study Material 1. Financial Accounting Study Text and Revision Series by AT Foulks Lynch Pakist an. 2. Financial Accounting Study Text and Revision Series by Professional Business Publications (PBP). 3. Published financial statements of listed companies. Recommended Reading Intermediate Examinations The Institute of Chartered Accountants of Pakistan Taxation 26 PAPER C 7: Taxati on (100 marks) Module C The aim of this paper is to develop basic knowledge and understanding in the cor e 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 (rel evant to the syllabus). Objective Note: a. Finance Act / Ordinance, Notifications and circulars issued within a period o f less than 4 months from the date of examination shall not be tested b. Chapters, Parts and Divisions not mentioned here specifically are excluded fr om the syllabus. However, it is clarified to eliminate any ambiguity that if only a chapter is me ntioned it includes all parts and if only a part is mentioned it includes all divisions. c. The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected. d. Students are not expected to remember the tax rates. Same if applicable shall be given in the question paper. Indicative Grid Syllabus Content Area Weightage 1. Income Tax a. Basic concepts of taxation 15 b. Heads of income, Computation of income, Determination of tax liability d. Procedures and Administration e. Income Tax Rules 2002 2. Sales Tax Prescribe chapters of Sales Tax Act and Rules. 40 10 25 c. Types of persons and their taxation 10 Total 100 The weightages given above are for guidance purposes only and some deviations in setting of papers could be expected. Intermediate Examinations The Institute of Chartered Accountants of Pakistan Taxation 27 Contents: 1. Income Tax Ordinance 2001 2. Sales Tax Act 1990 a Basic concepts of taxation i. Chapter I ii. Chapter II iii. Chapter IV Preliminary (concepts of terms defined) Charge of tax (excluding section 7) Common rules (Part I & II) b. Heads of income, Computation of income, Determination of tax liability i. Chapter III ii. Chapter IX iii. Chapter X Part V iv. 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 c. Types of persons and their taxation i. Chapter V Part I ii. Chapter V Part II - Div I iii. Chapter V Part III iv. Chapter VII Part II Central concepts Individuals Association of persons Taxation of foreign-source income of residents d. Procedures and Administration e. Income Tax Rules 2002 i. Chapter X Part I ii. Chapter X Part II iii. Chapter X Part III iv. Chapter X Part IV v. Chapter X Part VIII vi. Chapter XI Part I Returns Assessments Appeals including Alternative Dispute Resolution Collection and recovery of tax (Sections 137 to 140) Audit (Section 177) Administration Ð General (excluding section 224 to 227) i. Chapter I Preliminary (concepts of terms defined) ii. Chapter II Scope and payment of tax iii. Chapter III Registration iv. Chapter IV Book keeping and invoicing requirements v. Chapter V Returns w Chapter I Registration, Voluntary registration and De-registration w Chapter II Filing of returns w Chapter III Credit and Debit Note and Destruction of Goods w Chapter IV Apportionment of Input Tax vi. The following rules (excluding annexure and forms) of the Sales Tax Rules Ð 20 06 related to the relevant chapters of the Sales Tax Act may be examined. Rules other than the following shall not be examined at this stage: The rules related to the above chapters of the Income Tax Ordinance 2001 shall a lso be examined Intermediate Examinations The Institute of Chartered Accountants of Pakistan Taxation 28 PAPER C 7: Taxation Book Name & Author About the Book 1. Complete Income Tax Law by S. A. Salam. 2. Law & Practice of Income tax by Dr. Ikram-ul-Haq. 3. Sales Tax Ready Reference by S. A.Salam. 4. Synopsis of taxation by Mirza Munawar Hussain. 5. Pakistan income tax law Principles and Practice by Mian Safiullah & Kashif Aziz Jahangiri. 6. Khalid Petiwala»s Notes Income Tax and Sales Tax. 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. Recommended Reading } } Intermediate Examinations The Institute of Chartered Accountants of Pakistan 29 PAPER C 8: Business Communication & Behavioural Studi es (100 marks) Module C The course aims to introduce students to the key concepts of business communicat ion and their application. The course also intends to incorporate an understanding of the conc epts of organizational behaviour to develop problem solving skills, negotiation skills and leadership q ualities in the students. Objective Indicative Grid Syllabus Content Area Weightage 1. Principles of Effective Business Communication 25 2. Communication methods and skills 40 3. Organizational Behavior 35 Total 100 Contents: 1. Principles of Effective Business Communication a. Introduction i Concepts and benefits of effective communication ii. Components of communication including effective listening iii. Problems of communication b. Basic Principles of Business Communication Seven C»s of effective communication c. Interpersonal Communication (IPC) i. Universals of IPC ii. Axioms of IPC iii. Types of IPC Business Communication & Behavioural Studies Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Intermediate Examinations The Institute of Chartered Accountants of Pakistan Business Communication & Behavioural Studies 30 a. Business Messages i. Planning before communication ii. Basic organizational plans iii. Appearance and design iv. Letters to customers v. Circular letters vi. Job application and Curricular Viatea (Résumé) vii. Good news messages & bad news messages viii. Persuasive messages ix. Business letters, memos, faxes and e-mail b. Meetings Preparation of Agenda, Notice and Minutes of meetings c. Report and proposal writing i Short report ii. Long report iii. Proposals 2. Communication Methods and Skills a. Introduction i. Approaches to Organizational Behaviour ii. Definitions and characteristics of OB iii. Challenges faced by the management Ð Globalization, Information Technology, Diversity and Ethics b. Organizational processes i. Organizational structure & design (principles of organization, different ways of structuring organization) ii. Organizational Change (nature of change process, resistance to change) iii. Organizational culture (concept, dysfunctional aspect of culture) c. Individual Behaviour i. Perception ii. Attitude iii. Job Satisfaction iv. Job Stress 3. Organizational Behaviour (OB) Intermediate Examinations The Institute of Chartered Accountants of Pakistan Business Communication & Behavioural Studies 31 d. Motivation i. Types of Motivation ii. Theories of Motivation iii. Applications Ð Job Design iv. Goal setting and Management by Objectives (MBO) v. Management by Exception (MBE) e. Leadership i. Type of Leadership ii. Theories of Leadership iii. Applications Ð Roles, Activities, Skills of Leaders iv. Group Dynamics and teamwork (types of groups, group formation, group structu re, individual in groups, team work) f. Conflict and Negotiation i. Levels of Conflict ii. Conflict Resolution iii. Negotiation & Stages of Negotiation iv. Peculiar Negotiation Situations PAPER C 8: Business Communication and Behavioural Studies Book Name & Author About the Book 1. The Effective Business Communication by Herta A Murphy, Herbert Hildebrandt, Jane P. Thomas. 2. Organizational Behavior by Stephen P. Robbins. 3. Organizational Behavior by Fred Luthans. 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. Supplementary Study Material 1. Business Communication and Behavioral Study Text and Revision Series by Profe ssional Business Publications (PBP). 2. Business Communication and Behavioral Study Text and Revision Series by AT Fo ulks Lynch Pakistan. Recommended Reading } Intermediate Examinations The Institute of Chartered Accountants of Pakistan Company Law 32 PAPER D 9: COMPANY LAW (100 marks) Module D 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 othe r business environment, excluding advanced topics such as provisions relating to arbitratio n, arrangements and reconstruction, prevention of oppression and mismanagement, winding up etc. that are covered at the Final Examination stage. Objective Indicative Grid Syllabus Content Area Weightage 1. The Companies Ordinance, 1984 Ð Sections 1 to 51 2. The Securities and Exchange Commission of Pakistan Act, 1997 20 3. The Companies Ordinance, 1984 Ð Sections 52 to 136 25 4. The Companies Ordinance, 1984 Ð Sections 142 to 262 55 Total 100 1. The Companies Ordinance, 1984 Ð Sections 1 to 51 a. Part I; Preliminary (concepts of terms defined) b. Part II; Jurisdiction of courts c. Part III; Section 12 and Section 13 d. Part IV; Incorporation of companies and matters incidental thereto e. First schedule to the Companies Ordinance, 1984 Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Contents: Intermediate Examinations The Institute of Chartered Accountants of Pakistan Company Law 33 2. The Securities and Exchange Commission of Pakistan Act, 1997 3. The Companies Ordinance, 1984 Ð Sections 52 to 136 a. Part V; Prospectus, allotment, issue and transfer of shares and debentures, d eposits, etc. b. Part VI; Share capital and debentures. c. Part VII; Registration of mortgages, charges etc. 4. The Companies Ordinance, 1984 Ð Sections 142 to 262 a. Part VIII Management and Administration (excluding investigation & related ma tters) b. Third Schedule to the Companies Ordinance, 1984 PAPER D 9: Company Law Book Name & Author About the Book 1. Complete Company Law S. A. Salam (Relevant topics). 2. Practical Approach to the Companies Ordinance, 1984 by Nazir Ahmed Shaheen (Relevant topics). Bare Law and brief explanation thereon are included in the book. The book is useful for understanding practical application of law. Supplementary Study Material 1. Company Law Study Text and Revision Series by A T Foulks Lynch Pakistan. 2. Company Law Study Text and Revision Series by Professional Business Publicati ons (PBP). Recommended Reading Intermediate Examinations The Institute of Chartered Accountants of Pakistan Cost Accounting 34 PAPER D 10: Cost Account ing (100 marks) Module D The course is designed to equip candidates with fundamentals of accounting for m aterial, labour and manufacturing expenses; an understanding of the importance of the role of cost a ccounting in planning and controlling the wide range of organizational and manufacturing cost. The stu dents are expected to acquaint themselves with a comprehensive knowledge of established practices of c ost accumulation methods and learn the application of this knowledge to basic planning, control a nd decision making. The course also covers job order, process costing and standard costing systems. Objective Indicative Grid Syllabus Content Area Weightage 1. Cost Concepts, Uses and Classification 2. Elements of Cost Accounting i. material ii. labour iii. overhead 40 3. Costing Systems 4. Cost Behaviour 30 5. Planning and Control 6. Decision Making 30 Total 100 Contents: 1. Cost Concepts, Uses and Classification a. The nature and scope of Cost Accounting; Sources of Cost data b. Definition of and distinction between financial accounting, cost accounting a nd management accounting c. The concept of ÒCostÓ for different types of entities d. Cost classification Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Intermediate Examinations The Institute of Chartered Accountants of Pakistan Cost Accounting 35 2. Elements of Cost Accounting 3. Costing Systems a. Material i. Material purchasing, receiving and issuing procedures and its documentation ii. Inventory recording system (Perpetual and Periodic) iii. Basis of valuation Ð Cost formulas iv. Stock taking, Reconciliation of Bin Card and Stock Card, and adjustments for inventory differences v. Valuation of inventory at lower of Cost and NRV vi. Economic Order Quantity and Inventory Levels vii. Segregation of material for selective control (ABC Plan) b. Labour i. System and documentation ii. Basis for Labour Cost Control iii. Labour turnover, Productivity and Efficiency measurement iv. Accounting entries for payroll and statutory deductions v. Wage incentive plans (piece work plan, bonus and group bonus plans) c. Overheads i. Manufacturing expenses Ð actual and applied ii. Over or under applied overhead iii. Concept of production & Service Departments iv. Basis of apportionment and allocation of service department overheads to pro duction department a. Fundamentals of Cost Accounting Information System b. Manufacturing Cost Accounting Cycle c. Chart of accounts d. Factory Ledger and accounting entries e. Reconciliation of Cost and Financial accounts f. Job order Costing g. Process costing h. Treatment of Joint Products and By-Products 4. Cost Behaviour a. Analysis of fixed, variable and semi variable expenses b. Direct cost and Indirect cost c. Cost estimation using high-low points method and linear regression analysis d. Marginal costing and Absorption costing e. Product cost and Period cost f. Breakeven analysis and charts Intermediate Examinations The Institute of Chartered Accountants of Pakistan Cost Accounting 36 5. Planning and Control a. Principles of Budgeting b. Cash Budgets c. Revenue Budgets d. Flexible Budgets e. Projected Income statement and Balance Sheet f. Standard Costing concepts 6. Decision Making a. Opportunity Cost b. Relevant Cost c. Make or buy decisions d. Pricing for special orders e. Further processing decisions f. Utilization of spare capacity g. Decision with limiting factors (excluding linear programming) PAPER D 10: Cost Accounting Book Name & Author About the Book 1. Cost Accounting, Planning and Control by Matz and Uzry. 2. Management and Cost Accounting by Colin Drury. 3. Cost accounting by T. Lucey. 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. The book covers almost all the parts of the syllabus and ensures concept building by giving a variety of questions for each topic. It is a very useful book especially for theoretical aspects of costing. Supplementary Study Material 1. Cost Accounting Study Text and Revision Series by A T Foulks Lynch Pakistan. 2. Cost Accounting Study Text and Revision Series by Professional Business Publi cations (PBP). Recommended Reading Intermediate Examinations The Institute of Chartered Accountants of Pakistan Auditing 37 PAPER D 11: Auditi ng (100 marks) Module D The purpose of the syllabus is to give students theoretical and to a limited ext ent, technical knowledge and skills of auditing and review of historical financial information. It will p rovide a foundation for acquiring intensive knowledge required for professional competence. The syllabus will ensure that candidates are able to understand the nature of au diting and review services and are familiar with the intellectual and procedural bases for perform ing them. Objective 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 100 Contents: 1. General concepts and principles of audit i. Objective and general principal governing an audit ii. Responsibility for the financial statements iii. Auditor»s responsibility to consider fraud and errors iv. Introduction to International Federation of Accountants v. Introduction to international auditing and assurance standard setting body vi. Legal consideration relating to appointment and removal of auditor vii. Acceptance and continuance of audit client including requirement of Code of Ethics issued by ICAP viii. Audit engagements Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Intermediate Examinations The Institute of Chartered Accountants of Pakistan Auditing 38 3. Audit conclusions and reporting i. Nature of different audit opinions (Students will only be expected to underst and the form and implications of audit qualifications) ii. Form of audit reports under the Companies Ordinance, 1984 4. Audit conclusions and reporting i. External confirmation ii. Subsequent events iii. Management representation iv. Consideration of related parties vi. Using the work of another auditor, internal auditor and expert vii. Review of interim financial statements by the independent auditor Candidates are expected to respond examination questions with reference to inter national and local pronouncements issued by any relevant standard setting body. The standards related to syllabus outline are prescribed as under: Institute of Chartered Accountants of Pakistan has a practice to publish periodi cally the bound volumes of updated auditing pronouncements. All pronouncements related to the areas cove red in the syllabus and published in such bound volumes are deemed applicable for examination purpos es (irrespective of their applicability date in practice) unless ICAP specifically notifies that the same will not be adopted. However, pronouncements and revisions published by ICAP within less than six mon ths from the date of examination shall not be tested. ISA-200 ISA-210 ISA-220 ISA-230 ISA-240 ISA-300 ISA-315 ISA-320 ISA-500 ISA-505 ISA-520 ISA-530 ISA-550 ISA-560 ISA-580 ISA-600 ISA-610 ISA-620 ISA-700 ISA-701 ISRE-2410 Note: Reference to ISAs shall be deemed to have been changed whenever the same i s replaced by another standard. 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 Intermediate Examinations The Institute of Chartered Accountants of Pakistan Auditing 39 PAPER D 11: Auditing Book Name & Author About the Book 1. International Standards on Auditing, 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). 2. Code of Ethics for Chartered Accountants issued and included in Handbook given at (1) above. 3. Companies Ordinance, 1984. 4. Advanced Auditing by Dr. Khawaja Amjad Saeed. 5. Practical Auditing by Javed H. Zubairi. The book covers all topics of syllabus except for Laws and Regulations contained in Companies Ordinance, 1984. It contains detailed material including background, rationale and practical examples of each subject of the syllabus. Part B of the Code covers the topics of client acceptance and continuance procedure. Provisions related to Appointment, Removal, Report etc. of auditor of limited companies are also governed by the Companies Ordinance 1984. These books contain almost all syllabus areas and explain various topics in context with the ISAs. Supplementary Study Material 1. Auditing Study Text and Revision Series by A T Foulks Lynch Pakistan. 2. Auditing Study Text and Revision Series by Professional Business Publications (PBP). Recommended Reading } Intermediate Examinations The Institute of Chartered Accountants of Pakistan 40 PAPER D 12: Information Technology (100 marks) Module D The objective of this syllabus is to provide the students with adequate knowledg e of the following areas and their applications with particular reference to business and finance: Objective 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 100 Contents: 1. Computer Hardware and Related Matters: 1.1 Parts and accessories of computer i. Recent developments in computer hardware 1.2 Networking i. Networking components ii. Network configuration and design iii. Types of networks iv. Use of communication devices vi. Transmission medium vii. Network administration and controls a. Computer hardware and software. b. Important elements and concepts of information systems. c. Basic principles of computer programming d. Computer software application. e. IT Security and controls . f. Practical experience on performing various general procedures and use of stan dard packages Information Technology Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Intermediate Examinations The Institute of Chartered Accountants of Pakistan Information Technology 41 2. Information Systems: a. Fundamentals of Information Systems i. General system concepts ii. System architectures 3. Computer Programming and Software Applications: a. Introduction to Computer Programming Basic principles and concepts of program writing b. Flow Charts i. Benefits and limitation of flowcharts ii. Types of flowcharts c. Commonly used ERPs d. Knowledge Based Systems i. Decision Support System (DSS) ii. Executive Information System (EIS) iii. Expert System (ES) e. Transaction processing in business and accounting applications i. General application processing ii. Data entry/ capturing / editing iii. Master file update iv. Reporting and queries v. Processing modes vi. Batch processing vii. On-line processing viii. Real time processing ix. Distributed processing x. Multi tasking xi. Multi processing b. Organizational Information Systems i. Information flow in an organization ii. Management Information System iii. Transaction Processing Systems iv. Financial reporting systems v. Order processing and inventory control systems vii. Personnel systems viii. Sales and marketing systems ix. Integrated systems Intermediate Examinations The Institute of Chartered Accountants of Pakistan Information Technology 42 c. Decision Tables i. Benefits and limitation of decision tables ii. Types of decision tables d. Computer Aided Software Engineering (CASE) Types of CASE tools, their applications and advantages e. Operating System Introduction to commonly used operating systems including DOS, Windows, Novell NetWare, Unix and Linux f. Utility Software Compression utilities, disk maintenance utilities, antivirus programs and audio and video software etc., their features, benefits and limitations g. Communication Software Features, benefits and limitations of Internet browsers, email software, chattin g programs, telephony via Internet and video conferencing etc. h. E-Commerce Basic concepts covering: i. Current trends in e-commerce ii. E - commerce Tools and technologies iii. Electronic data capture iv. Publishing systems v. Communication systems vi. E-commerce services for example electronic trading, online banking and onlin e information services etc. vii. Electronic Payment Systems viii. Payment options ix. Security technologies i. Web Hosting and Surfing i. Website hosting ii. Downloading software from web iii. Use of search engines Intermediate Examinations The Institute of Chartered Accountants of Pakistan Information Technology 43 4. Introduction to System Development and Control Activities a. Systems Development Life Cycle (SDLC) i. Feasibility study based on investigation and analysis of existing systems ii. Structured systems analysis, planning, designing and implementation iii. Evaluation and control of Information Systems and needs iv. Documentation v. Post implementation review b. Data organization and access Methods i. Data structures and file organizations ii. Access methods and file maintenance iii. Types of data files c. Database Management System (DBMS) Introduction to commonly used DBMS like Oracle and SQL Server etc. (their charac teristics, advantages and limitations) d. Control Activities Introduction to: i. Control design ii. General controls iii. Preventive, detective and corrective controls iv. Audit trails e. Control over Data Integrity, Privacy, and Security i. Logical access controls ii. Physical access controls iii. Program security techniques iv. Data security and public networks v. Monitoring and surveillance techniques f. Disaster Recovery Planning i. Threat and risk management ii. Software and data backup techniques iii. Alternative processing facility arrangements iv. Disaster recovery procedural plan Intermediate Examinations The Institute of Chartered Accountants of Pakistan Computer Practical Examination 44 Microsoft Windows and Internet a. Windows Accessories i. System Tools ii. Communication & Entertainment iii. Accessibility b. Windows Keyboard Shortcuts c. Basic Networking Tasks i. Sharing drives, folders and devices ii. Protecting files and folders on a network d. Core Windows Tasks i. Customizing Desktop and Start Menu ii. Working with files and folders iii. Managing Windows iv. Logging on and off v. Searching for information e. Protecting your computer i. Locking the computer ii. Screen Saver password iii Password reset disk f. Windows Firewall g. Internet i. Internet browsing ii. Making a dial-up connection iii. Internet explorer iv. Commonly used Internet search engines and web based email services v. Voice and video chatting 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 compute r practical examination will be held soon after the Intermediate examination. Contents: Intermediate Examinations The Institute of Chartered Accountants of Pakistan Computer Practical Examination 45 Microsoft Word a. Formatting Contents i. Creating custom styles for text, tables, and lists ii. Inserting and modifying objects iii. Creating and modifying diagrams and charts using data from other sources b. Organizing Contents i. Sorting contents in lists and tables ii. Performing calculations in tables iii. Modifying table formats iv. Preparing letters, labels and envelopes using mail merge tools c. Formatting Documents i. Creating and modifying document background ii. Creating and modifying document index and table of contents iii. Inserting and modifying endnotes, footnotes, captions, and cross-references Microsoft Excel a. Organizing and Analyzing Data i. Construction and application of customised formulas ii. Application of advanced filters iii. Performing data analysis using automated tools iv. Creating PivotTable and PivotChart reports v. Application of built in functions and formulas vi. Use of Tools menu commands like Goal Seek and Formula Auditing etc vii. Defining, modifying, and using named ranges b. Formatting Data and Contents i. Creating and modifying customised data formats ii. Using conditional formatting iii. Formatting charts and diagrams c. Sharing and Security i. Protecting cells, worksheets, and workbooks ii. Sharing workbooks iii. Merging workbooks iv. Tracking, accepting, and rejecting changes to workbooks d. Managing Data and Workbooks i. Importing and exporting data to and from Excel ii. Creating and editing templates e. Customizing Excel i. Customizing toolbars and menus ii. Creating, editing, and running macros Intermediate Examinations The Institute of Chartered Accountants of Pakistan Computer Practical Examination 46 d. Managing Word Documents i. Application of Track Changes tool ii. Publishing and editing Web documents iii. Managing document versions iv. Protecting and restricting documents v. Ways of viewing a Word document e. Customizing Microsoft Word i. Creating, editing, and running macros ii. Customizing menus and toolbar Microsoft PowerPoint a. Creating Contents i. Creating new presentations from templates ii. Inserting and editing text-based contents iii. Inserting and editing tables, charts, diagrams, pictures, shapes, graphics and objects b. Formatting Contents i. Formatting text-based contents ii. Formatting pictures, shapes, and graphics iii. Formatting slides iv. Applying animation schemes v. Applying slide transitions vi. Customizing slide templates vii. Working with slide master c. Managing and Delivering Presentations i. Tracking, accepting, and rejecting changes in a presentation ii. Adding, editing, and deleting comments in a presentation iii. Comparing and merging presentations iv. Setting up slide shows for delivery v. Rehearse timing vi. Printing slides, outlines, handouts, and speaker notes vii. Exporting a presentation to another Microsoft Office program Microsoft Access a. Structuring Databases i. Creating and modifying tables ii. Defining and modifying field types iii. Creating and modifying one-to-many relationships iv. Creating and modifying queries, forms and reports Intermediate Examinations The Institute of Chartered Accountants of Pakistan Computer Practical Examination 47 b. Managing Databases i. Entering, editing, and deleting records ii. Importing and exporting data to and from Access iii. Compacting and repairing databases iv. Creating and modifying calculated fields and aggregate functions v. Sorting records vi. Filtering records Microsoft Project a. Task Management i. Defining the project ii. Defining general working times iii. Listing the tasks in the project iv. Organizing tasks into phases v. Scheduling tasks vi. Linking to or attaching more task information vii. Adding columns of customised information viii. Setting deadlines and constraints b. Resource Management i. Specifying resources (people and equipment) for the project ii. Defining working time and availability of resources iii. Assigning resources to tasks iv. Linking to or attaching more resource information v. Adding columns of customised information c. Project Tracking i. Saving a baseline to compare with later versions ii. Incorporating progress information into the project iii. Checking the progress of the project iv. Tracking risks and issues associated with a project d. View and Report Project Status i. Selecting and modifying views and reports ii. Viewing critical tasks, allocation of resources and project costs iii. Sharing project information with other applications iv. Changing the look or contents of the Gantt chart Microsoft Outlook / Outlook Express a. Messaging i. Originating and responding to e-mails and instant messages ii. Attaching files to messages iii. Creating and modifying a personal signature for messages iv. Modifying e-mail message settings and delivery options v. Creating and editing contacts Intermediate Examinations The Institute of Chartered Accountants of Pakistan Computer Practical Examination 48 b. Scheduling i. Creating and modifying appointments, meetings, and events ii. Customizing calendar settings iii. Creating, modifying, and assigning tasks c Organizing i. Creating and modifying distribution lists ii. Linking contacts to other items iii. Creating and modifying notes PAPER D 12: Information Technology Book Name & Author About the Book 1. Management Information Systems Strategy and Action by Charles Parker and Thomas Case. 2. Management Information Systems by Gerald Gerald V. Post and David L. Anderson. 3. Management Information Systems (Sixth edition) by James A. O» Brien. 4. System Analysis and Design by Kenneth E. Kendall and Julie E. Kendall. The book is useful for understanding management information systems. The book contains adequate material on MIS, networking, database management systems and e-business for CA Intermediate students. The book gives good explanation of MIS, networking and e-business solutions along with real world case studies. The book contains useful material on various types of information systems, system development life cycle, e-commerce, fundamentals of computer programming and computer aided software engineering. Supplementary Study Material 1. Information Technology Study Text and Revision Series by A T Foulks Lynch Pak istan. 2. Information Technology Study Text and Revision Series by Professional Busines s Publications (PBP). 3. Computers by Larry Long and Nancy Long. Recommended Reading F I N A L There are two ways to meeting difficulties: You alter the difficulties, or you a lter yourself to meet them (Phylis Bottome) Final Examination The Institute of Chartered Accountants of Pakistan 51 PAPER E 13: I nf orma tion Technology Manageme nt , Audi t and Control (100 marks) Module E This syllabus aims to provide: a. Essential body of IT knowledge related to business information systems. b. IT security, control and governance knowledge related to business information systems. c. Application of knowledge to manage the above and evaluate IT. The Case studies in ICAP study material for this syllabus are designed to assist the students in enhancing their knowledge and skills in: Managerial role; Evaluator role; Enterp rise resource planning; and Electronic Commerce. Case studies / scenario based questions will be set in the examination. Introduction Information Technology Management, Audit and Control 1. IT Strategy and Management Contents: Broad knowledge / skill area IT strategy Management of IT Main topic coverage Strategic considerations in IT development E-Business models Management of computer operations Illustrative sub-topics w Planning of information systems based on business success factors/criteria w Position of the entity within its industry/sector w Alignment/integration with business objectives/success factors w Risks: economic, technical, operational, behavioral w Components of long range plans w Operational dynamics that influences the entity»s business/programs w Business to Consumer (B2C) w Business to Business (B2B) w Business to Employee (B2E) w Consumer to Consumer (C2C) w Government to Citizen (G2C) w Developing operational priorities w Compatibility of computers w Planning IT capacity w Impact of IT on procedures w Data/information architecture w IT infrastructures (hardware, facilities, networks) Final Examination The Institute of Chartered Accountants of Pakistan Information Technology Management, Audit and Control 52 Software IFAC Guidelines / discussion papers Management of interorganizational computing Management of end-user computing Financial analysis and control IT control objectives E-business enabling software w Software (systems, applications, utilities) w Performance measurement (productivity, service quality) w Collaborative computing Distributed system EDI and electronic commerce Outsourced services (ISPs, ASPs, etc.) w Technology diffusion w Information center, help desk w End-user system security w Support for end-user applications w Capital budget w Time/expense tracking w Cost charge out / monitoring w Accounting for system costs w Effectiveness, efficiency, economy of operations w Reliability of financial reporting w Effectiveness of controls (design, operation) w IT asset safeguarding w Compliance with applicable laws and regulations w System reliability: r Availability and continuity (back-up, recovery) r Access controls (physical, logical) r Processing integrity (completeness, accuracy, timeliness, authorization) r Data integrity w Supply chain management (SCM) w Enterprise resource planning (ERP) w Sales force automation (SFA) w Customer relationship management (CRM) w Electronic commerce systems: r Brochure, catalog, order entry, payment processing, fulfillment r Knowledge management systems r Knowledge creation, capture, sharing, maintenance w Managing Information Technology Planning for Business Impact w Acquisition of Information Technology w The Implementation of Information Technology Solutions w IT service Delivery and Support w Executive Checklist. Final Examination The Institute of Chartered Accountants of Pakistan Information Technology Management, Audit and Control 53 Broad knowledge / skill area Control frameworks Control objectives Layer of control Responsibility for control Main topic coverage Risks and exposures in computer-based information systems IT control frameworks Effectiveness, efficiency, economy of operations Reliability of financial reporting Effectiveness of control (design, operation) IT asset safeguarding Compliance with applicable laws and regulations System reliability Data integrity Societal Organizational environment Technology infrastructure Software Business process Role and responsibilities of key parties Illustrative sub-topics w Error, fraud, vandalism/abuse, business interruption, competitive disadvantage, excessive cost, deficient revenues, statutory sanctions, social costs, etc. w Effect of IT audit on organization, controls r Economic, technical, operational, behavioral considerations r Cost/benefit w COBIT, ITCG, SysTrust, WebTrust, etc w Cost effectiveness of control procedures w Relevance, reliability, comparability / consistency w At a point in time; during a period of time w Evaluation of facilities management and IT asset safeguarding w Prevention/detection of fraud, error and illegal acts w Privacy, confidentiality, copyright issues w Availability and continuity (back-up, recovery) w Access control (physical, logical) w Processing integrity (completeness, accuracy, timeliness, authorization) w Completeness, accuracy, currency / timeliness, consistency/comparability, authorization, auditability, w Input /output; reception/distributic controls w Attitudes, laws and regulations Board level, management level, IT administrative /operational level w Hardware, facilities, network System, application w User departments, individual user w Board, top management w IT management and IT personnel w User departments, individuals w Auditors 2. Information Technology Security, Control and Management Final Examination The Institute of Chartered Accountants of Pakistan Information Technology Management, Audit and Control 54 Control environment Risk Assessment External regulatory controls Board/audit committee governance Management philosophy and operating style Plans/structure of organization Method to communicate the assignment of authority and responsibility Management control methods Human resource policies and practices Financial policies and practices Risk Categories Probability of loss Consequences w Record keeping, privacy, copyright, taxation, etc, w Regulatory compliance, fiduciary obligations, IT governance, system reliability w Integrity and ethical values, commitment to competence w Leadership for IT organization, organization of IT function, segregation of incompatible IT and user functions, partnership with other organizations w Business practices, codes of conduct, documentation of systems, operations, user responsibilities, reporting relationships w Strategic planning, business system/IT integration planning, budgeting, performance measurement, monitoring, compliance with policies w Hiring, training, evaluation, compensation of IT personnel, career paths w Budgeting process; Cost charge out methods; w Economic, technical, operational behavioral w Main reason for failure of computer Projects w Error, fraud , vandalism/abuse, business interruption, competitive disadvantage, excessive cost, deficient revenues, statutory sanctions, social costs, etc. w Quantitative / qualitative w Monetary, non-monetary w Balancing costs of controls vs. costs of unmitigated risks Final Examination The Institute of Chartered Accountants of Pakistan Information Technology Management, Audit and Control 55 Control activities Control activities Control design Control procedures Control over data integrity, privacy and security Availability / continuity of processing, disaster recovery planning and control w Objectives, framework, environment, activities, monitoring w Legal, ethical, professional standards/requirements w Preventive/detective /corrective strategies w Effective control environment (personnel management methods) w Preventative application controls w Detective application controls w Contingency plans, insurance w Authorization w Separation of incompatible functions (organizational design, user identification, data clarification, user/function/data authorization matrix, user authentication) w Adequate documents and records w Asset safeguards; limitation of access to assets w Independent check on performance; verification of accounting records, comparison of accounting records with assets w Computer-dependent controls (edit, validation, etc.) w User controls (control balancing, manual follow-up, etc.) w Audit trails w Error identification/investigation /correction / tracking w Understanding of data protection legislation w Consideration of personnel issues and confidentiality w Classification of information w Access management controls w Physical design and access control w Logical access control (user authorization matrix) w Network security (encryption, firewalls) w Program security techniques w Monitoring and surveillance techniques w Threat and risk management software and data backup techniques (problems of on-line systems, etc.) w Alternate processing facility arrangements w Disaster recovery procedural plan, documentation Final Examination The Institute of Chartered Accountants of Pakistan Information Technology Management, Audit and Control 56 Monitoring of control compliance IS processing /operations Roles of management, users, auditors (internal, external) Computer assisted audit techniques w Integration with business continuity plans w Periodic tests of recovery procedures w Insurance w Planning and scheduling; service levels; Risks Standards r Infrastructure (hardware, facilities, networks) r Software r Human resources (skill sets and staffing level) w Business processes w Performance monitoring Costs / benefits (quantitative and qualitative impact on management Jobs and office procedures) w Business drivers that impact IT (e.g., scalability, rightsizing, flexibility of change in technology) or business, speed to market, cross-platform capability) w Control over productivity and service quality w Software /data library management w Input/output distribution and control w Security and backup, and recovery w Internal monitoring processes w Performance review processes w External monitoring processes w Processes for addressing-non-compliance w Familiarisation with: r System analysis and documentation (e.g., flowcharting package, review of program logic, etc.) r System /program testing (e.g., test data ,integrated test facility, parallel simulation etc.), r Data integrity testing (e.g., generalized audit software, utilities, custom programs, sampling routines, etc.) r Problem solving aids (e.g. spreadsheet, database. Online data bases, etc) r Administrative aids (e.g., word processing, audit program generation, work paper generators etc). Final Examination The Institute of Chartered Accountants of Pakistan Information Technology Management, Audit and Control 57 PAPER E 13: Information Technology Management, Audit and Control Book Name & Author About the Book 1. Information Systems Control and Audit by Ron Weber. 2. Strategic Management & Information Systems by Wendy Robson. 3. Auditing in a Computerized Environment by Mohan Bhatia. 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. The book is useful for the topic of strategic management of information system. The book explains the fundamentals of information systems audit, business continuity management and the application of CAATs in an effective manner. Supplementary Study Material 1. Information Technology Management, Audit and Control Study Text and Series by A T Foulks Lynch Pakistan. 2. Information Technology Management, Audit and Control Study Text and Series by Professional Business Publications (PBP). 3. Information Technology Management Audit & Control by Mohammad Amjad d Muhammad Qaiser Sheikh. 4. International Information Technology Guidelines developed by IFAC»s e, available at IFAC»s website. 5. Useful information is also available at the website: www.isaca.org. Recommended Reading Revision Revision Bhatti an IT Committe Final Examination The Institute of Chartered Accountants of Pakistan Advanced Accounting & Financial Reporting 58 PAPER E 14: Adv anced Ac counti ng & Financi al Report ing (100 marks) Module E 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 arrivi ng at pragmatic solutions. Students will be expected to be aware of the requirements of the International A ccounting Standards (IASs) and International Financial Reporting Standards (as and when issued) as a pplicable in Pakistan and their application to practical situations and the informational needs of dif ferent users of accounts. Students will be expected to analyse, interpret and explain the commercial activ ities 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 arr angements (e.g. reorganisations, demergers, business combinations, dissolutions, etc.) in accord ance with applicable statutory disclosure requirements. Students will be expected to be familiar with the preparation of the financial s tatements 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 is sues. The examinees are expected to possess profound understanding of the subject over and above wha t 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 an d skills learnt at an earlier stage. Case studies / scenario based questions will be set in the examin ation. Introduction Indicative Grid Syllabus Content Area Weightage 1. a. Financial Statements and Reporting b. International Financial Reporting Standards and Statutory Requirements 2. Specific Accounting Areas 45 3. Analysis of Financial Statements 15 4. Specialised Financial Statements 10 30 Total 100 Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Final Examination The Institute of Chartered Accountants of Pakistan Advanced Accounting & Financial Reporting 59 Contents: 1 a. Financial Statements and Reporting i. Preparation of financial statements including consolidated financial statemen ts and their disclosure. ii. Accounting for investments in subsidiaries and associated undertakings iii. Financial reporting on interests in joint venture iv. Interim financial reporting v. Reporting on discontinued operations vi. Preparation of statutory and directors» report vii Related party transaction viii. Segment reporting 2. Specific Accounting Areas a. Accounting of taxes on Income b. Accounting for leases c. Accounting for construction contracts d. Retirement benefits costs and pension plans e. Foreign currency transactions f. Business combinations g. Accounting for Investments h. Accounting treatment on changes in accounting policies and estimate including fundamental errors i. Recognition and measurement of financial instruments j. Valuation of intangible assets k. Impairment of assets l. Provisions and contingencies m. Revenue recognition b. International Financial Reporting Standards (IFRSs) and Statutory Requirement s i. Recognition, measurement, accounting treatment and disclosure of various tran sactions 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 Institu te of Chartered Accountants of Pakistan. ii. Accounting treatments and disclosure requirements under the Companies Ordina nce, 1984 iii. Specific departures from IFRSs under the local statutory requirements 3. Analysis of Financial Statements i. Horizontal and vertical analysis ii. Ratio analysis iii. Common-size statements a. Needs of various users of financial statements and its importance b. Techniques for analysis c. Earning per share (EPS) d. Business and share valuations Final Examination The Institute of Chartered Accountants of Pakistan Advanced Accounting & Financial Reporting 60 4. Specialized Financial Statements a. Banks b. Leasing companies c. Insurance companies d. Mutual funds and similar enterprises e. Employee benefit plans Recommended Reading PAPER E 14: Advanced Accounting & Financial Reporting Book Name & Author About the Book 1. International Financial Reporting Standards (IFRS) Published by ICAP. 2. Gripping IFRS Vol. 1 published by ICAP. 3. Gripping IFRS Graded Question published by ICAP. 4. Companies Ordinance 1984. 5. Insurance Ordinance 2000 and Banking Companies Ordinance 1962. 6. IFRS Ð Interpretation and Application of International Accounting and Financial Reporting Standards (Wiley Series) by Barry J. Epstein and Abbas Ali Mirza. 7. IFRS Practical Implementation Guide and Workbook (Wiley) by Abbas Ali Mirza, Graham J. Holt and Magnus Orrel. 8. Published Financial Statements of Leasing Companies, Mutual Funds, Banks and Insurance Companies. It is the primary source and explains the topics with illustrations and appendices. Contains useful material on various IASs and IFRSs with examples. Contains questions for practice on various IASs and IFRSs. Schedule IV and V covers disclosure requirements for listed public companies and unlisted companies repectively. Contains disclosure requirements for financial statements of insurance and banking companies. 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. The concepts built by Interpretation of IFRS series are further explained with practical examples. Reading and understanding of these published information will help in the preparation of these specialized financial statements. Supplementary Study Material 1. Advanced Accounting & Financial Reporting Study Text and Revision Series by A T Foulks Lynch Pakistan. 2. Advanced Accounting & Financial Reporting Study Text and Revision Series by P rofessional Business Publications (PBP). 3. Selected Opinions and Technical Releases (Accounting). 4. The websites of following audit firms provides free online financial reportin g tools for. understanding IFRS. The links can be viewed from the e-learning section of ICAP»s website: w Deloitte IFRS e-learning w EY Resource for IFRS w KPMG issues and insight w PWC research and publications Final Examination The Institute of Chartered Accountants of Pakistan Corporate Laws 61 PAPER E 15: Corporate Laws (100 marks) Module E The syllabus aims to provide the knowledge and understanding of corporate and ot her relevant laws, rules and regulations and to familiarize with the secretarial practices includin g 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 wil l be set in the examination. The examinees are expected to possess detailed knowledge of the Companies Ordina nce 1984 over and above what they have learnt at the Intermediate stage. Topics examined at th e Intermediate stage may or may not be directly re-examined here, however, examinees would need to ut ilize knowledge and skills learnt earlier. The knowledge required for Companies Rules would also be comprehensive but for other Laws and regulations only general knowledge would suffice. Introduction Indicative Grid Syllabus Content Area Weightage 1. Companies Ordinance, 1984 2. Various Rules under the Companies Ordinance 3. Secretarial Practices 4. Other laws and regulations 40 30 15 15 Total 100 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 a. Areas of the Companies Ordinance, 1984 covered at Module D Examination in Com pany Law Paper. Contents: Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. 1. Companies Ordinance, 1984 Final Examination The Institute of Chartered Accountants of Pakistan Corporate Laws 63 Floatation of shares and securities including prospectus, offer for sale and con vertible 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. Filing requirements, maintenance of statutory books and registers under the C ompanies Ordinance, 1984. b. Meetings of shareholders and directors and all proceedings thereto, including notices, agenda, quorum, voting, poll, proxies, resolutions and minutes. c. Functions and responsibilities of the Securities and Exchange Commission of P akistan under the SECP Act (Act No. XLII of 1997). 3. Secretarial practices a. Foreign Exchange Regulations - Foreign Exchange Manual 8th Edition i. Chapter XIX Loans, overdrafts and guarantees Part A: Rupee loans Foreign exchange regulations relating to definition of foreign controlled compan ies, provisions for general permission for lending to foreign controlled companies for working c apital, local borrowings by foreign controlled companies for capital expenditure. Part B: Foreign private loans Private foreign currency loans, repatriable foreign currency loans by foreign co ntrolled companies for meeting working capital requirements, foreign currency loans (repa triable and non-repatriable basis) by Pakistani firms and companies functioning in Pakistan. ii. Chapter XX - Securities Knowledge and application of provisions relating to rules and regulations govern ing acquisition and holding of foreign securities, issue, transfer and export of Pak istani securities to non-residents, general exemption from the restriction on transfer and issue o f Pakistani securities to non-residents, procedure for issue of shares to non-residents, tra ding of quoted shares by non-residents, and special instructions regarding shares transferred u nder the Central Depository System - CDS of the Central Depository Company b. Stock Exchange Listing Rules and Guidelines - especially those relating to se cretarial matters, public issue of shares, Code of Corporate Governance and Transfer Pricing. 4. Other laws and regulations f. NBFC Rules issued by SECP on April 01, 2003, Chapters I to III and Schedules I & IV only. g. Regulation 25 of d Non-banking Finance Companies and Notified Entities Regula tions, 2008. h. Schedule IX (Fit and Proper Criteria) and Schedule X (Long, Medium and Sort T erm Financing Facilities) of the Non-Banking Finance Companies and Notified Entities Regulatio ns 2008. Final Examination The Institute of Chartered Accountants of Pakistan Corporate Laws 64 Laws governing certain specialized institutions c. Banking Companies Ordinance, 1962 - Sections pertaining to audit and accounts , mainly sections 34 to 38 of the Banking Companies Ordinance, 1962. d. The Central Depositories Act, 1997 and Central Depository Companies (Establis hment and Regulation) Rules 1996 - Understanding of provisions relating to: i. Central Depository System; and ii. Effect of the Central Depository on provisions of the Companies Ordinance, 1 984 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 o n the rights of members. e. Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980. i. Provisions relating to the following: w Definitions (Section 2) w Registration of Modaraba Companies (Section 4 to 6) w Provisions applicable to Modaraba (Section 7 to 23,33,37,41 and 42) ii. Modaraba Companies and Modaraba rules, 1981 w Rules 2 to 4,7 to 13,16 to 20-B,23 and 25 to 28 w First Schedule (Form no.1,9 and 11 including annexures) w Third Schedule w Fourth Schedule (salient features of matter to be specified in prospectus and reports to be set out therein) f. The Insurance Ordinance, 2000 Ð provisions relating to statutory and special au dits 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 acco unts. Broad understanding of the Code of Corporate Governance for listed and unlisted insurance companies. g. The Securities and Exchange Ordinance 1969 and the Securities and Exchange Ru les, 1971Ð provisions pertaining to issuance of shares and securities to the general public (mainly section 9 ) and Insider Trading. h. Competition Ordinance and Regulations The following topics will be covered: i. Competition Ordinance 2007 Chapter - I Preliminary Chapter - II Prohibition of abuse of dominant position, certain agreements, deceptive marketing practices and approval of mergers. Chapter - IV Functions and Powers of the Commission Chapter - V Penalties and Appeals ii. Competition (Merger Control) Regulations 2007 excluding the Schedule iii. Competition (Leniency) Regulations 2007 Recommended Reading Final Examination The Institute of Chartered Accountants of Pakistan Corporate Laws 65 PAPER E 15: Corporate Laws Book Name & Author About the Book 1. Complete Company Law S. A. Salam (Relevant topics). 2. Foreign Exchange Manual (Latest Edition) by State Bank of Pakistan (Chapter No. XIX, XX only) available at www.sbp.org.pk. 3. Banking Companies Ordinance, 1962 (Relevant sections only). 4. Insurance Ordinance, 2000 (Relevant sections only). 5. Practical Approach to the Companies Ordinance, 1984 by Nazir Ahmed Shaheen (Relevant topics). Bare Law and brief explanation thereon are included in the book. Covers relevant part of the syllabus. Covers relevant part of the syllabus. Covers relevant part of the syllabus. It is a useful book for understanding practical application of law. Supplementary Study Material 1. Corporate Laws Study Text and Revision Series by AT Foulks Lynch Pakistan. 2. Corporate Laws Study Text and Revision Series by Professional Business Public ations (PBP). 3. SECP Guide Series available at SECP»s website (www.secp.gov.pk). 4. Relevant issues of Members» Information and Education Series issued by ICAP. i. Listed Companies (Substantial Acquisition of voting shares and Takeovers) Reg ulations, 2008 j. Rules and regulations framed by the Federal Government from time to time, as may be specifically notified by the Institute of Chartered Accountants of Pakistan for inclusion in the syllabus. Note: Where specific reference to an Act, Ordinance, Rules, Regulations, Guideli nes 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. Final Examination The Institute of Chartered Accountants of Pakistan Business Management 66 PAPER E 16: Busi nes s Management (100 marks) Module E The objective of this paper is that the individual should be able to: • Identify the principles and concepts in the theories and practices of strategic business management; • Asses the impact of environmental forces such as global microeconomic forces, in ternational trade and financial system on organizational strategies and plans; • Understand the importance of linking information systems development and managem ent to business goals and needs; • Understand the interplay of marketing with other vital functional areas in busin ess management and to understand the accountant»s role in servicing the needs of marketing and other functions of business; • Recognize the role of global marketing and international business; • Assess the importance of human resources development to organisations and identi fy methods of managing people effectively; • Evaluate ways in which change can be managed successfully; • Appreciation of social and ethical implication of strategic policies in business ; • Understand the aims of corporate codes of conduct and their role in improved cor porate governance; and • Understand the manager»s role and responsibilities in relation to the working envi ronment. Case studies / scenario based questions will be set in the examination. Introduction Indicative Grid Syllabus Content Area Weightage 1. Strategic management and planning 2. Corporate social responsibility and business ethics 30 3. Human resource management 4. Management of the working environment 30 5. Marketing Management 6. International Business 20 20 Total 100 Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Final Examination The Institute of Chartered Accountants of Pakistan Business Management 67 Contents: 1. Strategic management and planning: a. The purpose of strategic management and business planning and their inter rel ationship b. The methods which organisations use to plan for the future including the role of information technology c. Position appraisal and analysis: i. Identifying the organization»s strengths and weaknesses, opportunities and thre ats ii. Identification and quantification of the planning gap iii. Closing the planning gap through the identification and evaluation of alter native courses of action: improved efficiency; improved product(s);or service(s); introducing n ew product; entering new markets; merging with or acquiring other organisations iv. Use of alternative strategies v. Quality and a strategic variable; its implementation and management vi. Performance against operational and strategic targets; flexibility» economy, e fficiency and effectiveness vii. Performance against that of competitors; benchmarking; use of inter-firm co mparisons; the limitations of external data viii. Performance of costs, profit and investment centres using financial and no n-financial measures ix. Problems of measuring divisional and subsidiary company performance x. International and multinational trading; transfer pricing of goods and servic es and their impact on trading results xi. Impact of changing price level on current performance and the future project ions xii. Customer outlets, including customer profitability analysis d. The effect of external environment on strategy and plans and appraising the e nvironment: i. Scanning the environment of the organisation and the context in which it is s et for changes, developments and opportunities ii. Forecasting trends and developments in relevant areas through the use of rel evant quantitative and qualitative analysis iii. Future basing (i.e Anticipating long-term prospects for the business and it s likelihood of survival) and other scenario-building techniques iv. Impact on the organisation of changing national and international influences : demography; technology (progressional alternative / acceptability); economic res ources; social attitudes and aspirations; legislation and regulation; political forces; government and other agencies, including pressure groups v. Competitive advantage: w its meaning in different markets and industries of nations and the implication s of this for organisational success w the different approaches used by organisations and management in different countries and the lessons which can be applied to Pakistan w the effect on organisations of working in an international environment, the ke y aspects of that environment and methods of entry into it Final Examination The Institute of Chartered Accountants of Pakistan Business Management 68 vi. Use of renewable and non-renewable resources including the ethical implicati ons of such use; the effect of the environment on corporate performance vii. External sources of information, including databases, both private and publ ic, and their usefulness to the organisation viii. Impact of innovation, substitution and obsolescence on business process (i ncluding marketing and production) ix. Impact of international market integration on the transfer of goods, service s and labour x. Comparative organizational performance: market share production capacity e. Methods of gaining support and commitment for strategies f. Establishing the corporate objectives: i. Organizational missions, aims, goals and objectives ii. Long-term (strategic) and short-term (operational) objectives: quantitative and qualitative evaluation iii Application of decision theory iv Problems of achieving balanced growth and development v. Internal and external factors effecting decisions; implication of «short-termis m» g. Formulating and evaluating plans with an awareness of the various techniques available to managers h. Understanding and managing the risk of a proposed business plan for the plan itself and for all the aspects of business which it will influence i. Reviewing strategy for the effect it will have on the organisation and the lo cal and global community 2. Corporate social responsibility and business ethics a. Understanding of obligation towards society by business organisations and the individuals associated with it, in carrying out the business and professional activities b. Understanding ethical and social implications of business strategic policies and decisions and their impact on the stockholders; consideration thereof in the formulation a nd implementation of strategic planning and management decisions c. Disclosure and confidentiality d. Profit motives versus other corporate objectives e. Goal congruence and corporate performance measurement f. The role of professional bodies in regulating the activities of members Final Examination The Institute of Chartered Accountants of Pakistan Business Management 69 3. Human resource management a. The purpose and forms of personnel specifications in the recruitment of perso nnel b. Methods of identifying competencies and other attributes required c. Specifying personnel requirements d. Evaluating and determining the benefits and costs of new or additional person nel e. Identifying and determining suitable methods of recruitment f. Selection methods and their use g. Methods of motivating and supporting personnel h. Staff appraisals and the assessment of competence i. Warning and dismissing personnel: legal and organizational policies and proce dures; the role of internal and external specialists in the process j. The role of employee group in promoting the welfare of personnel k. National legislation which affects recruitment, selection, employment and dis missal of personnel l. The management of organizational and personal changes m. Concepts and principles of human resource development i. The role which individual and team development can play in growth and develop ment ii. The different concepts and models of competence iii. Methods of encouraging and supporting individuals and teams to grow and dev elop iv. The effect of internal and external factors on development n. Human relations management 4. Management of the working environment a. Interpretation, applying and monitoring best practices for managing the worki ng environment b. National Legislation which affects the working environment c. The role and purpose of health , safety and security requirements, procedures and guidelines d. Roles and responsibilities of management for managing and improving the worki ng environment 5. Marketing Management An introduction to marketing principles, the purpose of marketing philosophy and concepts in providing for customer needs. Areas include: a. Strategy in the market place i. Assessing threats and opportunities to the marketing plan; determining the ne ed for change in the planning area ii. Development of marketing strategies to meet organisation objectives iii. Assessing the nature and size of the market using internal records, market intelligence, market research iv. The process of creating, reviewing, selecting and marketing the right produc t in the right place, to the right customer at the right time, while achieving the right price; relevance of the product life cycle v. The product portfolio; formulation, management, the relevance of branded merchandise Final Examination The Institute of Chartered Accountants of Pakistan Business Management 70 vi. Consumer power within the marketing environment vii. Strategic management of markets through mergers, acquisitions and divestmen ts viii. Problems associated with the acquisition of the foreign subsidiaries espec ially in respect of performance appraisals b. Analyzing the impact of globalization on marketing to assess competitive adva ntage c. Techniques for analyzing the market, choosing the target market and the appro priate marketing mix, distribution channels, promotions, and developing a marketing pla n 6. International Business a. The environment of global marketing, global opportunities and threats; diffic ulties in International business and alternative approaches to managing the process b. The development of multinational organisations and transnational corporations and their role in the world economy c. International financial management decisions i. Alternative methods of financing imports and exports ii. The workings of international money and capital markets and the opportunitie s that they offer to companies as a source of finance and as a repository for the investment of funds iii. The management of financial resources within a group of companies including : • payments between companies • cash management • transfer pricing • judging the performance of companies within a group • the financial control of a group of companies iv. The appraisal of international capital investments, applying the appropriate techniques, and the consideration of the major issues in the decision-making process, includ ing: • strategic objectives • the principle of foreign home country versus host country returns • the form of foreign investments, including the use of branches versus subsidiari es • the different methods of financing foreign investments • the effect of taxation on foreign investment decisions • repatriation of sales amounts, earnings and charges to foreign operating compani es • political risk analysis Final Examination The Institute of Chartered Accountants of Pakistan Business Management 71 PAPER E 16: Business Management Book Name & Author About the Book 1. Strategic Management Concepts and Cases by Fred R. David. 2. Principles of Marketing by Kotler Armstrong. 3. Human Resource Management by H. John Bernardin. 4. Management and Organizational Behaviour by Laurie J. Mullins. 5. Business Studies by Dave Hall Rob Jones and Carlo Raffo. 6. AS Level and A Level Business Studies by Peter Stimpson. The book ensures concept building for the topics on strategic management. The book gives an in-depth knowledge of the principles of marketing and a good explanation of basic marketing concepts. The book is relevant for various syllabus topics under the mentioned grid. 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. The books comprehensively cover the following topics: Business Strategy and environment, marketing and human resources. Supplementary Study Material 1. Business Management Study Text and Revision Series by AT Foulks Lynch Pakista n. 2. Business Management Study Text and Revision Series by Professional Business P ublications (PBP). Recommended Reading } Final Examination The Institute of Chartered Accountants of Pakistan Management Accounting 72 PAPER F 17: Management Accounting (100 marks) Module F The objectives of this syllabus are: • The understanding of cost accounting in relation to management functions. • The application of financial information for control purposes. • The development and interpretation of data for decision making. • The techniques for performance appraisal and operational research. • The candidates» ability to design and present plans and schemes to the management. The examinees are expected to possess comprehensive understanding of the subject over and above what they have learnt at the Intermediate stage. Topics examined at the Intermed iate stage may or may not be directly re-examined here, however, examinees would need to utilize knowl edge and skills learnt earlier. The paper is designed to cover theory and practical aspects of manageme nt accounting with special reference to Pakistan and real life situations. Case studies / scenario based questions will be set in the examination. Introduction Indicative Grid Syllabus Content Area Weightage 30 4. Quantitative techniques a. Learning curve b. Network planning c. Operational research and cost reduction d. Linear programming 3. Working capital management 15 15 2. a. Standard Costing b. Budgetary controls c. Management control systems d. Activity based costing e. Preparation and interpretation of financial forecasts f. Cost control g. Total quality management h. Non financial risk management 40 Total 100 1. a. Cost accounting objectives, classifications and systems b. Cost concept in decision making c. Marginal costing and decision making problems d. Pricing and output decisions Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Final Examination The Institute of Chartered Accountants of Pakistan Management Accounting 73 1. a. Cost accounting Objective of a costing system; inventory valuation; cost classification; costing methods and systems, cost estimation; cost apportionment; job order costing; product costing (including process costing); and joint-and by-product. b. Cost concept in decision making Relevant and apportioned costs; differential cost, incremental cost; opportunity costs, and break-even & cost volume profit analysis c. Marginal costing Distinction between marginal costing and absorption costing; break-even analysis , cost volume profit analysis. Various decision making options. d. Pricing and output decisions Full cost pricing policies, including ROI; pricing of new products; opportunity cost; full cost vs marginal cost; transfer pricing methods and optimisation. 2. a. Standard costing Nature and method of standard, marginal and absorption costing; standard setting ; variance analysis and disposals of variances; use of standard costs in internal and exter nal reporting; responsibility accounting, comparison with budgets; classification of variances; and planning and operational variances. b. Budgets Concepts of budgetary control; advantages, administration and preparation of bud get; functional budgets leading to preparation of master budget; fixed and flexible b udgets; performance budgeting; the budget as part of the overall business plan; sales bu dget; sales forecast; production budget; direct materials budget; direct labour budget; manu facturing overhead budget; inventory budget; cost of goods sold budget; selling and admini strative expenses budget; inflation aspects; zero based budgets, capital expenditure budg ets and human & motivational aspects of budgets. c. Management control systems Responsibility accounting; decentralised divisional control; transfer prices; re sidual income and ROI as tools of control; centralised control and budgetary systems; evaluati on of performance; performance budgeting. Reporting on performance at different levels . Contents: Final Examination The Institute of Chartered Accountants of Pakistan Management Accounting 74 d. Activity based costing Activity based costing for control and decision making purposes. e. Preparation and interpretation of financial forecasts Preparation of projected financial forecast and application of probability and r egression analysis in preparation of estimates f. Cost Control Cost control as distinct from cost determination. Control over w astages, scrap, spoilages, and defects. g. Total quality management Basic concepts and application of TQM h. Non financial risk management i. Aspects of risk, such as: political, economic, social, technological and frau d ii. Techniques of minimising the risk of fraud, such as: fraud policy statements , effective recruitment policies and good internal controls especially over procurement and cash iii. Principle of diversifying risk (no numerical calculations required) iv. Risk of loss while goods are in transit and the risk of litigation 3. Working Capital Management a. Working capital- general i. Working capital requirements ii. Short term financial ratios iii. Working capital and the operating cycle iv. Sources of short and medium term finance v. Problems relating to working capital management b. Inventory management i. Costs associated with the acquisition and holding of inventories ii. The derivation and use of the economic order quantity (EOQ) model iii. Optimal production plans iv. Financial ratios of inventory v. Lead-time, buffer stocks and stock-out costs vi. Perpetual inventory and continuous stocktaking vii. Just-in-time (JIT) stock management c. Debtor/creditors management i. Collection policies ii. Credit policies iii. Customer evaluation iv. Credit financing (including factoring) v. Financing of imports and exports Final Examination The Institute of Chartered Accountants of Pakistan Management Accounting 75 d. Cash management i. Solvency and liquidity ii. Cash flow forecasting iii. Uncertainty in cash forecasting iv. Short term investment opportunities v. Cash handling and transmissions 4. Quantitative Techniques a. Learning curve The theory of learning curve and its effect in cost estimation b. Network planning Concept and application; drawing simple networks; concept of critical path and f loat; accelerated project times; cost analysis; uncertainly; probability analysis; loa ding analysis; gantt charts; and time management. c. Operational research and cost reduction Introduction to operational research, application concepts and its advantages. C ost reduction: techniques for cost reduction such as work study, time and motion study and valu e analysis. Employee participation in cost reduction programmes, significance of constitutin g special cost reduction cells. d. Linear programming Introduction to mathematical programming and major forms of linear 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 t echniques. Final Examination The Institute of Chartered Accountants of Pakistan Management Accounting 76 PAPER F 17: Management Accounting Book Name & Author About the Book 1. Cost Accounting by Matz and Uzry. 2. Management Accounting by Colin Drury. 3. Financial Management by P.K. Jain and M. Y. Khan. 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. The book covers almost all the parts of the syllabus and ensures concept building by giving a variety of questions for each topic. The book is relevant for various syllabus topics and contains a large number of questions for practice. Supplementary Study Material 1. Management Accounting Study Text and Revision Series by AT Foulks Lynch Pakis tan. 2. Management Accounting Study Text and Revision Series by Professional Business Publications (PBP). Recommended Reading Final Examination The Institute of Chartered Accountants of Pakistan Business Finance Decisions 77 PAPER F 18: Business Finance Deci sions (100 marks) Module F The aims of the syllabus are to provide a sound understanding of the conceptual principles and practical applications of modern analysis of financial decisions and of the rela tionship 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 operatio nal business decisions. The paper is designed to cover theory and practical aspects of financial managem ent with special reference to Pakistan and real life situations. Case studies / scenario based questions will be set in the examination. Introduction Indicative Grid Syllabus Content Area Weightage 1. a. Sources of local finance b. International financing and financial management c. Capital structure, interest rate risks and cost of capital d. The dividend decision 30 30 40 Total 100 2. a. Capital investment decisions and project planning b. Inflation and financial management c. Risk and Returns, including portfolio management 3. a. Analysis and interpretation of published financial statements b. Strategic planning c. Valuation d. Mergers, amalgamations and acquisitions e. Reports to management Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Final Examination The Institute of Chartered Accountants of Pakistan Business Finance Decisions 78 1. a. Sources of local finance i. Credit, money and capital markets in Pakistan ii. Raising capital, equity, debt, mezzanine debt, convertibles, factoring, warr ants, term finance certificates, venture capital financing, project financing, short term f inance. iii. Financial leasing iv. Futures v. Pakistani stock markets vi. Prudential regulations b. International financing and financial management i. Raising international finance ii. Introduction to international financial management iii. Exchange rate risk management iv. Foreign exchange transactions c. Capital structure, interest rate risks and cost of capital i. Capital structure: business and financial risk, financial gearing and operati ng gearing, the effect of taxes ( except calculations involving the effect of personal taxes on capital structure), and impact on earnings per share ii. Interest rate risk management including the use of interest rate swaps iii. Cost of capital, equity, debt, convertibles, weighted average rate and use of cost of capital in investment appraisal. d. The dividend decision i. Dividend and valuation ii. Information content of dividend, clientele effect and other factors affectin g dividend levels. 2. a. Capital investment decisions and project planning i. Investment appraisal techniques: NPV, IRR, payback, ROI; and comparison of NP V and ROI ii. Investment appraisal under inflationary conditions iii. Relevant costs iv. The effect of taxation upon investment appraisal v. Replacement decisions using the equivalent annual cost method and deciding replacement policy vi. The effect on accounting profits and investor ratios of undertaking a partic ular investment decision vii. Lease or buy decisions viii. Make or buy decisions ix. Decisions under uncertainty, including expected values, sensitivity analysis and value of information Contents: Final Examination The Institute of Chartered Accountants of Pakistan Business Finance Decisions 79 x. Decisions under constraints, including interpretation of the linear programmi ng output including dual values (shadow prices and opportunity costs), assumptions and lim itations of linear programming, application of linear programming to capital rationing pr oblems xi. Preparation of project report and evaluation of proposals xii. Social cost benefits analysis xiii. Project planning techniques b. Inflation and financial management Inflation and financial analysis; project appraisal under inflationary condition s; relationship with interest rates c. Risk and returns, including portfolio management i. Measures of risk and return, and their relationship ii. Portfolio analysis; risk reduction effects and diversification iii. Attitudes to risk iv. Capital assets pricing model and its practical use 3. a. Analysis and interpretation of published statements i. Inter-firm and intra-firm comparisons through ratio analysis ii. Limitations of ratio analysis b. Strategic planning i. Objectives ii. Production functions and resource analysis iii. Production strategy iv. Manpower planning v. Financial strategy vi. Competition strategy vii. Information strategy viii. Business and corporate plans ix. Implementation of business plans c. Valuation i. Valuation of business w Earnings and asset valuation models w Merger valuation models w Attitudes to risk and analytical procedures for dealing with uncertainty w Other factors ( e.g. the impact of the accounting treatment of goodwill and in tangibles on debt covenants; the nature of executives incentive contracts) ii. Valuation of shares w Earnings dividend and assets valuation models w Valuing minority interests Final Examination The Institute of Chartered Accountants of Pakistan Business Finance Decisions 80 w Valuing controlling interest w Other factors influencing share values ( including uncertainty) w Identify components of shareholder value and identify ways in which shareholde rs value can be increased. d. Mergers, amalgamation, acquisition, etc Amalgamation, reconstruction, takeovers and mergers, including devising schemes and advising management. e. Reports to management i. The design and presentation of plans and reports ii. Designing various forms and reports for different levels of management iii. Specific reports w On acquisition and disposal of business or assets w On application for new or additional borrowings w On specialised one-off assignments (e.g. management buyouts) w On other problem areas. PAPER F 18: Business Finance Decisions Book Name & Author About the Book 1. Financial Management by Eugene F. Brigham and Michael C. Ehrhardt. 2. Essentials of Financial Management by George E. Pinches. 3. Financial Management & Policy by James C. Van Horne (Pearson Education). 4. Modern Investments and Security Analysis by Russel J. Fuller & James L. Farrel Jr. 5. Foundations of Finance by Keown, Petty, Scott & Martin. The book covers substantial part of the syllabus. The book covers substantial part of the syllabus. The book covers substantial part of the syllabus. The book is specifically written for security analysis. It is a good source for concept building. The book covers substantial area of syllabus. Provides firm foundation for the subject. Supplementary Study Material 1. Business Finance Decision Study Text and Revision Series by AT Foulks Lynch P akistan. 2. Business Finance Decision Study Text and Revision Series by Professional Busi ness Publications (PBP). Recommended Reading Final Examination The Institute of Chartered Accountants of Pakistan Advanced Taxation 81 PAPER F 19: Adv anced Taxati on (100 marks) Module F 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 be low. The examinees shall also be expected to have command on the practical application of the laws. A general knowledge of the Central Excise Law will also be examined. The paper covers the following laws. w The Income Tax Ordinance, 2001 w The Sales Tax Act, 1990 w The Sales Tax Ordinance, 2000 promulgated by the Provinces w The Islamabad Capital Territory (Tax on Services) Ordinance, 2001 w The Federal Excise Act, 2005 w Notifications, Rules, General orders and Circulars issued under the above ment ioned 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 poss ess profound understanding of the subject over and above what they have learnt at the Interme diate stage. Topics examined at an earlier stage may or may not be directly re-examined, however, ex aminees would need to utilize knowledge and skills learnt at the Intermediate stage. Knowledge of specific agreements for avoidance of double taxation will not be re quired. 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/Or dinance would be examined from the attempt following its date of enforcement. Introduction Indicative Grid Syllabus Content Area Weightage A comprehensive knowledge and practical applications in respect of: 1. Income Tax Laws 2. Sales Tax Laws General knowledge in respect of : 3. The Federal Excise Act, 2005 (Chapters I & II only) 55 Ð 65 25 Ð 35 7 Ð 15 Total 100 Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Final Examination The Institute of Chartered Accountants of Pakistan Advanced Taxation 82 PAPER F 19: Advanced Taxation Book Name & Author About the Book 1. Complete Income Tax Law by S.A. Salam. 2. Law & Practice of Income tax by Dr. Ikram-ul-Haq. 3. Sales Tax Ready Reference Act by S.A. Salam. 4. Federal Excise Act, 2005 including relevant notifications, circulars etc. by Tariq Najeeb Choudhry. 5. Practical Handbook of Income Tax by Dr. Ikram-ul-Haq. 6. Synopsis of taxation by Mirza Munawar Hussain. 7. Pakistan income tax law Principles and Practice by Mian Safiullah & Kashif Aziz Jahangiri. These books cover all topics of syllabus, regularly updated and also gives background of any changes made to the law. Bare Act, Rules, Notifications; Circulars etc on syllabus topics are included in the book with brief explanations. The book covers the related topics of syllabus. These are very useful books for understanding practical application of taxation. Recommended Reading } } Final Examination The Institute of Chartered Accountants of Pakistan Advanced Auditing 83 PAPER F 20: Adv anced Audit ing (100 marks) Module F To ensure that students have acquired the competence to provide comprehensive au dit and business assurance services, by testing their ability to integrate and apply their knowle dge of auditing to realistic problems. Students will be expected to have the knowledge of the International Standards o n Auditing and Related Services, the International Auditing Practice Statements, Technical Rele ases 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 p art of the assurance process and should be fully conversant with the use of Computer Assisted Audit T echniques (CAATs). Students will be expected to display the ability to document the accounting and internal control systems of an enterprise and prepare simple flow charts thereon. Students will also be expected to possess knowledge of the implications on the a udit, of laws, rules and regulations covered in the Corporate Laws paper. Students will be expected to draft audit reports, qualifications in audit report s, 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 Ord inance and Bye- Laws. The students are encouraged to be abreast of current issues relating to the audi tors and audit practice as discussed / reported in accounting magazines, national press, etc. The examinees are expected to possess a profound understanding of the subject ov er 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 kn owledge and skills acquired at the Intermediate stage. Case studies / scenario based questions will be set in the examination. Introduction Final Examination The Institute of Chartered Accountants of Pakistan Advanced Auditing 84 5. Completion stages and the reporting function 6. Special reports 7. Special audits 25 8. Quality control for audit work 9. Management of audit clients and client relationships 10 10. International Standards on Assurance, Auditing & Related Services, and International Auditing Practice Statements 11. Professional and ethical considerations 30 Total 100 1. Practical aspects in respect of areas of auditing covered at Intermediate stage 2. Advanced issues in planning an audit a. Consideration of laws and regulations in the audit of financial statements. b. Performance of client acceptance procedures at the time of accepting new audi t engagements and issuing engagement letters. c. Consideration of the effects on an audit when: i. The financial statements are audited for the first time; or ii. when the financial statements for the prior period were audited by another a uditor who has expressed an unqualified or a qualified opinion. Contents: Note: The weightages given above are for guidance purposes only and some deviati ons in setting of papers could be expected. Indicative Grid Syllabus Content Area Weightage 1. Practical aspects in respect of areas of auditing covered at Intermediate stage. 2. Advanced issues in planning an audit 3. Audit techniques and procedures 4. Evaluation of critical areas 35 Final Examination The Institute of Chartered Accountants of Pakistan Advanced Auditing 85 d. The examination of prospective financial information and its effects on diffe rent stages of audit. e. Obtaining knowledge of business and significant business risks, and using it to develop overall audit approach plan. f. Considerations in using the work of: i. Internal auditors; ii. experts; iii. another auditor; and iv. audit committees. g. Determining the components of audit risk i.e. inherent risk, control risk, de tection risk and use of this assessment to formulate overall audit plan in order to keep the audit ri sk to an acceptable low level. h. Relationship between materiality and audit risk. i. Development of the overall audit plan identifying the significant/critical au dit areas. j. Development of detailed audit programmes. k. Organising and planning complex audit situations, including group audits, joi nt audits, multilocation engagements, special purpose engagements including due diligence reviews and related service engagements. l. Identification of related parties and effects of transactions with related pa rties on the financial statements and auditors» opinion. m. Security issues in computerised systems: (i) IFAC guideline on Managing Security of Information; and (ii) Information Security Governance Guidance for Boards of Directors and Execut ive Management. Both of these publications are available on IFAC website www.ifac.or g. n. Time budgeting, staffing and costing. o. Changes to overall audit plan and audit programmes. p. Maintenance and updating of Permanent audit files. 3. Audit techniques and procedures 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: Final Examination The Institute of Chartered Accountants of Pakistan Advanced Auditing 86 a. Identifying risks of material misstatements in: i. Existence, ownership / obligation, accuracy / measurement, valuation and comp leteness of assets and liabilities; ii. appropriateness of accounting policies and their consistent application; and iii. disclosures in the financial statements of an entity, including additional information relating to capital commitments and contingencies and effects of post balance sheet event s. b. Selecting one or more analytical procedures from comparison, averaging, ratio analysis and quantitative analysis (but excluding correlation, regression, time-series analys is and more advanced statistical techniques) to yield informative results relevant to identi fied risks. c. Applying selected analytical procedures to given financial and other data. d. Selecting one or more tests of controls and substantive procedures (using CAA Ts where applicable) from inspection, observation, enquiry (including management represen tations, assessment of the work of other auditors and specialists, and independent confir mations) and computations to provide evidence relevant to identified risks which will be suff iciently reliable and which avoid duplication of work. e. Outlining the differences between statistical and non-statistical methods of sampling and selecting samples from random, value-weighted, systematic, haphazard and block populations. f. Documentation of audit work alongwith evidence of review and conclusions draw n. Reporting of significant issues identified during the audit. g. Drawing straightforward conclusions regarding financial statements, given the results of analytical procedures, audit tests and post balance sheet events. These conclusions should: i. Present and justify a view, where there is sufficient evidence to do so; ii. identify and justify requirements of further evidence, where there is insuff icient evidence to form a view but such evidence could practicably be obtained; and iii. state that it is not possible to form a view, where there is insufficient e vidence to do so and such evidence could not practicably be obtained. 4. Evaluation of critical areas a. Appropriateness of going concern assumption. b. Evaluating the effects on reporting responsibilities of an auditor resulting from: i. pending legal action; ii. fraud and error; iii. non-compliance with laws and regulations; and iv. taxation and tax related contingencies. v. other post balance sheet events c. Audit of accounting estimates. Final Examination The Institute of Chartered Accountants of Pakistan Advanced Auditing 87 5. Completion stages and the reporting function a. Review of financial statements including comparative information, directors r eport and other information included in documents containing audited financial statements to ide ntify any departures from legal requirements and / or IFRSs, inadequacies in disclosures, internal inconsistencies and / or inconsistencies with other available information. b. Adequate disclosure of events occuring after reporting period and their effec t on the auditor»s opinion. c. Management representations regarding all significant matters. d. Forming and justifying an opinion on financial statements in the light of sup ervisory reviews and the results and conclusions from audit tests and procedures, which would com ply with the requirements of the Companies Ordinance, 1984 or other laws related to special e ntities. e. Preparation of management letters, internal control memoranda of entities whi ch include clear and concise statements of facts, their potential effects and recommendations for actions relevant to the needs and nature of the entity. 6. Special reports a. Special purpose reports e.g. on forecasts and estimates etc. b. Reporting and related services (compilation and review engagements). c. Reports on prospectuses. d. Certificates of auditors on statutory reports. e. Reports relating to bonus issues. f. Reports on prospective financial information. g. Audit reports on special purpose audit engagements. h. Special audit reports relating to forensic assignments. i. Reporting on due diligence engagements. j. Reporting on compliance with the Code of Corporate Governance. k. Report on component of financial statements l. Certificates on break-up value, net worth, right issue, other matters as spec ified from time to time by Regulating authorities. 7. Special audits a. Non statutory audits, cost audits, management audit, systems audits, operatio nal audits, forensic assignments (including money laundering aspects), due diligence reviews , internal audit functions (in house and outsourced). b. Audits of specialised enterprises e.g. banks, insurance companies, investment companies, housing finance companies, employees» retirement funds. 8. Quality control for audit work a. Quality control policies and procedures: i. at audit firms (peer reviews); and ii. at individual audits. Final Examination The Institute of Chartered Accountants of Pakistan Advanced Auditing 88 b. Specifying quality control procedures: i. the independence of the audit firm and audit personnel; ii. the skills and competence of audit personnel; iii. procedures for review of the audit documentation iv. handling and safeguarding the audit documentation v. procedures to resolve technical disagreements which will be suitable for a sp ecific audit firm and which shall be cost effective; vi. quality control reviews (internal and / or by ICAP); and vii. the concept of audit committees. 9. Management of audit clients and client relationships a. Managing the audit clients, including compiling and reviewing information on clients throughout the year. b. Managing the audit relationship including negotiating the fee for services an d discussion of administration and results of audit c. Confidentiality. d. Independence. 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. Detailed knowledge of International Standards on Auditing b. sufficient knowledge of International Standards on Review Engagements c. general awareness of International Auditing Practice Statements, Internationa l Standards 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 a nd its implementation and enforcement including but not limiting to the following: a. Rules of professional conduct i. integrity, objectivity and independence ii. professional duty of confidence iii. changes in professional appointments iv. books, documents and papers v. corporate financial advice vi. conflicts of interest b. Professional responsibility and liability i. fraud and error ii. professional liability (including negligence) iii. misconduct iv. expectation gap v. professional indemnity insurance vi. insider dealing Final Examination The Institute of Chartered Accountants of Pakistan Advanced Auditing 89 PAPER F 20: Advanced Auditing Book Name & Author About the Book 1. International Standards on Auditing, 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. 2. Code of Ethics for Chartered Accountants issued and included in Handbook given at (1) above. 3. Companies Ordinance, 1984 by Government of Pakistan. 4. Advanced Auditing by Dr. Khawaja Amjad Saeed. 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. Part B of the Code covers the related topics of syllabus. The book contains provisions related to appointment, removal, report etc. of auditor of limited companies. The book contains important material useful to deal with various issues of audit and related services. Supplementary Study Material 1. Advanced Auditing Study Text and Revision Series by AT Foulks Lynch Pakistan. 2. Advanced Auditing Study Text and Revision Series by Professional Business Pub lications (PBP). 3. Selected Opinions, Technical Releases (Auditing). 4. Relevant issues of Members» Information and Education Series issued by ICAP. Recommended Reading 12.Case studies Case studies will be based on the whole subject and knowledge acquired during pr actical training. The candidates should be able to : a. Select and apply analytical techniques and methods from the syllabus accordin g to the requirements of a particular case. b. Prepare recommendations for action in response to the case.