ICAP CA Financial Accounting and Reporting Syllabus

Financial Accounting and Reporting syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Financial Accounting and Reporting in ICAP CA, not a summary of it.

1. 1

   Conceptual and Regulatory Framework

   3 topics

   • IFRS Conceptual Framework
   • Standard-setting process and IASB
   • Companies Act 2017 reporting requirements
2. 2

   Preparation of Financial Statements

   4 topics

   • Statement of financial position
   • Statement of profit or loss and other comprehensive income
   • Statement of changes in equity
   • IAS 7 Statement of cash flows
3. 3

   Property, Plant and Equipment

   4 topics

   • IAS 16 recognition and depreciation
   • Revaluation model
   • IAS 23 Borrowing costs
   • IAS 40 Investment property
4. 4

   Intangibles and Impairment

   2 topics

   • IAS 38 Intangible assets
   • IAS 36 Impairment of assets
5. 5

   Inventories and Revenue

   2 topics

   • IAS 2 Inventories
   • IFRS 15 Revenue from contracts with customers
6. 6

   Liabilities and Provisions

   3 topics

   • IAS 37 Provisions, contingent liabilities and assets
   • IAS 12 Income taxes
   • IFRS 16 Leases
7. 7

   Partnership and Branch Accounts

   2 topics

   • Admission, retirement and dissolution
   • Branch and departmental accounts
8. 8

   Accounting for Errors and Events

   2 topics

   • IAS 8 Accounting policies, estimates and errors
   • IAS 10 Events after the reporting period

Financial Accounting and Reporting flashcards for ICAP CA

25 of 66 cards from the Financial Accounting and Reporting deck — real questions with worked answers.

1. Under the IASB Conceptual Framework, what are the two fundamental qualitative characteristics of useful financial information?

   Relevance and faithful representation. Relevance requires predictive and/or confirmatory value (and materiality); faithful representation requires information to be complete, neutral and free from error.

2. List the four enhancing qualitative characteristics of useful financial information under the Conceptual Framework.

   Comparability, verifiability, timeliness and understandability. They enhance the usefulness of information that is already relevant and faithfully represented.

3. How does the Conceptual Framework define an asset?

   An asset is a present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.

4. How does the Conceptual Framework define a liability?

   A liability is a present obligation of the entity to transfer an economic resource as a result of past events.

5. What are the two recognition criteria for an element under the Conceptual Framework (2018)?

   An item is recognised if it meets the definition of an element AND recognition provides useful information, i.e. relevant information and a faithful representation (considering cost constraint, existence uncertainty and measurement uncertainty).

6. Name the measurement bases identified in the Conceptual Framework.

   Historical cost and current value. Current value comprises fair value, value in use (for assets) / fulfilment value (for liabilities), and current cost.

7. What is the underlying assumption on which financial statements are prepared under the Conceptual Framework?

   The going concern assumption — the entity is assumed to continue in operation for the foreseeable future and has neither the intention nor the need to liquidate or materially curtail operations.

8. What are the steps in the IASB's standard-setting (due process) for developing a new IFRS?

   Agenda consultation, research programme, Discussion Paper (optional), Exposure Draft (mandatory, with public comment), redeliberation, then issue of the IFRS, followed by a post-implementation review.

9. What body is responsible for interpreting IFRS Standards, and what are its pronouncements called?

   The IFRS Interpretations Committee (IFRIC); its pronouncements are IFRIC Interpretations, which once approved by the IASB form part of IFRS.

10. Distinguish between the IFRS Foundation, the IASB and the IFRS Advisory Council.

    The IFRS Foundation is the oversight/governance body. The IASB (International Accounting Standards Board) is the independent standard-setting body that issues IFRSs. The IFRS Advisory Council provides advice to the IASB and Trustees on agenda and priorities.

11. Under the Companies Act 2017 (Pakistan), within how many days of the financial year end must a public listed company hold its AGM and lay financial statements?

    A listed company must hold its AGM within 120 days of the close of its financial year, at which the audited financial statements are laid before the members.

12. Which financial reporting framework do companies in Pakistan apply under the Companies Act 2017?

    Public interest and large-sized companies apply IFRS as notified; medium and small-sized companies apply the relevant accounting and financial reporting standards for SMEs as notified by SECP under the third schedule classification.

13. What is the minimum content of a complete set of financial statements under IAS 1?

    Statement of financial position; statement of profit or loss and other comprehensive income; statement of changes in equity; statement of cash flows; notes (accounting policies and explanatory information); and comparative information. A third SOFP is required when policies are applied retrospectively.

14. What is the IAS 1 criterion for classifying an asset as current?

    An asset is current if: it is expected to be realised/sold/consumed in the normal operating cycle; it is held primarily for trading; it is expected to be realised within 12 months after the reporting period; or it is cash or a cash equivalent (not restricted).

15. Under IAS 1, when must a liability be classified as current?

    When it is expected to be settled in the normal operating cycle, held for trading, due to be settled within 12 months, or the entity does not have a right at the reporting date to defer settlement for at least 12 months.

16. Define other comprehensive income (OCI) and give two examples of items recognised in it.

    OCI comprises items of income and expense not recognised in profit or loss as required/permitted by IFRS. Examples: revaluation surplus on PPE (IAS 16), remeasurements of defined benefit plans, foreign operation translation differences, and gains/losses on FVOCI financial assets.

17. What is the difference between OCI items that are reclassified to profit or loss and those that are not?

    Some OCI items may be reclassified ('recycled') to P&L on a later event (e.g. foreign operation translation, cash flow hedges, FVOCI debt instruments). Others are never reclassified (e.g. IAS 16/38 revaluation surplus, defined benefit remeasurements, FVOCI equity instruments).

18. What columns/components make up a Statement of Changes in Equity?

    Each component of equity is shown as a column: share capital, share premium, revaluation surplus, other reserves and retained earnings. Rows show opening balance, total comprehensive income, transactions with owners (issues, dividends), and closing balance.

19. Under IAS 7, what are the three classifications of cash flows?

    Operating activities, investing activities and financing activities.

20. Under IAS 7, distinguish the direct and indirect methods of presenting operating cash flows.

    Direct method discloses major classes of gross cash receipts and payments. Indirect method starts with profit before tax and adjusts for non-cash items, changes in working capital, and items classified as investing/financing.

21. Under the indirect method (IAS 7), name three adjustments made to profit before tax to reach cash generated from operations.

    Add back depreciation/amortisation and impairment; remove gains/losses on disposal and interest/investment income; adjust for changes in inventories, receivables and payables (working capital movements).

22. Under IAS 7, how may interest and dividends paid be classified?

    Interest paid and dividends paid may be classified as operating or financing activities; interest and dividends received may be classified as operating or investing — chosen consistently. (Under IAS 7, for non-financial entities a common treatment is operating for interest, financing for dividends paid.)

23. State the IAS 16 recognition criteria for an item of property, plant and equipment.

    Cost is recognised as an asset if it is probable that future economic benefits will flow to the entity and the cost can be measured reliably.

24. What is included in the initial cost of an item of PPE under IAS 16?

    Purchase price (less trade discounts) plus import duties and non-refundable taxes; directly attributable costs of bringing the asset to location and condition for intended use; and the initial estimate of dismantling/removal and site restoration costs (a decommissioning provision).

25. Define depreciation and the depreciable amount under IAS 16.

    Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Depreciable amount = cost (or revalued amount) less residual value.

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