ICMA Pakistan Financial Accounting & Corporate Reporting Syllabus

Financial Accounting & Corporate 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 & Corporate Reporting in ICMA Pakistan, not a summary of it.

1. 1

   Conceptual Framework

   3 topics

   • IFRS conceptual framework for financial reporting
   • Qualitative characteristics of useful information
   • Recognition and measurement of elements
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
   • Statement of cash flows (IAS 7)
3. 3

   Accounting for Assets

   4 topics

   • Property, plant and equipment (IAS 16)
   • Intangible assets (IAS 38)
   • Impairment of assets (IAS 36)
   • Investment property (IAS 40)
4. 4

   Revenue and Liabilities

   3 topics

   • Revenue from contracts with customers (IFRS 15)
   • Provisions, contingent liabilities and assets (IAS 37)
   • Leases (IFRS 16)
5. 5

   Financial Instruments

   2 topics

   • Classification and measurement (IFRS 9)
   • Recognition and derecognition
6. 6

   Consolidated Financial Statements

   3 topics

   • Business combinations and goodwill (IFRS 3)
   • Consolidated statement of financial position
   • Associates and joint arrangements (IAS 28 / IFRS 11)
7. 7

   Analysis and Interpretation

   2 topics

   • Ratio analysis and performance measurement
   • Limitations of financial statements

Financial Accounting & Corporate Reporting flashcards for ICMA Pakistan

19 of 60 cards from the Financial Accounting & Corporate Reporting deck — real questions with worked answers.

1. What is the objective of general purpose financial reporting under the IFRS Conceptual Framework?

   To provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity (e.g. buying, selling or holding equity/debt, and providing or settling loans).

2. What are the two FUNDAMENTAL qualitative characteristics of useful financial information?

   Relevance and Faithful representation.

3. What are the four ENHANCING qualitative characteristics of useful financial information?

   Comparability, Verifiability, Timeliness and Understandability.

4. What three attributes make a faithful representation under the Conceptual Framework?

   It should be complete, neutral (supported by prudence) and free from error.

5. Define 'materiality' as described in the Conceptual Framework.

   Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that primary users make based on the financial statements. It is an entity-specific aspect of relevance.

6. Under the Conceptual Framework, what are the two underlying assumptions / overall basis of preparation?

   The going concern assumption (the entity will continue to operate for the foreseeable future) and the accrual basis of accounting.

7. Define an ASSET under the 2018 IFRS Conceptual Framework.

   A present economic resource controlled by the entity as a result of past events, where an economic resource is a right that has the potential to produce economic benefits.

8. Define a LIABILITY under the 2018 IFRS Conceptual Framework.

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

9. Define EQUITY under the IFRS Conceptual Framework.

   The residual interest in the assets of the entity after deducting all its liabilities (Equity = Assets - Liabilities).

10. Define INCOME and EXPENSES under the IFRS Conceptual Framework.

    Income: increases in assets or decreases in liabilities that result in increases in equity, other than contributions from equity holders. Expenses: decreases in assets or increases in liabilities that result in decreases in equity, other than distributions to equity holders.

11. What two recognition criteria must be met to recognise an element under the Conceptual Framework?

    Recognition is appropriate if it provides users with (1) relevant information about the asset/liability and resulting income/expense, and (2) a faithful representation of them — considering cost-benefit constraints.

12. List the measurement bases identified in the IFRS Conceptual Framework.

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

13. What is the difference between financial capital maintenance and physical capital maintenance?

    Financial capital maintenance: profit earned only if net assets at period end exceed net assets at start (in money or constant purchasing power terms). Physical capital maintenance: profit earned only if the physical productive capacity at period end exceeds that at the start.

14. Which IAS governs the presentation of financial statements, and what is the complete set of statements it requires?

    IAS 1. A complete set comprises: statement of financial position; statement of profit or loss and other comprehensive income; statement of changes in equity; statement of cash flows; notes; and a comparative period (plus an opening SOFP when retrospective restatement occurs).

15. Under IAS 1, what makes an asset CURRENT?

    An asset is current if: it is expected to be realised/sold/consumed in the normal operating cycle; held primarily for trading; expected to be realised within 12 months after the reporting period; or it is cash or a cash equivalent (unless restricted). All other assets are non-current.

16. In a statement of financial position, what is the basic accounting equation that must balance?

    Assets = Equity + Liabilities (i.e. Total assets = Total equity + Total liabilities).

17. What is the difference between 'profit or loss' and 'other comprehensive income' (OCI)?

    Profit or loss includes all items of income and expense unless an IFRS requires/permits otherwise. OCI comprises items of income and expense not recognised in profit or loss, e.g. PPE revaluation surpluses, certain FVOCI gains, remeasurements of defined benefit plans, and foreign operation translation differences. Total comprehensive income = P/L + OCI.

18. Distinguish OCI items that are RECLASSIFIED to profit or loss from those that are NOT.

    Reclassified ('recycled') to P/L: gains/losses on FVOCI debt instruments, cash flow hedge reserves, and foreign operation translation differences. NOT reclassified: PPE/intangible revaluation surpluses, remeasurements of defined benefit plans, and gains/losses on FVOCI equity instruments (these may transfer within equity to retained earnings).

19. What is the purpose of the Statement of Changes in Equity, and what columns/components does it reconcile?

    It reconciles opening to closing balances of each equity component (share capital, share premium, revaluation surplus, other reserves, retained earnings), showing total comprehensive income, transactions with owners (issues of shares, dividends), and effects of changes in accounting policy or error corrections.

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