1 Foundation Level Exams Learning_objectives

8/13/2019 1 Foundation Level Exams Learning_objectives

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Foundation level examsLearning Objectives

Foundation level exams - overview

To offer a truly global accounting designation for strategic business leaders, CPA Australia have enhanced theconfiguration and content of the CPA Program. The enhanced Program comprises 14 segments and a fully integratedpractical experience requirement, previously known as the Mentor Program.


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For the CPA Program foundation level, a series of exams will be available through CPA Australia from 2010. Thefollowing are the eight foundation level exams:

IT and Business Processes

Economics and Markets

Foundations of Accounting

Fundamentals of Business Law

Business Finance

Financial Accounting and Reporting

Management Accounting

Accounting Concepts and Principles

The exams for the CPA Program foundation level focus on assessing candidates technical knowledge in ten coreknowledge areas. Each exam tests one or more core knowledge areas to determine candidates readiness to undertakethe professional level of the CPA Program. Candidates will need to demonstrate that they have met a set of identifiedlearning objectives developed for each exam.

The following are the core knowledge requirements and the corresponding exams:

Core knowledge requirements Foundation level exams

Information Systems Design and Development IT and Business ProcessEconomicsQuantitative Methods


Accounting Systems and Processes Foundations of Accounting

Commercial LawCompany Law


Finance Business Finance

Financial Accounting Financial Accounting and Reporting

Management Accounting Management Accounting

Accounting Theory Accounting Concepts and Principles


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Foundation level exams learning objectives

The following outlines the learning objectives for each foundation level exam. This information can be used to determinewhat topics are generally covered in each exam as well as the approximate exam weightings associated with each topic.Candidates will be assessed against each set of learning objectives to ensure that they meet the core knowledgerequirements each exam is designed to test.

IT and Business Processes

General overviewThis exam covers a critical awareness of business processes in the context of information technology. It requires anunderstanding of database concepts and data analysis tools, corporate networks and the design and operations ofbusiness information and accounting systems. It also covers the key areas of information controls and processes and thereporting of accounting information.

Topics:

1. Hierarchy of systems1.1 Identify and explain the role of the core elements of an organisations information infrastructure1.2 Explain the hierarchy of systems

2. Database concepts2.1 Illustrate the application of database concepts for accounting information2.2 Explain the need for data collection and storage2.3 Explain database systems and data storage models2.4 Explain data modelling, design and implementation2.5 Analyse controls for data and databases and their effectiveness2.6 Analyse the ethical issues related to data capture and storage

3. Data analysis tools3.1 Identify and explain the role of application and data analysis tools3.2 Illustrate the components of an enterprise-wide resource-management system, highlighting the centraliseddatabase and workflow management aspects of these systems3.3 Analyse different types of productivity software3.4 Explain data mining and its uses

4. Corporate networks4.1 Analyse the components of a corporate network4.2 Illustrate typical corporate network configurations4.3 Explain applications where client server and peer-to-peer architectures can be used4.4 Analyse control issues relating to the choice of network architecture

5. Design, configuration and operations of information systems5.1 Illustrate information systems design, configuration and operations5.2 Distinguish between systems development and maintenance5.3 Illustrate an overview of the systems development life cycle5.4 Explain the activities undertaken during the review and maintenance stage of the systems development life cycle5.5 Explain aspects of the operation and maintenance of the systems development life cycle5.6 Identify and explain the role of typical controls used in project management5.7 Illustrate typical controls used in systems design, development, and maintenance activities

6. Accounting information systems6.1 Explain the role of accounting information systems in business6.2 Define an accounting information system6.3 Illustrate the types of accounting information systems and their roles6.4 Analyse the evolution of accounting information systems and their importance to accountants6.5 Distinguish between the various types of data processing techniques


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6.6 Analyse the relationship between ethics and accounting information systems

7. Information controls and processes7.1 Describe and explain data quality principles7.2 Explain the complementary roles of technical and procedural controls7.3 Explain why a business system needs to use a mixture of preventive and detective controls7.4 Analyse security and privacy issues relating to personal web pages maintained by employees7.5 Analyse security and privacy issues relating to electronic communication methods used by employees7.6 Construct an overview diagram of business processes7.7 Produce an effective summary of business processes and systems7.8 Explain the interrelationships between business processes and accounting information systems7.9 Analyse the difference in the controls needed when a transaction is performed face-to-face compared with anelectronic communication channel, such as telephone, Internet, or mobile7.10 Identify and explain the steps involved in changing business processes

8. Distribution and reporting of accounting information8.1 Explain the importance of ensuring accounting information is reported and distributed appropriately8.2 Compose a list of internal and external stakeholders8.3 Explain the concepts of reliability and transparency8.4 Distinguish between hard and soft accounting data8.5 Describe and explain the use of XBRL (eXtensible Business Reporting Language)8.6 Analyse the reasons for the problems encountered in trials of XBRL concerning the quality of externally reportedaccounting information8.7 Analyse the growth of corporate watchdogs and regulators

Topic exam weightings:

1. Hierarchy of systems 6%2. Database concepts 6%3. Data analysis tools 8%4. Corporate networks 10%5. Design, configuration and operations of information systems 10%6. Accounting information systems 20%7. Information controls and processes 20%8. Distribution and reporting of accounting information 20%

TOTAL 100%


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General overviewThis exam covers economics and quantitative methods. In economics, key microeconomics concepts of demand andsupply, elasticity, productivity, market structures, and market failure are covered. It also covers macroeconomic conceptsof income distribution and the structure of the financial economy including the calculation of key national economicmeasures. In quantitative methods, key tools of statistical analysis are covered, such as descriptive statistics, frequencydistributions and probability, hypothesis testing, simple linear regression and correlation.

Topics:

Part 1: Economics1. Defining economics and the market

1.1 Define economics and describe the characteristics of an economic perspective

1.2 Distinguish between wants and needs

1.3 Explain how consumers allocate resources

1.4 Define scarcity

1.5 Explain the practical application of the law of marginal utility

1.6 Explain the theory of markets

1.7 Explain and apply the theory of comparative advantage between products and countries

1.8 Analyse in practical terms the advantages and disadvantages of production on the basis of comparative

advantage

1.9 Identify and describe the factors of production

1.10 Explain production and productivity

1.10.1 Prepare and explain the production possibility frontier

2. Demand, supply, and the price mechanism

2.1 Explain the concepts of demand and supply

2.2 Relate consumer indifference to the substitution of goods

2.3 Prepare demand curves for normal and inferior goods

2.4 Explain the relationship between demand and supply

2.5 Distinguish between movement along the demand curve and a shift in the demand curve2.5.1 Prepare a demand curve showing the impacts of shifts

2.6 Distinguish between individual and market demand

2.7 Distinguish between firm and industry demand and supply curves

2.7.1 Prepare a short run and a long run supply curve

2.8 Distinguish between movement along the supply curve and a shift in the supply curve

2.8.1 Prepare a supply curve showing the impacts of shifts

2.9 Define market equilibrium price and quantity

2.10 Explain the use of price legislation, including price ceilings and price floors

2.10.1 Illustrate the impact of price ceilings and price floors using the demand and supply curves

2.11 Evaluate the process of price stabilisation and price control mechanisms

2.12 Explain and illustrate how an equilibrium price is achieved

3. Elasticity of demand and supply

3.1 Explain the concepts of elasticity of demand and elasticity of supply

3.2 Calculate and interpret the elasticity of demand and elasticity of supply

3.3 Prepare demand curves for necessities and luxury goods

4. Cost, revenues and productivity

4.1 Explain the relationship between marginal cost, total cost, total revenue, marginal revenue, average revenue and

price in both the long terms and short term


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4.1.1 Demonstrate and apply the concept of MC = MR

4.2 Apply the concepts of marginal revenue product, marginal product, total product, total cost and marginal cost in

an analysis of productivity

4.2.1 Conduct a break-even analysis

4.3 Explain the demand for factors of production

4.4 Explain the concept of diminishing returns of factor of production

4.4.1 Calculate the diminishing returns

4.5 Explain how a firm can attain an optimal combination of factors of production

4.6 Explain the determinants of elasticity of a factor demand curve

4.7 Explain the causes of a shift of a factor demand curve4.8 Distinguish between economies of scale and diseconomies of scale

5. Market structures

5.1 Distinguish between perfect competition, monopolistic competition, monopoly, oligopoly, duopoly, and oligopsony

5.1.1 Illustrate the relevant demand and supply curves

5.2 Evaluate why monopolistic firms are able to allocate or misallocate scarce resources

5.3 Explain the long term pricing approach for a monopolistic firm

6. Market failure, externalities and intervention

6.1 Distinguish between social goods and private goods

6.2 Evaluate the impact of tax, savings and subsidies on the pricing mechanism

6.3 Analyse the implications of spill-overs or externalities using a demand and supply analysis

7. National income accounting

7.1 Distinguish between economic growth and economic development

7.2 Calculate Gross Domestic Product (GDP) and Gross National Product (GNP)

7.3 Perform national accounting calculations

8. Determining national income

8.1 Calculate the National Income equation Y = C + G + I + M X

8.1.1 Present national income calculations using the IS-LM curve

8.1.2 Calculate marginal efficiency of capital

8.1.3 Apply the multiplier to determine national income

8.1.4 Apply the accelerator principle in the determination of national income

8.2 Evaluate the implications of the marginal propensity to save (MPS) and the marginal propensity to consume

(MPC) on National Income (Y)

8.3 Evaluate the impact of tax, savings and subsidies on National Income

8.4 Explain the relationship between full employment and National Income

9. Macroeconomic conceptsinflation and unemployment

9.1 Describe different types of unemployment

9.2 Describe the causes of inflation and its impact on an economy

9.3 Explain the relationship between rates of employment and the performance of an economy

9.3.1 Prepare a Phillips curve

9.4 Define money9.5 Explain the structure of interest rates

9.6 Analyse the factors affecting the movement of interest rates

9.7 Explain the Keynesian and Classical theories of money

10. Macroeconomic policy

10.1 Explain government policy to address the redistribution of income

10.2 Analyse the impact of interest rates on base employment

10.3 Explain the purpose of monetary policy and the implications of holding cash balances

10.3.1 Calculate the credit multiplier


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10.4 Explain how fiscal policy relates to the stimulation of national income and rates of employment

10.4.1 Demonstrate how fiscal policy affects aggregate demand

10.5 Explain the relationship between interest rates, monetary policy, employment and national income

10.5.1 Prepare an expectations augmented Phillips curve

10.6 Analyse the role of the monetary authorities (Reserve Banks/Central Banks) in the control of money

11. Government intervention and income distribution

11.1 Explain how the government may intervene to reduce misallocation of resources

11.2 Analyse ways to redress income inequalities

11.3 Explain the concept of income distribution and describe the Lorenz curve

11.4 Measure income inequality

Part 2: Statistics12. Statistical analysis, data, and methods of describing data

12.1 Explain the role of statistical analysis in decision making

12.2 Distinguish between quantitative and qualitative data

12.3 Explain and apply the different sampling methods12.3.1 random sampling12.3.2 cluster sampling12.3.3 stratified sampling

12.4 Describe the different methods of collecting data and statistical information12.4.1 survey

12.4.2 published source12.5 Explain the different levels of data measurement

12.5.1 nominal-level data12.5.2 ordinal-level data12.5.3 interval-level data12.5.4 ratio-level data

12.6 Construct a bar graph, a pie chart, a histogram, and a scatter diagram from a given set of data

13. Descriptive statistics

13.1 Distinguish between measures of central tendency and measures of variability

13.2 Distinguish between the shapes of a normal distribution, exponential distribution and binomial distribution

13.3 Explain the difference between grouped and ungrouped data

13.4 Calculate and interpret the mean, median, and mode from a given set of data13.5 Calculate and interpret the range, standard deviation, and variance from a given set of data

13.6 Distinguish between the sample and population standard deviation and the sample and population variance

13.7 Distinguish between kurtosis and skewness

14. Frequency distributions and probability

14.1 Develop a frequency distribution from a given set of data

14.2 Distinguish between class range, class midpoint, relative frequency, and cumulative frequency

14.3 Define the concept of probability

14.4 Explain the different ways of assigning probability

14.5 Explain and apply marginal, union, joint, and conditional probabilities

14.6 Explain the use of probability matrices to solve probability problems

15. Hypothesis testing

15.1 Explain the concept of hypothesis testing

15.2 Construct null and alternative hypotheses

15.3 Distinguish between type I and type II errors

15.4 Test population mean using one-tail and two-tail tests.

15.5 Test population proportion

15.6 Calculate and interpret the probability value (p-value) in hypothesis testing


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16. Simple linear regression and correlation

16.1 Calculate the equation of a simple regression line from a sample of data

16.2 Explain and interpret the slope and intercept of the equation

16.3 Calculate and interpret estimated values of yusing the regression line

16.4 Calculate and interpret the coefficient of correlation

16.5 Calculate and interpret the coefficient of determination


Part 1: Economics

1. Defining economics and the market 5%

2. Demand, supply and the price mechanism 8%

3. Elasticity of demand and supply 5%

4. Cost, revenues and productivity 8%

5. Market structures 4%

6. Market failures, externalities and intervention 5%

7. Macroeconomic concepts 5%

8. Macroeconomic policy 7%

9. Government intervention and income distribution 5%

10. National Income accounting 4%

11. Determining national income 4%Part 2: Statistics

12. Statistical analysis, data, and methods of describing data 8%

13. Descriptive statistics 8%

14. Frequency distributions and probability 8%

15. Hypothesis testing 8%

16. Simple linear regression and correlation 8%

TOTAL 100%


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Foundations of Accounting

General overviewThis exam covers the knowledge of fundamental accounting concepts for different types of business entities, including thepurpose of accounting, the users of accounting information and an introduction to recording transactional accounting datain the double entry bookkeeping system. It also covers the acquisition and disposal of assets and the production offinancial statements.

Topics:

1. Introduction to accounting

1.1 Explain the role and purpose of accounting

1.2 Explain the meaning of generally accepted accounting principles

1.3 Define and apply accounting concepts1.3.1 Cost principle1.3.2 Monetary unit assumption1.3.3 Economic entity assumption1.3.4 Time period assumption recognition of income and expenses1.3.5 Accrual basis of accounting1.3.6 Going concern assumption1.3.7 Fair presentation1.3.8 Substance over form

1.4 Identify and explain the basic accounting equation1.4.1 Prepare an accounting equation from given data1.4.2 Define and identify assets, liabilities and owners equity

1.5 Identify the purpose of the Statement of Financial Position

1.6 Identify the purpose of the Statement of Comprehensive Income

2. Types of business entities sole trader, partnerships, companies

2.1 Identify and define a service entity and a retail entity

2.2 Compare and contrast a service entity and a retail entity

2.3 Identify and define types of business entities - sole trader, partnership, limited liability company

2.4 Identify the characteristics of a sole trader, a partnership and a company

2.5 Identify the advantages and disadvantages of operating as a sole trader, partnership and limited liability company

2.6 Identify the users of accounting information2.7 Identify and differentiate the information needs of different users of financial statements

3. Double entry bookkeeping

3.1 Identify main data sources

3.1.1 cash transactions and credit transactions

3.1.2 quotations

3.1.3 sales orders

3.1.4 purchase orders

3.1.5 goods received note

3.1.6 goods despatched note

3.1.7 invoice3.1.8 statement

3.1.9 credit note

3.1.10 debit note

3.1.11 remittance advice

3.1.12 receipt

3.1.13 bank statement

3.1.14 Identify the main types of business transactions

3.1.14.1 sales

3.1.14.2 purchases


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3.1.14.3 payments

3.1.14.4 receipts

3.2 Duality concept and the accounting equation

3.2.1 sales

3.2.2 purchases

3.2.3 payments

3.2.4 receipts

3.3 Understand the use of journals

3.3.1 sales

3.3.2 purchases3.3.3 payments

3.3.4 receipts

3.4 Understand the use of ledgers

3.4.1 sales

3.4.2 purchases

3.4.3 payments

3.4.4 receipts

4. Trial balance

4.1 Illustrate how to balance and close a ledger

4.2 Identify the purpose of a trial balance

4.3 Extract ledger accounts into a trial balance4.4 Understand the nature and purpose of an adjusted trial balance

5. Cash books, ledgers and subsidiary ledgers

5.1 Record sales and purchases in the books of prime entry (day books)

5.2 Record sales tax in the books of prime entry

5.3 Understand the nature and purpose of subsidiary ledgers for receivables and payables

5.4 Post the sales and purchases to the general ledger

5.5 Explain the nature and purpose of the cash receipts and cash payments book

5.6 Recognise the difference between trade discounts and settlement discounts

5.6.1 record settlement discounts received in the relevant cash book

5.6.2 record settlement discounts allowed in the relevant cash books5.7 Post the cash books to the general ledger accounts and subsidiary ledger accounts

6. Sales tax

6.1 Understand the general principles of the operation of a general sales tax

6.2 Calculate sales tax on transactions

6.3 Record sales tax in the books of prime entry, the ledger and subsidiary ledger

7. Accruals and prepayments

7.1 Understand how the matching concept applies to accruals and prepayments

7.2 Identify the adjustments needed for accruals and prepayments

7.3 Calculate the amount of the adjustments required for accruals and prepayments

7.4 Prepare adjusting journal entries and explain why they are needed for7.4.1 accruals

7.4.2 prepayments

7.5 Post the accruals and prepayments to the relevant ledger accounts


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8. Receivables and payables

8.1 Apply the principles of revenue recognition

8.2 Understand the meaning of an irrecoverable debt

8.3 Prepare a journal entry for an irrecoverable debt

8.4 Understand the meaning of an allowance for receivables

8.5 Prepare a journal entry to create or to adjust an allowance for receivables

8.6 Prepare a journal entry to account for adjustments between trade receivables and trade payables

8.7 Prepare journal entries to record settlement discounts allowed and received

8.8 Post the journal entries to the general ledger accounts and subsidiary ledger accounts

8.9 Prepare journal entries to account for annual leave entitlement of employees

9. Property, plant and equipment

9.1 Define non-current assets

9.2 Identify capital expenditure and revenue expenditure

9.3 Prepare journal entries for the purchase of non-current assets

9.4 Prepare journal entries for the revaluation of a non-current asset

9.5 Calculate the profit or loss on disposal of a non-current asset

9.6 Calculate the profit or loss on the disposal of a non-current asset given as a part exchange transaction

9.7 Calculate the profit or loss on disposal of a revalued asset

9.8 Prepare journal entries for the disposal of non-current assets9.9 Understand and explain the purpose of depreciation

9.9.1 Calculate the charge for depreciation using the straight line method and reducing balance method

9.9.2 Identify the circumstances where the two different methods would be appropriate

9.9.3 Prepare journal entries for the annual depreciation expense

9.9.4 Calculate depreciation on a revalued asset

9.9.4.1 Prepare journal entries for the transfer of excess depreciation between revaluation reserve and

retained earnings

9.9.4.2 Calculate the adjustment to the depreciation charge where changes are needed to the estimated

useful life or residual value10. Inventory

10.1 Understand the need for adjustments for opening and closing inventory

10.2 Understand the requirements for valuing inventory

10.3 Calculate the lower of cost and net realisable value

10.4 Calculate the cost of inventory using the first in, first out method (FIFO) and average cost method (AVCO)

10.5 Prepare journal entries for the adjustments for opening and closing inventory

11. Closing entries

11.1 Prepare journal entries to close off income ledger accounts to the statement of comprehensive income

11.2 Prepare journal entries to close off the expense accounts to the statement of comprehensive income

11.3 Prepare journal entries to carry forward asset accounts to the statement of financial position

11.4 Prepare journal entries to carry forward liability accounts to the statement of financial position

11.5 Prepare journal entries to carry forward capital accounts to the statement of financial position

12. Subsidiary ledgers and reconciliations

12.1 Explain what is meant by internal control

12.2 Outline methods of internal control that a business can use

12.3 Understand the purpose of control accounts for receivables and payables

12.4 Understand how control accounts relate to the double entry system

12.5 Prepare control accounts for receivables and payables from given information

12.6 Perform control account reconciliations for receivables and payables

12.7 Understand the need for a record of petty cash transactions and a separate petty cash book

12.8 Understand how an imprest system for petty cash operates


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12.9 Enter petty cash payments and receipts into the petty cash book

12.10 Post the petty cash book to the general ledger accounts

12.11 Understand the importance of controls and security over petty cash

12.12 Identify controls over the security of petty cash

13. Bank reconciliation

13.1 Understand the purpose of a bank reconciliation

13.2 Identify the main reasons for differences between the cash book balance and the bank statement balance

13.3 Correct any errors or omissions in the cash book

14. Statement of Financial Position

14.1 Show how the following items would appear in the Statement of Financial Position

14.1.1 non current assets

14.1.2 current assets

14.1.3 property, plant and equipment at carrying value

14.1.4 inventory

14.1.5 receivables balances

14.1.6 prepayments

14.1.7 cash and petty cash

14.1.8 current and non current liabilities

14.1.9 accounts payable balances including sales tax

14.1.10 current and non current liabilities

15. Statement of Comprehensive Income

15.1 Show how the following items would appear in the Statement of Comprehensive Income

15.1.1 revenue net of sales tax

15.1.2 opening and closing inventory

15.1.3 purchases net of sales tax

15.1.4 discounts allowed

15.1.5 discounts received

15.1.6 depreciation

15.1.7 accruals

15.1.8 prepayments15.1.9 irrecoverable and doubtful debts

16. Use of an accounting package

16.1 Understand the uses of integrated accounting software packages

16.2 Be able to use an accounting package to record data


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1. Introduction to accounting 10%2. Types of business entities sole trader, partnerships, companies 5%3. Double entry bookkeeping 10%4. Trial balance 5%5. Cash books, ledgers and subsidiary ledgers 10%6. Sales tax 5%7. Accruals and prepayments 5%8. Receivables and payables 5%9. Property, plant and equipment 10%10. Inventory 5%11. Closing entries 5%12. Subsidiary ledgers and reconciliations 10%13. Bank reconciliation 5%14-15. Statement of Financial Position & Statement of Comprehensive Income 5%16. Use of an accounting package 5%

TOTAL 100%


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General overviewThis exam covers general legal knowledge relating to the business environment, a basic knowledge of the law ofcontracts, and an understanding of the responsibilities and risks that arise in business, with particular regard to the lawrelating to corporate entities.

Topics:

1. Sources of law1.1 Identify the sources of different types of law1.2 Identify the features of the different legal systems

1.2.1 common law1.2.2 civil law1.2.3 sharia law

2. Common law and legislation: precedent and stare decisis and statutory interpretation2.1 Identify how common law and relevant legislation are applied2.2 Analyse and explain legal cases and principles in setting precedents2.3 Specify how legal cases and principles set precedents2.4 Identify how to deal with the doctrine of stare decisis (legal precedent)2.5 Specify the rules and models for statutory interpretation

3. Legal framework3.1 Describe the legal framework of statute law (legislation) and common law3.2 Explain the court system3.3 Explain different methods of alternative dispute resolution

4. Fundamental aspects of contracts and contract law4.1 Describe the fundamental features and essential requirements (terms) of contracts.4.2 Describe the law of contract4.3 Describe the necessary elements in the formulation of a contract4.4 Explain the importance of conditions and essential terms of contracts4.5 Identify the nature and status of pre-contract representations4.6 Explain the effect of valid exclusion clauses

5. Breaches of contract law5.1 Recognise the different types of breach of contract and their effects5.2 Specify relevant and available remedies for breach of contract

5.2.1 damages5.2.2 specific performance

6. Specialised commercial contracts6.1 Identify the characteristics of commercial contracts used in international trade

6.1.1 international sales of goods6.1.2 international transportation of goods

7. Torts

7.1 Explain that the law of torts concerns a civil wrong which may mean a civil action for compensation arises7.2 Explain the tort of negligence7.3 Explain that tort law provides legal remedies for damages caused by negligence7.4 Explain that negligence means failure to exercise reasonable care7.5 Explain consumer protection law and negligence7.6 Explain the implications under common law in relation to pre-incorporation contracts

8. Agency theory8.1 Explain that agency is the relationship between principal and agent8.2 Explain how agency theory underlies the principles of corporate governance8.3 Explain that partnership is an agency relationship


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8.4 Explain the application of agency theory to companies

9. Incorporation and its effects9.1 Recognise the nature and effect of a company having a separate legal personality9.2 Explain the effects on incorporation

9.2.1 limited liability9.2.2 perpetual succession

9.3 Distinguish the differences between public and proprietary companies9.4 Identify the processes necessary in forming a company9.5 Specify the elements of the constitution of a company9.6 Describe the role of promoters in forming a company9.7 Recognise the difficulties and implications of pre-incorporation contracts

10. Management of companies10.1Identify the key legal issues that arise in the management and governance of companies

10.1.1 identify the impact of key business decisions on shareholders interests10.1.2 identify the impact of key business decisions on the public

10.2 Specify the nature and role of company directors and other officers as agents of the company10.3 Specify the nature, role and powers of the board of directors

10.3.1 specify the relationship between the board and the company in a general meeting10.4 Identify the rules on directors remuneration and financial benefits to directors and other related parties10.5 Identify the rules on appointment and removal of directors from office10.6 Specify the extent of directors duties and powers10.7 Recognise the issue that arises when there are related party transactions10.8 Specify the rules on transfer of shares and refusal to register a transfer of shares10.9 Identify the role and powers of the company secretary10.10 Identify the role and powers of the registered company auditor

11. Membership and dividends11.1 Identify the significance of the register of members11.2 Identify the significance of the requirement for disclosure of interests in shares11.3 Recognise the role of the general meeting of shareholders11.4 Distinguish the rights and remedies of members of companies

11.4.1 appointing a registered company auditor11.4.2 inspection of the books of the company11.4.3 protection of the minority and the treatment for unfair or oppressive company practices

11.5 Specify the procedure for payment of dividends11.6 Specify the rights of shareholders regarding dividends11.7 Specify the company formalities in determining when dividends are payable to shareholders11.8 Identify the rules governing the maximum amount for dividend distribution

12. Corporate insolvency and bankruptcy12.1 Specify the grounds relating to the dissolution and winding up of companies and partnerships12.2 Specify the procedures for dissolution and winding up of companies and partnerships12.3 Specify the procedures for addressing corporate insolvency and bankruptcy, including stakeholders and therights of claimants12.4 Identify the powers and duties of receivers and liquidators12.5 Recognise administration as an appropriate alternative to winding up when a company is in financial difficulties


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1. Sources of law 5%2. Common law and legislation 5%3. Legal framework 5%4. Fundamental aspects of contracts and contract law 10%5. Breaches of contract law 6%6. Specialised commercial contracts 5%7. Torts 10%8. Agency theory 10%9. Incorporation and its effects 10%10. Management of companies 12%11. Membership and dividends 10%12. Corporate insolvency and bankruptcy 12%

TOTAL 100%


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Business Finance

General overviewThis exam covers the understanding of business finance and treasury function including the fundamental concepts ofcapital, investment, funding and risk assessment and management. It also covers the analysis and management of anentitys financial position, portfolio management, and short and long term financial management.

Topics:

1. Capital budgeting: payback, IRR, NPV

1.1 Explain the term financial mathematics

1.2 Calculate and interpret the future and present values of a series of single cash flows and of annuities

1.3 Explain the characteristics of major and long-term investments where a capital budgeting approach might be

required

1.4 Identify and apply the different quantitative methods used in project evaluation

1.5 Explain why investment decisions should be analysed using the NPV method

1.6 Apply the NPV method to investment project scenarios

1.7 Compare and contrast the NPV method with the IRR method of project evaluation

1.8 Calculate the weighted average cost of capital and apply it in capital budgeting

1.9 List the advantages and disadvantages of IRR, payback and NPV methods of investment appraisal1.10 Undertake a sensitivity analysis of diverse projects using appropriate tools

2. Capital markets

2.1 Explain the structure of the capital market

2.2 Explain the economies of scale attached to financial intermediaries

2.3 Distinguish between official and unofficial money markets

2.4 In the context of capital markets distinguish between operating efficiency, allocative efficiency and pricing

efficiency

2.5 Explain the role of the government in regulating the capital markets

2.6 Explain the meaning of the term corporate securities

2.7 Distinguish between secondary and primary securities

2.8 Describe typical guidelines related to the operation of securities markets2.9 Explain the term rights issue

2.10 Explain the benefits of a rights issue to equity holders

2.11 Explain the meaning of cum rights and ex-rights

2.12 Explain how the trading of options, futures and warrants work

2.13 Explain the benefits and costs associated with options, futures and warrants

2.14 Explain the advantages and disadvantages of different hedging strategies

2.15 Distinguish between American and European options

3. The Capital Asset Pricing Model

3.1 Demonstrate the relationship between systematic risk and expected return of individual securities and portfolios

using the CAPM and the security market line relationship

4. Cost of funds

4.1 Analyse capital rationing and draw appropriate conclusions

4.2 Analyse the various sources of short term finance

4.3 Explain the cost of short and medium term finance

4.4 Calculate and interpret the cost of various sources of finance

4.5 Describe sources of international finance and their merits or otherwise

4.6 Explain the different sources of long term finance

4.7 Calculate and interpret the cost of capital associated with leases; and debt and equity


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4.8 Demonstrate the link between working capital management and corporate cash flow

4.9 Describe the operating cycle in working capital management to explain inventory management, debtor

management and cash management

5. Efficient market hypothesis

5.1 Distinguish between the weak form test, the semi strong form test and the strong form test of the Efficient Market

Hypothesis (EMH)

5.2 Explain the implications of market efficiency for both investors and companies

6. Long term financing, investment appraisal and dividend policy

6.1 Calculate and interpret measures of expected return and risk using the probability distribution approach

6.2 Explain the factors which influence the dividend policy decision

7. Portfolio management

7.1 Calculate and interpret rates of return on financial investments

7.2 Calculate and interpret measures of expected return and risk for two-security portfolios

7.3 Explain the impact of portfolio leveraging and short selling on the risk and expected return of two-security

portfolios

7.4 Analyse and assess portfolio risk

8. Short term financial management

8.1 Prepare short term finance plans and strategies

9. Valuation of corporate securities

9.1 Calculate and interpret effective interest rates; and apply the concepts of financial mathematics to valuing home

mortgages and debt and equity securities

9.2 Calculate and interpret share price in both perfect and imperfect markets

10. Risk management and risk assessment

10.1 Define the term risk

10.2 Explain the different types of risk in international trade

10.3 Explain the different methods of risk assessment in international trade


1. Capital budgeting: payback, IRR, NPV 20%2. Capital markets 20%3. The Capital Asset Pricing Model 10%4. Cost of funds 10%5. Efficient market hypothesis 5%6. Long term financing, investment appraisal and dividend policy 5%7. Portfolio management 10%8. Short term financial management 3%9. Valuation of corporate securities 7%10. Risk management and risk assessment 10%

TOTAL 100%


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Financial Accounting and Reporting

General overviewThis exam covers an understanding of the format and function of financial statements, including analysis andinterpretation of financial statements. It also includes the production of financial statements for consolidated companygroups, and foreign currency translation.

Topics:

1. Financial reporting and the regulatory framework1.1 Explain the meaning of generally accepted accounting principles and identify the key elements of the IASBFramework and its relationship to accounting standards1.2 Explain the objectives of financial reporting and general purpose financial reports1.3 Analyse the qualitative characteristics of accounting information such as understandability, relevance, materiality,reliability, comparability1.4 Analyse and apply the criteria for identifying a reporting entity

2. Statement of comprehensive income2.1 Explain and apply the provisions of IAS 1 Presentation of Financial Statements for the determination of profit(loss) of an entity2.2 Apply the provisions of IAS 1 for disclosures to be made in an income statement; statement of changes in equity;statement of financial position2.3 Analyse and apply the guidelines for the selection of accounting policies and the disclosures required aboutchanges in accounting policies (IAS 8 Accounting policies, changes in accounting estimates and errors)

3. Statement of financial position3.1 Apply the provisions of IAS 1 for disclosures to be made in an income statement; statement of changes in equity;statement of financial position3.2 Analyse and apply the guidelines for the selection of accounting policies and the disclosures required aboutchanges in accounting policies (IAS 8 Accounting policies, changes in accounting estimates and errors)

4. Statements of cash flow4.1 Examine the usefulness of the statements of cash flow4.2 Explain and apply the definition of cash and cash equivalents4.3 Distinguish among operating, investing and financing activities4.4 Prepare a statement of cash flow using the indirect method

5. Ratio analysis and interpretation of financial statements5.1 Prepare a comparative analysis of financial reports5.2 Identify and apply the tools of financial statement analysis5.3 Identify and calculate ratios, describe their purpose and use in analysing an entitys liquidity, profitability andsolvency5.4 Explain ratio interrelationships5.5 Analyse and interpret a set of accounts using ratios5.6 Explain the limitations of financial statement analysis

6. Consolidated financial statements

6.1 Discuss the forms of business combinations6.2 Explain how goodwill is measured and disclosed at date of acquisition6.3 Explain how goodwill is measured subsequent to the date of acquisition including the requirements regardingimpairment6.4 Apply the requirements of Accounting for Income Tax and prepare associated journal entries6.5 Explain the concept of control and how the existence of control is determined6.6 Explain and prepare consolidation worksheet entries where a parent has ownership interest in a subsidiary6.7 Explain why transactions within a group must be eliminated6.8 Explain when profit from transactions within a group will be considered to be realised6.9 Prepare consolidation worksheet entries to eliminate transactions within a group6.10 Define and explain the concept of minority interest


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7. Equity accounting7.1 Define significant influence and briefly analyse the factors that may be used to determine whether significantinfluence exists7.2 Explain the underlying methodology of the equity method and outline its basic features7.3 Calculate the investors share in an investee and explain why this concept is important7.4 Prepare journal entries to account for the initial application of the equity method7.5 Prepare equity accounting entries to record investee results and dividends7.6 Outline the disclosure requirements for investments in associates (IAS 28)

8. Foreign currency translation8.1 Explain and account for foreign currency transactions at transaction date and subsequent dates8.2 Apply the requirements of IAS 21 to record foreign currency denominated transactions and exchange ratedifferences that arise on foreign currency monetary items8.3 Explain and apply the IAS 21 method for translating financial statements from a functional currency to apresentation currency8.4 Outline the disclosure requirements of IAS 21


1. Financial reporting and the regulatory framework 15 %2. Statement of comprehensive income 10%3. Statement of financial position 10%4. Statements of cash flow 10%5. Ratio analysis and interpretation of financial statements 20 %6. Consolidated financial statements 25 %7. Equity accounting 5 %8. Foreign currency translation 5 %

TOTAL 100%


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Management Accounting

General overviewThis exam covers an understanding of developments in management accounting and the tools management accountantsuse to cost products and services, and to develop and manage budgets. It also covers performance management andcontrol; planning and assessment of project alternatives; and an understanding of the nature, functions, structures andoperations of management.

Topics:

1. Conceptual issues and behavioural implications

1.1 Explain the historical development of management accounting

1.2 Analyse the key differences between financial, cost and management accounting

1.3 Analyse the current influences on management accounting

1.4 Explain the range of theories that underpin management accounting and how they have an influence on practice

1.5 Outline the core parts of management accounting systems and how they enable strategic management

1.6 Analyse the roles of management accountants in cross-functional teams

1.7 Identify and explain appropriate internal controls for management and accounting systems in a range of

situations

1.8 Explain how organisational behaviour can impact the creation of organisational value

1.9 Describe the increasing awareness of sustainability and its relationship to management accounting

2. Decision making

2.1 Apply the steps in the decision making process2.1.1 define the problem2.1.2 identify the decision making criteria2.1.3 develop alternatives2.1.4 analyse alternatives2.1.5 select an alternative

2.2 Apply relevant information guidelines for short-term alternative choice operating decisions

2.3 Identify the quantitative and qualitative criteria involved in accepting a project

2.4 Analyse the challenges posed by differences between a project and an organisations risk profiles

2.5 Explain the impact of cash flows and risks on project decision making

3. Budgeting

3.1 Identify and analyse the human behavioural challenges to the budgeting process in organisations

3.2 Explain the nature of budgets and the reasons that organisations use budgets

3.3 Prepare an operations budget

3.4 Prepare a cash budget

4. Cost behaviour

4.1 Apply the techniques to separate costs into their fixed and variable components

5. Overhead costingproduct and service costing

5.1 Explain three methods of departmental overhead allocation

5.2 Explain the concepts underpinning product costing in organisations5.3 Develop different product costing statements involving production resource costs

5.4 Evaluate the difference between direct production costs and indirect overhead costs

5.5 Apply the principles of absorption and variable costing to product costing analysis

6. Overhead costingactivity-based costing

6.1 Identify and apply the principles of activity-based costing to allocate overheads in organisations

7. Process and job costing

7.1 Explain the differences between job and process costing techniques


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Accounting Concepts and Principles

General overviewThis exam covers a critical awareness of accounting issues in an international context. It requires an understanding of thetheoretical concepts within the regulatory and conceptual framework of corporate reporting. This includes recognitioncriteria, methods of valuation, and reporting and disclosure of the financial performance of companies.

Topics:

1. Introduction to accounting1.1 Define the need for accounting information for a wide variety of users1.2 Identify the users of financial information and their information needs1.3 Define the purpose and scope of financial reporting1.4 Understand the need for financial accounting systems that enable entities to record and report financialtransactions1.5 Describe the main types of systems used in an organisation to provide information to users1.6 Identify how financial accounting systems can assist in providing information to users

2. The regulatory framework2.1 Define what is meant by the regulation of published financial statements2.2 Identify the different sources of accounting regulation including company law, local GAAP and IFRS2.3 Identify the advantages and disadvantages of regulating financial statements2.4 identify why regulatory regimes may vary between different countries2.5 Describe the role of the International Accounting Standards Board (IASB) in the regulation of financial statements2.6 Identify the need for international financial reporting standards as a global means of regulating accounting2.7 Describe the benefits of international accounting standards for national jurisdictions2.8 Describe the process involved when the IASB introduces a new accounting standard

3. Conceptual framework of accounting3.1 Define and explain the purpose of a conceptual framework of accounting3.2 Explain whether conceptual frameworks are a necessary component of financial reporting3.3 Explain the benefits of a conceptual framework in the development of financial reporting standards3.4 Identify the advantages and disadvantages of conceptual frameworks3.5 Consider whether a conceptual framework removes the need for accountants to make judgements in financialreporting3.6 Explain why a conceptual framework cannot consist only of financial reporting standards3.7 Explain the role and purpose of the IASB Framework for the Preparation and Presentation of FinancialStatements3.8 Explain the process of accounting in situations where accounting standards do not exist3.9 Identify the benefits of a conceptual framework in situations where accounting standards do not exist

4. Accounting standards and concepts4.1 Define the purpose of an accounting standard4.2 Explain the reason that accounting standards are used to regulate financial reporting4.3 Explain the advantages and disadvantages of accounting standards4.4 Explain the need for financial statements to provide a fair presentation of the financial performance and financialposition of an entity4.5 Define the principle of substance over form

4.6 Explain the importance of recording the economic substance of transactions rather than the legal form4.7 Distinguish between a principles-based and rules-based system of accounting4.8 Identify recent developments in the harmonisation of worldwide accounting standards4.9 Identify the effect of harmonisation of accounting standards on companies4.10 Identify the importance of International Financial Reporting Standards in the harmonisation process

5. Elements of financial statements and their recognition criteria5.1 Define the elements of financial statements5.2 Identify and define the following elements of financial statements

5.2.1 asset5.2.2 liability


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5.2.3 equity5.2.4 income5.2 5 expense

5.3 Identify the financial statements where these elements are recognised5.4 Define the recognition means for an element of the financial statements5.5 Identify the criteria for recognition of the elements of the financial statements

6. Alternative methods of valuation6.1 Identify the advantages and disadvantages of the historical cost system of accounting6.2 Identify, explain and calculate amounts using the following measurement bases

6.2.1 historical cost6.2.2 current cost6.2.3 fair value6.2.4 deprival value6.2.5 replacement cost6.2.6 net realisable value

7. Alternative theories of accounting7.1 Define positive accounting theory7.2 Define normative accounting theory7.3 Identify financial capital maintenance and operating capital maintenance and how this can affect calculated profits7.4 Describe operating and financial capital maintenance as alternatives to historical cost and identify the impact onreported profits7.5 Calculate profits or losses using the financial capital maintenance and operating capital maintenance models

8. Reporting and disclosure of performance8.1 Explain agency theory in the context of company activity8.2 Define the role and authority of the agent8.3 Explain the separation of ownership and control in a large corporation8.4 Define an agency cost8.5 Identify the types of agency costs involved in monitoring the activities of the agent8.6 Identify the components of a set of financial statements8.7 Identify the difference between the mandatory and non-mandatory information that is produced in the annualreport8.8 Identify the different types of financial and non-financial information produced in the annual report8.9 Identify the possible advantages and disadvantages of providing financial and non-financial information in the

annual report

9. Efficiency in capital markets and company reporting9.1 Distinguish between the following concepts of capital market efficiency

9.1.1 weak form efficiency9.1.2 semi-strong form efficiency9.1.3 strong form efficiency

9.2 Discuss the benefits of providing company information to shareholders9.3 Discuss the content of the following company reports

9.3.1 annual financial report9.3.2 chairmans statement9.3.3 directors report9.3.4 corporate governance statement

9.3.5 corporate social responsibility report9.3.6 auditors report


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1. Introduction to accounting 5%2. The regulatory framework 15%3. Conceptual framework of accounting 20%4. Accounting standards and concepts 15%5. Elements of financial statements and their recognition criteria 10%6. Alternative methods of valuation 5%7. Alternatives theories of accounting 10%8. Reporting and disclosure of performance 10%9. Efficiency in capital markets and company reporting 10%

TOTAL 100%

Documents

1 Foundation Level Exams Learning_objectives