syllabuses icab

8/14/2019 Syllabuses Icab

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SYLLABUSESON

PROFESSIONAL EXAMINATIONS

Professional Examination I (PE I)

Paper I : Financial Accounting and CostAccounting 03 hours

Full paper 100 marks

Section I : Financial Accounting1.50 hours

Half paper 50 marks

Objectives

This course is designed to impart knowledge about the impact of nature of specialbusiness transactions and also of organisation structure on accounting. This course alsocovers accounting of financial institutions and public utilities.

Specification Grid

Syllabus Contents

(Indicative grouping of areas)

Weightage

(Indicative %)Joint Venture Accounts, Consignment Accounts, Branchand Departmental Accounts

25%

Hire-Purchase and Installment Accounting, LeaseAccounting, Royalty Accounts, Accounting for GarmentsEnterprises

25%

Integrated Accounting System as practiced in IndustrialEnterprises in Bangladesh, Accounting for NGOs andenterprises in Export Processing Zones, Accounting forNot-for-profit Organizations

25%

Accounts of Banks, Accounts of Insurance Companies

Accounting for Public Utilities Concerns

25%

100%

Contents

01. Joint Venture Accounts: Difference between Joint Venture andConsignment, Accounting for Joint Venture, No. separate books of JointVenture, Joint Venture Account, Memorandum Joint Venture Account,Separate Books for Joint Venture, Joint Bank Account, Joint VentureAccount, Joint Venture Investment Account, Interest Calculation, AccountCurrent.

02. Consignment Accounts: Difference between sales and consignment,Account sales, Accounting treatment in consignors books, Valuation ofunsold stock, Treatment of commission, bad debt and Del CredereCommission, treatment of loss of goods on consignment, Stock


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deficiencies, insured and uninsured stock losses-goods on consignment atselling price, treatment of discount on bill of exchange, accountingtreatment in consignees book.

03. Branch and Departmental Accounts: Distinction between Branchesand Departments, Branch selling only for cash, Branch selling both for

cash and credit, Goods invoiced at selling price, Branch maintainingindependent Accounts, Foreign branches, Departmental Accounts.

04. Hire-Purchase and Installment Accounting: Hire-Purchase:Definition, Accounting treatment in the books of buyer and seller,

Treatment of repossession. Installment: Hire-purchase versus Installment,Determination of Installments Accounting, treatment for installment bothin purchasers and sellers books.

05. Lease Accounting: Concept of Lease, Economics of Leasing,Accounting for Lease, Accounting by Lessor : Opening Leases, DirectFinancial Lease and sale type Leases, Accounting by Leases : Opening

Lease, Capital Lease, Sales & Lease back [IAS 17].06. Royalty Accounts: Introduction, Minimum Rent or Deed Rent, Short-

workings, Journal Entries, Ledger Accounts, Records in the book ofLandlords, Treatment in final accounts.

07. Accounting for Garments Enterprises: Finalisation of accounts ofgarments enterprises with special references to currency translation andback-to-back L/C. [IAS 15, IAS 21].

08. Integrated Accounting System as practised in IndustrialEnterprises in Bangladesh.

09. Accounting for NGOs and enterprises in Export ProcessingZones.

10. Accounting for Not-for-profit Organisations: AccountingProcedures, Receipts and Payments Account. Income & ExpenditureAccount, Balance Sheet.

11. Accounts of Banks: Provisions of the Banking Companies Act, 1991relating to Accounts and Audit-Book-keeping : Principal and subsidiarybooks, Ledgers, General and Subsidiary, Internal control & checks,Designing a system of accounting for bank, important items of a BalanceSheet, Full particulars of Book debts. Auditors Report, prescribed forms ofProfit & Loss Account and Balance Sheet of a bank, Financial powers ofmanaging directors and directors, Reserve fund and cash reserve,Restrictions on loans and advances, Maintenance of liquid assets [IAS30].

12. Accounts of Insurance Companies: Provisions of the Insurance Act of1938 relating to investment, loans, management, investigation,commission---rebates etc.

Preparation of Revenue Account and Balance Sheets for life Insurance andGeneral Insurance. Insurance Claim Settlement.

13. Accounting for Public Utilities Concerns: Accounting for Railways,Electricity, Telephone, WASA & Gas Distribution Authority. Treatment ofReplacement and Renewals under Double Accounts System.

Schedule of recommended text & books


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# Hanif & Mukherjee Modern Accounting# Jain & Narang Advanced Accounting# Haried Advanced Accounting# Insurance Act, 1938# Banking Companies Act, 1991

***Section II : Cost Accounting

1.50 hoursHalf paper 50

marksObjective

The course is designed to acquaint students with a comprehensive knowledge ofestablished practices of cost accumulation methods and learn the application of thisknowledge to basic planning, control and decision-making. The course covers job order,process costing and standard cost systems. It is programmed to equip candidates withfundamentals of accounting for material. Labour and manufacturing expenses: andunderstanding of the importance of the role of the cost accounting in planning andcontrolling the wide range of organisational and manufacturing costs.

Specification Grid

Syllabus Contents(Indicative grouping of areas)

Weightage(Indicative %)

Introduction, Cost Terminology and Cost Flows 15%

Costing and Control of Materials, Costing and Control of

Labour, Costing and Control of Manufacturing Overhead

20%

Allocating Costs to departments, Activity-Based Costing(ABC)

20%

Job-Order Costing, Process Costing 25%

Costing for Joint Products and By-ProductsOperation Costing and Back flash Costing

20%

100%

Contents

01. Introduction: Cost Accounting Defined; Comparison of Cost Accountingand Financial Accounting; The Role of Cost Accounting; Cost Data for

Management Purposes; Methods and technique of Cost Accounting;Characteristics of an Ideal Cost Accounting System; Applications of CostAccounting; Modern Trends in Cost Accounting.

02. Cost Terminology and Cost Flows: Cost object; Cost; Expense andLoss; Cost Categories, Cost associated with Time of Incurrence, CostReactions to Changes in Activity, Cost Classifications on FinancialStatements; Components of Product Cost; Accumulation of Product Costs;Cost of Goods Manufactured and Sold.

03. Costing and Control of Materials: Classification of Materials;Accounting for Materials; Pricing the Issue of Materials; Periodic Inventorysystem and Perpetual Inventory System; Planning Material Requirement;Ordering Cost; Holding Cost and EOQ; Effect of quantity Discounts on EOQ;Safety Stock and Reorder Point.


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Maximum and Minimum Stock Levels; JIT and Material Control; MaterialRequirement Planning (MRP); ABC Analysis.

04. Costing and Control of Labour: Productivity and Labour Costs; Costsincluded in Labour; Accounting for labour; Time-keeping, Computation of

Total Payroll and Allocation of Payroll costs: Jourrnalizing Labour Costs;

Special Problems Relating to Accounting for labour; Labour Cost Control,Labour Turnover and Control of Labour Turnover.

05. Costing and Control of Manufacturing Overhead: ManufacturingOverhead Costs, Actual vs. Normal Costing of Manufacturing Overhead;Production Capacity, Predetermined Overhead Rates; Departmental vs.Plantwide Overhead Rates; Separate Variable and Fixed OverheadApplication Rates; Separating Mixed Costs- High-low Method and LeastSquares Regression Analysis; Using Flexible Budgets in SettingPredetermined Overhead Rates; Disposition of Underapplied andOverhead; Causes of Underapplied Overhead.

06. Allocating Costs to departments: Cost Allocation through Cost Pools;Allocation of Service Department Costs; Reasons for Service DepartmentCost Allocations, Methods of Service Department Cost Allocation-DirectMethod, Step Method, Algebraic Method and Reciprocal Method.

07. Activity-Based Costing (ABC): Methods; Identifying Activities that UseResources; Cost Drivers and choosing Cost Drivers, Assigning Costs UsingActivity, Based Costing, Benefits of ABC, Criticism of ABC.

08. Job-Order Costing: Job-Order Costing; Job Cost Sheet; Accounting forMaterials and Labour in Job-Order System; Factory Overhead Application;Spoiled Units, Defective Units, Scrap and Waste in Job Order Cost System.

09. Process Costing: Process vs. Job-Order Costing; Determination ofEquivalent Units; Cost of Production Report; Weighted Average and FIFOProcess Costing Methods; EUP Calculations and Cost Assignments.

10. Costing for Joint Products and By-Products: Joint Products and By-Products, Allocating Joint Costs-Physical Measure of Allocation andMonetary Measure of Allocation, Accounting for By-Products.

11. Operation Costing and Back flush Costing


# Polimeni, Fabozzi and Adelberg Cost Accounting (3rd Edn.)# Barfeld, Ralborn & Dalton Cost Accounting -Traditions & Innovations (1st Edn.)

# L.Gayle Rayburn Cost Accounting -Using A Cost Management Approach (4th Edn.)# Michael Maher Cost Accounting -Creating Value for Management (5th Edn.)# Barfeld, Ralborn & Kinney Cost Accounting -Traditions & Innovations (3rd Edn.)

***Paper II : Taxation-1

03 hoursFull paper 100 marks

Aim: The aim is to examine:- The basic principal of income tax and the rules relating thereto;

- The application of those principles and rules in practical situations;- The basic principles and rules relating to value added tax (VAT0 and

application of those principles and rules in practical situations.


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Specification Grid



Income taxPreliminary (Chapter-I): Definitions, Administration (Chapter-II): Income

tax authorities and their Powers (Chapter-XIV), Taxes AppellateTribunal(Chapter-III) including Taxes Appellate Tribunal (Procedure)Rules-1985, Charge of income tax (Chapter-IV), Computation of income(Chapter-V), Exemption and allowances (Chapter-VI), Payment of taxbefore assessment (Chapter-VII), Return and Statement (Chapter-VIII),Assessment (Chapter-IX), Liability in special cases (Chapter-X), Specialprovisions relating to avoidance of tax(Chapter XI), Requirement offurnishing Certain Information(Chapter XII), Imposition of penalty(ChapterXV), Recovery of tax (Chapter XVI), Double Taxation relief(Chapter-XVII), including tax-treaties, Refunds (Chapter-XVIII), Appealand reference(Chapter-XIX), Protection of Information(Chapter-XX),Offenses and Prosecution(XXI), Miscellaneous (Chapter-XXII) and

Schedules. The First Schedule: PART A- Approved Superannuationfunds, PART B- Recognised Provident Funds & PART C ApprovedGratuity Funds. The Second Schedule: Rates of income tax in somespecial cases. The Third Schedule: Computation of DepreciationAllowance, The Fourth Schedule: Computation of profits and gains ofInsurance Business. The Fifth Schedule: PART A Computation of theprofits or gains from the exploration and production of petroleum(including natural gas) and the determination of the tax thereon and PARTB Computation of profits and gains from the exploration and extractionof mineral deposits (other than oil and natural gas) in Bangladesh. TheSixth Schedule: PART A Exclusions from total income PART B Exemptions and allowances for assessees being resident. The Seventh

Schedule: Computation of relief from Income tax by way of credit inrespect of Foreign tax.

65%

Value Added Tax (VAT):Fair knowledge with respect to principles and practices of VAT includingpractical problems

35%

100%

Statutes/Rules/legal references:1. Income tax (IT):

a. Income Tax Ordinance (No.XXXVI) of 1984 including updated amendmentsmade by the annual FO/FA thereto:

IT Manual: Part-I : Sections: 01 187: Schedules: 01 7b. Income Tax Rules (SRO No.39-L/85 of 14 January 1985) 1984 including

updated amendments made thereto: Rules: 01-67c. Various Notifications/SROs and Orders made from time to time there under.

2. Value Added Tax (VAT):a. VAT Act (No.22) of 1991 including updated amendments made by the annual

FO/FA thereto: Sections 01-73 and Schedules 1-3 theretob. VAT Rules 1991: SRO No.178 Law/91/3-Mushak of 12 June 1991 including

updated amendments made thereto: Rules 01-43 and Forms: Mushak: 01-29c. Various Notifications/SROs and Orders made from time to time there

under.

3. Customs Act (No.IV) of 1969 updated:Import-duty (ID), Supplementary-duty (SD) under VAT law and Infrastructure

Development Sur-charge (IDSC) under Finance Act (No.15) of 1997.4. Court Fees Act (No.VII) of 1870 dated


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5. Stamps Act (No.II) of 1899 updated6. Registration Act (No.XVI) of 1908 updated7. Motor Vehicles Tax:

Motor Vehicles Tax Act (Bengal Act No.I) of 1932 updatedMotor Vehicles Ordinance (No.LV) of 1983 updated

8. Travel Tax: Finance Act (No.XXIII) of 1980 updated &Finance Ordinance (No.XLV) of 1986 updated

Paper III : Auditing & BusinessLaw 03 hours


Section I :Auditing

1.5 hoursHalf paper 50 marks

Objectives

As an induction into the professional examinations, the syllabus is intended to enablecandidates to equip and familiarize themselves with a professional approach needed forconducting an adequate and effective audit and reporting on the financial statements ofan entity. The examination is designed to assess the candidates understanding andapplication of the objective, basic principles, procedures and practices involved in theaudit of usual practical client situations.

The whole of the Auditing syllabus from Foundation Examination III (aggregating 200marks) should be viewed in totality as a continuous process for learning and applicationof the candidates knowledgeability and understanding thereof in practical audit

situations.

Candidates are expected to have cumulative knowledge of the subject matters covered inthe Auditing Syllabi of earlier examinations.

Specification Grid



Audit Principles and Procedures:Position of an AuditorPrinciples of Auditing

40%30%30%

100%

Contents

6. Audit Principles and Procedures:Audit AdministrationAudit StrategyAudit Methodology

- Accounting System and Internal Control- Planning- Controlling- Documentation- Review of Financial

- Audit Evidence Stages of an Audit

Tests of Control


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Substantive Procedures

Review Techniques

Formulation of Audit Opinion

Internal Control System :

- Meaning, Objectives and Types of Internal Control

- Basic Principles Governing Accounting Systems and Related InternalControls

- Significance of an adequate and effective system of Internal Control- Essential Characteristics of an Internal Control System

Plan of Organisation

Management Supervision

Authorisation Procedures

Recording Procedures

Custody Procedures- Risk Assessment and Internal Control- Internal

- Meaning, Nature and Scope of Audit- Objectives of Audit- Need for and purpose of audit- Primary and secondary objectives and advantages of audit- Essential Features (Characteristics) of Audit- Reviewing- Testing- Comparing- Reporting Functions- Types and Classes of Audit- Statutory and Non-Statutory audit- Internal and External audit- General and Independent audit- Compliance and Comprehensive audit.

02. Position of an AuditorAudit appointment and Engagement lettersCompanies Act (1994) Provisions regarding:

- Appointment and Removal of Auditor- Rights and powers of Auditor- Responsibilities and duties of Auditor- Qualification and Disqualification of Auditor- Remuneration of Auditor

Financial and Accounting Responsibilities of Directors

03. Principles of AuditingElementary knowledge of :

- Accounting and Auditing Standards- General (Basic) Principles Governing an Audit- Ethical Guidelines and Technical Standards

General Understanding of:- Financial Statements and Accounting Policies

Accounting Concepts and Consideration of :- Going Concern-Consistency-Accruals- Prudence-Substance over Form-Materiality

Audit Conceptualization of :- Auditors Reasonableness- Professional Judgement- Audits Duty of Care


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- Audit Materiality- Audit Independence

True and Fair View Audit Opinion


Bank Audit Guide ICAB Publication

Insurance Audit Guide ICAB PublicationModern Auditing & Assurance Services GillModern Auditing GillInformation System Auditing & Assurance HallAuditing : Integrated Concepts and Procedures TaylorModern Auditing BoyntonPrinciples & Practice of Auditing Pagare, DinkarContemporary Auditing Kamal GuptaAuditing Principles and Procedures Dr. Khawaja Amjad SaeedMembers Handbook, ICABIFAC Handbook of Auditing & Ethics PronouncementsIFAC Code of Ethics for Professional Accountants

IFAC Handbook of Technical Pronouncements International Information TechnologyGuidelines IFAC Handbook of Technical Pronouncements International PublicSector Accounting Standards

Section II : BusinessLaw

1.5 hoursHalf paper 50 marks

Objectives

The object of study of Business Law by the students who are preparing themselves for

the profession of chartered accountants, should be to make themselves familiar with thedifferent aspects and provisions of Commercial Laws which they may come across indischarging their professional responsibilities.

Specification Grid



The Law of contract in detail, including contract of indemnity,Guarantee, Bailment, pledge and Law of agency

30%

Different types of business concern-proprietorship partnershipand Limited Companies and Corporations created by Law, aComparative study only and not a detail study

40%

Sale of Goods Act, 1930- Salient Features and provisions, theLaw relating to insolvency including Bankruptcy, NegotiableInstruments Act 1882, the Arbitration Act 1940

30%

100%

Contents

01. The Law of Contract in detail, including Contract of Indemnity,Guarantee, Bailment, Pledge and Law of agency.

02. Different types of business concern-Proprietorship, Partnership, Limited Companiesand Corporations created by Law-a-comparative study only and not a detailed study.

03. The Sale of Goods Act, 1930-Salient features and provisions04. The Laws relating to Insolvency including Bankruptcy05. The Negotiable Instruments Act, 188206. The Arbitration Act, 1940


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i. Types of computers (digital, analog and hybrid) and distinctions between themii. Computer hardware

6. Softwareiv. Operating systems-single user (MSDOS/Windows 95), multiuser (Unix) and

networking (Netware, Windows NT)v. Utility Softwaresvi. Tools languages-High level (procedural and Visual and Object oriented)/low

level and fourth generation languages (4 GLs)vii. Application softwares (Accounting Packages, Office 97 and other productivity

softwares)viii. Input / Output devicesix. Physical constituent parts of Personal Computerx. Main memory, cache memory, video memory, buffers, virtual memoryxi. External storage-hard discs, floppy discs, tapes, Data, CDs and VCDsxii. Configuration of a Personal Computer

03. Basic Networking and Communication conceptsi. Local area networkingii. Server based and peer to peer networking

6. Modems and data transmission speedsiv. Wide area networkingv. Client server computingvi. Distinction between a dumb terminal and an PC or intelligent terminalvii. Internet basics-e-mail, world wide web, browsing

04. Elements of data processingi. Bits and Bytes, fieldii. Data representation-Binary, BCD, Octal, Hexadecimal, ASCII

6. Data and Informationiv. Databases, Files/Tables, database files structure or scheme Records, fields

v. Relational Data Base Management Systems (RDBMs)vi. Word processing, Spreadsheets, groupware (Lotus Notes)

6. Batch processing, Online processing, Real time processingviii. Distributed (distributed server) versus pecialized databaseix. Basic appreciation of nature procedural languages (i.e. COBOL,

BAISC) and object oriented programming system in visualenvironment (visual BASIC, Visual C++).

05. Securityi. Backups and restoreii. Importance of disaster recovery policy and proceduresiii. Passwords and other security (physical and data) features in modern

computer systemiv. Audit trail and evidences in accounting packages

06. Modern trends in Information Technologyi. Appreciation of current trends in computing introduced commercially in the last

year or soii. Appreciation of what is likely to come in IT in the near future that will

significantly impact businesses

07. Effective Business Information System with use of InformationTechnology where relevanti. Understanding of types of information required by management of manufacturing,

trading, service and other business, for planning, pecialize, directing, co-ordinating, controlling and decision-making;ii. Ability to peciali business information needs according to their purpose, quality,

quantity, frequency, consistency and form of presentation, document them using


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descriptions, system flow charts, pecialize system design (system analysis anddesign) and communicating same to programme developers and IT experts foreventual pecializedn of such information system;

iii. Basic appreciation of programme logic by way of flow charts andpseudo code for effective communication with software developers;

iv. Understanding of system development stages i.e. need identificationfeasibility study, design prototyping (if necessary), programmedevelopment, testing and debugging, parallel run, data conversion andchange-over process (if relevant), going live, post implementationevaluation and recommendations for future revisions andenhancements according to changed business needs, overall projectmanagement and control.

08. Computerised Financial/Accounting Systemi. Ability to outline a pecialized accounting system using manual and/or

pecialized (packages and/or bespoke softwares) elements which willmeet identified needs and which is appropriate with the resources andobjectives of the business;

ii. Appreciation of financial audit risks introduced in pecializedfinancial/accounting systems;

iii. Appreciation of integration of accounting systems with other systemsfor establishment of overall management information system in thepecialized;

iv. Ability to evaluate accounting packages or softwares so developed forfinancial audit trails;

v. Recommendation of security (physical and data) features consistentwith aims and objectives of a given pecialized;

vi. Internal controls for computerized accounting systems for small,medium and large pecialized and their implementation for

completeness, accuracy and validity of information.6. Establishment of Standards and Controls in general in

Computerized Business Systemsi. Appreciation of accepted standards for analysis, design, software

development through proper documentation and other procedures;ii. Controls in a computing environment i.e. organizational, personnel,

access, change, security, task division, routine audit of computersystems in addition to financial audits, disaster recovery procedures asdeemed necessary for a particular pecialized;

iii. Controls and security in a networked environment and controls in amodern Internet system by way of encryption methodologies, firewalls,

etc.10. Questions of equal marks may be set to both tests the depth of

understanding and to cover as wide an area of the syllabus as possibleSchedule of recommended text & books

For Section: 1, 2 & 4# Peter Norton Introduction to Computers# Hutchinson & Sawer Computers & Information Systems# Pressman Software Engineering# Ghezzi Fundamentals of Software Engineering

For Section: 3# Tananburn Computer Network# Minasi The complete Network & Maintenance Guide# Jaisal Networking Technology


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For Section: 5, 7 & 8# Awad System Analysis & Design# Obrien Management Information System# Lawdon Management Information System# Gupta Management Information SystemFor Section: 6# BPB Publication Internet Complete# Jaisal Networking Technology


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Professional Examination II (PE II)

Paper I : Advanced FinancialAccounting 03 hours


Objectives

This course is designed to cover both micro and macro level accounting. At micro level,emphasis is given on company accounts including mergers, acquisitions and insolvency.At macro level, the course will cover governmental and national income accounting.

Specification Grid

Syllabus Contents


Weightage

(Indicative %)Company AccountsAccounting for Construction Contracts, Accounting forTaxes on Income, Accounting for Research &Development CostsMerger & Reorganisation, Group of Companies,Insolvency AccountsGovernment AccountingNational Income Accounting

30%

20%20%15%15%

100%

Contents

6. Company Accounts: Preparation of final accounts in accordance withstatutory and accounting standards-Revenue recognition: recognition atpoint of sales-before delivery-after delivery-Revenue recognition forspecial sales transactions-Franchise. Provisions and Reserves-Taxation-Directors emoluments-Fixed Assets and Depreciation.

Issue of Prospectus, shares and debentures-Redemption of debentures-Dividendpayments-Issue of Bonus Shares & Right Shares-Shares Split-Disclosurerequirements as per the Companies Act 1994 and the Securities & ExchangeCommission Act 1993. Preparation of Final Accounts.

02. Accounting for Construction Contracts: [IAS 11]: Types of

contracts-Accounting treatments of construction contract, costs andrevenue-The basis of pecialized revenue on construction costs-Percentageof completion method-Completed contract method-Accounting forconstruction contracts-Disclosure [IAS 11]

03. Accounting for Construction Contracts: [IAS 12]: Tax payableMethod-Deferral Method-Liability Method-Tax Losses-Financial Presentation[IAS 12]

04. Accounting for Research & Development Cost: [IAS 9]: Researchand Development-Costs of Research and Development Activities-Accounting Treatment of Research and Development Costs-Disclosure.

05. Merger & Reorganisation: [IAS 22]: Accounting for BusinessPurchase-Amalgamation-Absorption and Reconstruction.


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06. Financial Statements of Group of Companies: Accounting forHolding Companies [IAS 27]: Need for consolidation of FinancialStatements-Scope of consolidated Financial Statements-Consolidationprocedures-Consolidated Profit & Loss Account-Consolidated BalanceSheet.

Accounting for Investment in Associates: [IAS 28]: The Equity Method-The CostMethod-Choice of Accounting Method in Consolidated Financial Statements.

07. Accounting relating to Insolvency: Individual and Partnershipfirms

6. Government Accounting: Nature and scope of GovernmentAccounting; Summary of differences to commercial accounting;Government Accounting in developing countries-general observations.

The frame-work and structure of government accounting in Bangladesh;Comptroller and Auditor Generals powers and duties; public accountsof central and local government; System of accounts; Finance andrevenue accounts; Period accounts; Budgets; Annual DevelopmentProgramme; public sector corporations and other governmententerprises; Taxation and other revenue.

The theory of government accounting: Planning and budgeting.

Account classification; Performance budgeting; Planning-Programming-budgeting-systems; Public Enterprise accounting; Pricing in the public sector, Taxation andgovernment accounting.

6. National Income (Social) Accounting: Nature and purpose ofNational Income Accounts; Comparison of system of National Accountsused in countries with market economies and system of material

product balances used in countries with centrally planned economies.Definition of national product; Limitations of GNP Measure; Nature ofconsumption and investment. Double entry accounting in NationalIncome Accounts; Source of data; Matrix presentation; input-outputtables; National income accounts at constant prices; Treatment ofcapital gains and losses, value added, inter temporal adjustments; form,content and presentation of National Income Accounts, problem ofNational Income Accounting in Bangladesh.


# Hay, L.E - Accounting for Government and Non- profit Entities# Ministry of Finance Government of Bangladesh Introduction to Government

Accounting# Patwary , S.U Financial Administration in Bangladesh# Hanif and Mukherjee Modern Accounting# Jain and Narang Advanced Accounting# Douglas Government and Non- profit Accounting# Harid, et.al Advanced Accounting# Taylor Consolidated Financial Statements# Backerman - An Introduction to National Income Analysis# Eddy and Goyal- National Income and Social Accounting

Paper II : AdvancedAuditing 03 hoursFull paper 100 marks

Objectives


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As an advanced level Professional Examination, the Syllabus is intended to enablecandidates to consolidate their knowledge and professional competence to conduct anadequate, effective audit on the financial information on a given situation. Theexamination is designed to assess the candidates skill and understanding in theapplication of the principles, methodologies and practices involved in general and

pecialized audit situations. In answering examination questions, candidates are expectedto have relevant developments of the contents of applicable International Standards onAuditing based on subject matters covered.

The whole of the Auditing Syllabi from Foundation Exam to Professional Exam III(aggregating 200 marks) should be viewed in totality as a continuous process for learningand application of the candidates knowledgeability and understanding thereof in practicalaudit situations. Candidates are expected to have cumulative knowledge of the subjectmatters covered in the Auditing Syllabi of earlier examinations.

Specification Grid

Syllabus Contents


Weightage

(Indicative %)Introduction, Objectives and Status of AuditAudit Principles and MethodologiesProfessional Ethics, Audit Independence and ConceptsEDP, Group Accounts and Non-Financial AuditSpecialised Audits and Reports

10%30%20%20%20%

100%

Contents

6. Introduction, Objectives and Status of Audit

Development of Auditing

Meaning, Nature and Features of an Audit

Objective of an Audit

Types and Classes of Audit

Terms of Audit Engagement

Legal and Professional Considerations

Auditors and Directors Responsibilities Regarding Financial

Statements

Legal Position of an Auditor- Companies Act 1994- Securities & Exchange Rules 1987Other Laws and Regulations

Accounting and Auditing Standards- Meaning Objectives and Significance- Standard Setting/Adoption ProcessIASC & IFAC (IAPC)/ACAB

02. Audit Principles and Methodologies

Audit Administration

Audit Methodology

Audit Strategy

Stages of an Audit

Tests of Control

Substantive Procedures Review Techniques

Formulation of Audit Opinion


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Accounting and Internal Control Systems

- Meaning, Objectives & Basic Principles Governing Accounting- System and Related Internal Controls- Types, Characteristics and Significance of an Internal Control

System

- Risk Assessment and Internal Controls- Internal Check- Internal Audit- Internal Control Memorandum, ICQ & ICE- Evaluation of Controls and Impact on Audit Work

Letter of Weakness

Planning an Audit- Meaning, Objectives and Basic Principles of Planning- Knowledge of Clients Business- 1st year Audit Engagement- Planning Considerations and Memorandum

- Interim and Final Audit- Audit Risk and Materiality levels- Audit Risk and Materiality levels- Audit Plans and Programmes- Budgeting and Staffing- Reliance on Internal AuditMulti Location Engagements

Controlling an Audit

- Meaning, Objectives and Basic Principle of Controlling- Audit Control Procedures- Delegation and Supervision of Work

- Review of Working Papers, Notes and QueriesTime and Costs Monitoring

Quality Control- Principles and Purpose of Quality Control- Appropriate Skills and Competence- Establishment and Monitoring of Procedures- Quality Control Reviews

Documentation of Audit work

- Meaning, Objectives and Basic Principle of Documentation- Recording of work done- Types and purpose of working papers

- Evidence of reviews, conclusions and actions- Evaluation of significant matters

Audit Evidence

- Meaning, Objectives and Basic Principle of Audit Evidence- Nature and Sources- Existence- Ownership- Sufficiency- Relevance- Reliability

Audit Techniques and Procedures- Inspection, Enquiry and Observations- Computation and Appraisal- Management Representations


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- Sampling Techniques- Substantive Testing- Analytical Review- Depth Checking- Directional and Rotational Testing- Use of CAATs- Reliance on other Auditors and Experts

Audit Verification Procedures-Final Audit

- Nature, Objectives and Procedures of Verification- Basic Verification Techniques & Methodologies- Compliance Procedures, Substantive Procedures & Art- Cut off Procedures, Attendance at Stock taking and Circularization of

Debtors & Creditors, etc.- Vouching and Verification Procedures in respect of relevant Balance

Sheet and Profit & Loss A/c Items

Audit Conclusion and Reporting (Auditors Report on)

- Overall Review of Financial Statements and Audit Work- Post-Audit Reviews- Considerations for Formulation of True and Fair View Audit opinion- Basic Elements of Auditors Report- Events and Circumstances- Types of Audit Opinion- Unqualified Audit Opinion (with illustrations)- Qualifications in Auditors Report (with illustrations)- Qualified Opinion- Disclaimer Opinion- Adverse Opinion

03. Professional Ethics, Audit Independence and Concepts- Professional Ethics

Bangladesh C.A. Bye-laws, 1973IFAC Guidelines on Professional Ethics

- Audit Independence

- Audit Concepts

Auditors Reasonableness and Professional JudgementsTruth and Fairness of Financial StatementsGoing ConcernAudit MaterialityRelated Party TransactionsAudit Sampling

Management RepresentationsSubsequent Events & Contingencies

04. EDP, Group Accounts and Non-Financial Audit

EDP Audit

Auditing in Computer Information System (CIS) EnvironmentInternal Controls in a CIS EnvironmentComputer Assisted Audit Techniques (CAAT)

Group Accounts Audit

Joint Audits

Non-Financial Audit

Management (Operations) AuditPerformance AuditSocial AuditEnvironment Audit


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05. Specialised Audits and ReportsAudit of:

Banks

Insurance Companies

Other Financial Institutions (e.g. Investment/Merchant Bank & Finance

Cos.) Charities, Trusts and Co-operatives, Provident and Pension Funds

Educational Institutions and Friendly Societies

Public Sector Corporations and Projects

Value of Money Audit

Cost Audit

Investigations

Prospectus and Profit Forecast

Audit of Accounting Estimates

Examination of Prospective Financial Statements

Audit of Small Businesses

Review Engagements

Reports of Proprietorship and Partnership

Accountants Report

Other Information in Documents Containing Audited Financial

Statements

Auditors Report on Special purpose Audit Engagement


Bank Audit Guide ICAB PublicationInsurance Audit Guide ICAB PublicationModern Auditing & Assurance Services Gill

Modern Auditing GillInformation System Auditing & Assurance HallAuditing : Integrated Concepts and Procedures TaylorModern Auditing BoyntonPrinciples & Practice of Auditing Pagare, DinkarContemporary Auditing Kamal GuptaAuditing Principles and Procedures Dr. Khawaja Amjad SaeedMembers Handbook, ICABIFAC Handbook of Auditing & Ethics PronouncementsIFAC Code of Ethics for Professional AccountantsIFAC Handbook of Technical Pronouncements International Information TechnologyGuidelines IFAC Handbook of Technical Pronouncements International Public

Sector Accounting Standards

Paper III : Corporate Laws andPractices 03 hours


Specification Grid



Companies Act 1994Other Laws, Rules and Regulations

Secretarial Practices

40%25%

35%100%

Contents


19/30


20/30

100%

6. Introduction: Management Accounting Defined; Relationship betweenManagement Accounting and Financial Accounting; Relationshipbetween Management Accounting and Cost Accounting; Role ofManagement Accounting; Characteristics of Management AccountingInformation; Changing Business Environment; JIT, TQM, ProcessReengineering, Automation; Theory of Constraints (TOM), Benchmarkingand Continuous Improvement, Creating Value in Organisation; Ethics ofManagement Accountant Professionals.

02. Variable Costing and Cost-Volume-Profit Analysis: VariableCosting for Decision Making; Variable Costing vs. Absorption Costing,Income Statement; Reconciliation of Absorption Costing with VariableCosting; Income Advantages and Disadvantages of Variable Costing andAbsorption Costing.

Uses of CVP Analysis: Break-Even Point and shut-down Point: Underlying

Assumptions of Break-Even analysis; Graphical Approach of CVP Analysis;Incremental Analysis for Short-Run Changes; Margin of Safety; Operating Leverage;CVP Analysis in a Multiproduct Environment; ABCs Effects on CVP.

03. Pricing: Major influence on Pricing: Short-Run Pricing Decisions; Long-Run Pricing Decision; Cost Analysis for Pricing; ABC Costing and Pricing

Target Costing; Social Responsibility and Pricing.

04. Relevant Costing: Concept of Relevance; Sunk Cost; Relevant Cost;Relevant Costs for Specific Decisions; Make-or-Buy Decisions; ScarceResource Decisions; Sales Mix Decisions; Special Order Decisions;Product Line Decision, Further Processing Decision.

05. Managing Quality and Time: Quality: Production View of Quality andCustomer View of Quality; Benchmarking; Total Quality Management(TQM), Quality Costs; Control Costs and Failure Costs; Identifying QualityProblems; Time in a Competitive Environment; New Product Development

Time and Operational Measures of Time.

06. Standard Costing: Development of Standard Cost System;Considerations in Establishing Standards; Setting Standards for Material,Labour and Manufacturing Overhead; Variance Computations for Materials,Labour and Manufacturing Overhead; Mix and Yield Variances for Materialsand Labour; Disposition of Variances; Analysis of Material, Labour andOverhead Variances.

07. Revenue Variances: Sales Price Variance; Sales Volume Variance;Sales Mix Variance; Sales Quantity Variance; Market Size and Market SizeVariances.

08. Budgeting Process(i) Basic Framework of Budgeting: Budgeting; Advantages of

Budgets; Planning and Control; Budgets and Standards; Principles ofBudgeting-Relation to Organisational Structure and Environment,Budget Revisions, Budget Committee, Budget Period, Bottom-upBudgeting Approach.

(ii) Master Budget: Master Budget Interrelationships; Sales Forecasts;

Production-Related Budgets; Marketing and Administrative Budgets,Cash Budgets; Budgeted Income Statement, Budgeted Statement ofFinancial Position.


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(iii) Flexible Budget: Static Budgets and Flexible Budgets; Limitationsof Performance Evaluation with Static Budgets; Preparation of aFlexible Budget.

(iv) Other Aspects of Budgeting: Behavioural Aspects of Budgeting;Zero Base Budgeting; Using ABC in Budgeting; Performance Budget

and Performance Reports.

6. Responsibility Accounting and Transfer Pricing in DecentralisedOrganisation: Decentralisation; Responsibility Accounting System;

Types of Responsibility Centres; Transfer Pricing, Purposes of TransferPricing; Transfer Pricing Bases-Cost-Based Transfer Prices, Market-based

Transfer Prices; Negotiated Transfer Prices, Dual Transfer Pricing; Transfer Prices in Multinational Setting; Behavioural Implications ofTransfer Pricing.

6. Performance Evaluation: Designing a system of PerformanceMeasurement; Traditional Financial Performance Measures-Divisional

Profits, Cash Flow, Return on Investment, Residual Income; Limitationsof Traditional Measures; Performance Measures in World-ClassCompanies-Non-Financial Measures, Throughout and MultiplePerformance Measures; Activity-Based Management and PerformanceEvaluation; Performance Evaluation in Multinational Settings.

6. Quantitative Models for Planning and Control: ProgrammeEvaluation Review Technique; PERT-Cost Analysis; Decision TreeAnalysis, Linear Programming Model; Optimal Solution under LP withGraph.

6. Economics of Information: Cost Data and Information Economics;Opportunity Loss Concept; Expected Value of Information; Other

Considerations in Information Evaluation; Management Uses ofInformation Economics.


# Barfield, Raiborn and Kinney - Cost Accounting : Traditions and Innovations (3rd Edn.)# L . Gayle Rayburn - Cost Accounting : Using a Cost Management Approach (5th Edn.)# Michael Maher- Cost Accounting : Creating Value for Management# Ray H. Garrison and Erlc W. Noreen Managerial Accounting (8 th Edn.)# Deakin and Maher - Cost Accounting (3rd Edn.)

Professional Examination III (PE III)

Paper I : Financial Reporting and ProfessionalIssues 03 hours


Section I : FinancialReporting

03 hoursHalf paper 50 marks

Objectives:

The course is designed to evaluate various legal provisions influencing financial reportingby Companies. The course covers all Accounting Standards and their critical evaluation.


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Specification Grid



Limited Companys Financial Statements, GroupAccounts, Accounts of Bank and Insurance Companies

25%

Other Financial Reporting Issues, Reporting of UnusualEvents, Special Types of Liabilities, Fund Flow & CashFlow Statements, Framework for preparation andPresentation of Financial Statements

35%

International Accounting Standards as adopted inBangladesh, Developments of International Standardsand Current issues

20%

Analysis and Interpretation of Financial Statements, Financial

Reporting by Multinationals, Disclosure of Accounting

Information to Trade Union Leaders

20%

100%

Contents

01. Limited Companys Financial Statements: Contents of Annual Reports :Board of Directors-Financial History-Year at a glance-Statement of ValueAdded-Chairmans Statement-Report of Board of Directors-AuditorsReport-Profit & Loss Account-Balance Sheet-Cash Flow Statement-Notes toAccounts.

Explanation and critical evaluation of: Provisions of the Companies Act, 1994 :Sections 182, 183, 184, 185, 189 and 191.

Provisions of the Securities and Exchange Rules, 1987.

6. Group Accounts: Consolidated Balance Sheet and Profit and Loss

Account Notes to Accounts. Provisions of the Companies Act, 1994 :Sections 186, 187 and 188.

6. Accounts of Bank and Insurance Companies: Profit & Loss Account andBalance Sheet of Banks & Insurance Companies. Provisions of theCompanies Act, 1994 : Section 192. The Insurance Act, 1938 : Sections6, 7, 8, 9, 10, 11, 12. The Bank Companys Act, 1991 : Section 32-44.

04. Other Financial Reporting Issues: Limited Companies: Organisation andShareholders Equity : Ordinary Shares & Preferred Shares--- TheirCharacteristics-Role of underwriters-Share Pricing, Market Value; Book

Value and Market Price.

Reporting of Unusual Events [IAS 6] : Developing predictive information-Reporting Unusual

events-Continuing operation-Discontinuing operation-Earning per share-Fully diluted &

earnings per share.

Special Types of Liabilities: Debentures and Bonds Payable-Accounting for bonds---The

Concept of Present value etc. Lease obligations-Capital Leases-Deferred Income Taxes.

6. Fund Flow & Cash Flow Statements [IAS 6] : Distinction between FundFlow Statement and Cash Flow Statement. Preparation of Fund FlowStatement. Preparation of Cash Flow Statement.

06. Framework for preparation and Presentation of Financial Statements:Objectives of Financial Statements Underlying Assumptions-Qualitative Characteristics of Financial Statements-True and Fair View-Elements of Financial Statements-Recognition of Elements of Financial


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Statements-Measurement of Elements of Financial Statements-Concept ofCapital and Capital Maintenance.

6. International Accounting Standards as adopted in Bangladesh:Standards relating to disclosure of accounting policies-Valuation andpresentation of inventories-Consolidated financial statements-

Depreciation Accounting-Information to be disclosed in FinancialStatements-Statement of Changes in Financial Position-Unusual andPrior Period items and Changes in Accounting Policies-Contingenciesand errors occurring after Balance Sheet date-Reporting FinancialInformation by Segments-Property, Plant and Equipment-Accounting forLeases- Accounting for Investments in Associates-Financial Reporting inHyperinflationary situations-Disclosures in Financial Statements ofBanks and Similar Financial Institutions [Corporation with SSAP andFAS].

08. Recent Developments of International Accounting Standards and CurrentAccounting Issues.

6. Analysis and Interpretation of Financial Statements: Demand andSupply of Financial Statement Information-Techniques of FinancialStatement Analysis-Cross-sectional Analysis of Financial StatementInformation-Time series Analysis-Forecasting Financial StatementInformation-Capital Markets and Information Efficiency-Asset Pricing andFinancial Statement Information- Capital Markets and CorporateInformation Releases-Debt Rating and Financial-Distress Analysis andFinancial Information-Loan Decisions and Financial Information.

6. Financial Reporting by Multi-nationals: Financial Reporting in a Transnational context-International Joint Venture-Goodwill Accounting-Segment Reporting-Foreign Currency Translation-Inflation Accounting-International Financial Reporting- Financial Reporting by Multi-nationalEnterprises.

6. Disclosure of Accounting Information to Trade Union Leaders and toEmployees.


# Stickney Financial Reporting# Adams and Roberts Financial Accounting by Multinationals# Dasgupta Financial Reporting in India# IASC Publication (IAS)

# ICAB Publications (BAS)

Section II : ProfessionalIssues03 hours

Half paper 50 marks

Specification Grid



Audit IndependenceHarmonization of Accounting/Auditing Profession

Professional EthicsNon-financial AuditingComputerization of Accounting/Auditing functionsCASE STUDY-Simulation of Practical Financial

5%15%

5%10%

5%20%


24/30

Reporting and Auditing practiceCost AuditAudit of Group Companies, Holding/Subsidiaries,

AssociatesJoint AuditAudit approaches and Methodology in EDP Environment andInternal Control System

10%10%

5%15%

100%

Contents

1. Audit Independence

ICAB Bye-laws

IFAC Guidelines

2. Harmonization of Accounting/Auditing Profession

Globalization of Accounting/Auditing Profession

Future of Accounting/Auditing Profession

Challengers and Opportunities of Accounting/Auditing Profession Emerging Challenges of New Millennium-Positioning/re-positioning the

profession for the New Millennium

WTO-its implication on Accountancy/Auditing Profession

Challenges and Opportunities under WTO/GATS

National vs. International Standards

Implementation of IAS & ISA-Implication of Financial Reporting and

Audit Practice in Bangladesh

Roles of IFAC, IASC, IOSCO, WTO, etc. on Accountancy Profession

Mutual Recognition of Accounting Qualifications (AQ) & Cross Boarder

Practice of Accountancy Profession-Threats, Challenges, Opportunities-

SWOTAccountants roles as (future) Business Managers, Business Analysis andAdvisors (proaction)Attainment of IFAC Standards as BenchmarkEducation-Entry requirements SyllabusExaminationExperienceCPE (PQE)

3. Professional Ethics

Value from Money-Its applications, benefits and limitations

4. Non-financial Auditing- NFA-Types, Objectives, Methods and Stages- Management- Performance Audit- Social Audit- Environment Audit

5. Computerization of Accounting/Auditing functions6. CASE STUDY-Simulation of Practical Financial Reporting and

Auditing practice

Tea Plantation

Upazila/Municipal Corporation

Hotels, Construction Firms Stock Brokerage Firm

HP and Leasing Companies


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PSC and SOE (BJMC, BTMC, BSEC Projects

7. Cost Audit

6. Audit of Group Companies, Holding/Subsidiaries, Associates

Legal and Accounting considerations

Administrative Considerations

6. Joint Audit

Using the work of another Auditor [ISA 5]

6. Audit approaches and Methodology in EDP Environment and

Internal Control System

Audit and EDP Environment

Computer Audit

Auditing of Computerised Accounting System [ISA 6, 16, 20, 29] Auditing around and through Computer

Audit trail, Loss recovery


Bank Audit Guide ICAB PublicationInsurance Audit Guide ICAB PublicationModern Auditing & Assurance Services GillModern Auditing GillInformation System Auditing & Assurance HallAuditing : Integrated Concepts and Procedures TaylorModern Auditing BoyntonPrinciples & Practice of Auditing Pagare, DinkarContemporary Auditing Kamal GuptaAuditing Principles and Procedures Dr. Khawaja Amjad SaeedMembers Handbook, ICABIFAC Handbook of Auditing & Ethics PronouncementsIFAC Code of Ethics for Professional Accountants

IFAC Handbook of Technical Pronouncements International Information TechnologyGuidelines IFAC Handbook of Technical Pronouncements International Public SectorAccounting StandardsPaper II Taxation

II03 hoursFull paper 100 marks

Aim: The aim is to examine::

- The areas of taxation, duties, fees etc;- The ability to recognize and advise on the more usual practical

problems.

Specification Grid



Income Tax:Expert knowledge of law and practice of Income-Taxincluding practical problems and interpretation ofstatute/rules/regulations

60%


26/30

Other Taxes:

Value Added Tax (VAT0 and Gift tax including practicalproblems

25%

Customs: Import duty etc., Court fees, Stamp-duty,Registration fee, Motor vehicles tax and Travel tax

15%

100%

Statutes/Rules/legal references:1. Income tax (IT):

a. Income Tax Ordinance (No.XXXVI) of 1984 including updated amendmentsmade by the annual FO/FA thereto:

IT Manual: Part-I : Sections: 01 187: Schedules: 01 7

b. Income Tax Rules (SRO No.39-L/85 of 14 January 1985) 1984 includingupdated amendments made thereto: Rules: 01-67

c. Various Notifications/SROs and Orders made from time to time there under.2. Value Added Tax (VAT):

a. VAT Act (No.22) of 1991 including updated amendments made by the annualFO/FA thereto: Sections 01-73 and Schedules 1-3 thereto

b. VAT Rules 1991: SRO No.178 Law/91/3-Mushak of 12 June 1991 includingupdated amendments made thereto: Rules 01-43 and Forms: Mushak: 01-29

c. Various Notifications/SROs and Orders made from time to time thereunder.

3. Customs Act (No.IV) of 1969 updated:Import-duty (ID), Supplementary-duty (SD) under VAT law and Infrastructure

Development Sur-charge (IDSC) under Finance Act (No.15) of 1997.4. Court Fees Act (No.VII) of 1870 dated

5. Stamps Act (No.II) of 1899 updated6. Registration Act (No.XVI) of 1908 updated7. Motor Vehicles Tax:

Motor Vehicles Tax Act (Bengal Act No.I) of 1932 updatedMotor Vehicles Ordinance (No.LV) of 1983 - updated

8. Travel Tax:Finance Act (No.XXIII) of 1980 updated &Finance Ordinance (No.XLV) of 1986 updated

***

Paper III : FinancialManagement 03 hours


Objectives

The course is designed to provide a sound understanding of the conceptual principlesand practical application of modern analysis of financial decisions and of the relationsbetween sources of finance and financial management.

The candidates are expected to have complete understanding for the preparations,evaluation and implementation of practical business plans and reports on strategic and

operational business decisions.


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The paper is designed to cover theory and practice of financial management with specialreference to Bangladesh and real life situations (including case studies) may be tested inthe examination.

Specification Grid

Syllabus Contents


Weightage

(Indicative %)Role and Objective of Financial Management, FinancialMarkets and Institutes, Essential Concepts in FinancialManagement

10%

Valuation of SecuritiesPortfolio Theory and Capital Asset Pricing ModelSource of FinanceCapital BudgetingWorking Capital ManagementCost of Capital, Capital Structure and LeverageDividend Policy

Introduction of Derivatives and Option TheoryMergers and Acquisition, Foreign Exchange Management

5%10%

5%20%10%10%10%

5%15%

100%

Contents

01. Role and Objective of Financial Management

Introduction: Financial Management Decisions; Objectives of FinancialManagement; Agency Problems; Financial Objectives of Public Enterprises.

02. Financial Markets and Institutes

Financial Markets-Money Markets and Capital Markets, Primary Markets and

Secondary Markets, Organized and Over-the Counter Markets; The Efficiencyof Financial Markets-Allocative Efficiency, Operational Efficiency, InformationProcessing Efficiency; Role of Financial Institute in Financial Markets;International Financial Market.

03. Essential Concepts in Financial Management

The Time Value of Money; Analysis of Risk and Return; Capital Asset PricingModel; Arbitrage Pricing Theory.

04. Valuation of Securities

(i) Characteristics and Valuation of Fixed-Income Securities: Characteristics ofLong-Term Debts; Bond Valuation; Characteristics of Preferred Stock; Valuationof Preferred Stock.

(ii) Characteristics and Valuation of Common Stock- Characteristics of CommonStock-Valuation of Common Stock; Valuation of Closely Held Firms.

05. Portfolio Theory and Capital Asset Pricing Model

Portfolio and Portfolio Management; Market Portfolio; Efficient Portfolio; Selectionof Optional Portfolio; Objectives of Portfolio Management; Portfolio Risks-Systematicand non-systematic Risks; Analysis of a Two-Asset Portfolio, Extension to a Multi-Asset Portfolio; Risk-free Asset Combined with Risky Securities; Capital AssetPricing Model; Implication of Capital Asset Pricing Model (CAPM); Criticism ofCAPM.

06. Source of Finance

(i) Long-term Sources: Ordinary Shares; Preference Shares; Debt Finance-Debentures, Convertible and Warrants.

(ii) Lease Financing: Types of Lease-Operating Lease, Finance Lease, Sale andLeaseback, Leverage Lease; Lease or Buy Decisions.


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(iii) Short-term Finance: Trace Credit; Accrued Expenses and Deferred Income;Accounts Receivable Financing Factoring; Factoring; Short-Term Loan.

(iv) Financing of Small Business; Venture Capital; Business Angles.

07. Capital Budgeting

(i) Capital Budgeting and Cash Flow Analysis; Basic Framework for CapitalBudgeting; Estimating Cash Flow; Problems in Cash Flow Estimation.

(ii) Capital Budgeting Decision Criteria: Techniques for Evaluating InvestmentProjects; Capital Rationing and Capital Budgeting Decisions; Inflation andCapital Budgeting, Mutually Exclusive Investment having unequal Lives.

Framework for International Capital Expenditure Decisions.

(iii) Capital Budgeting and Risk; Measuring Project Risk; Capital Budgeting andCAPM; Ris Evaluation Approaches Risk Adjusted Discount Rate Approach,Certainty Equivalent Approach, Probability Approach, Decision Tree Approach,Sensitivity Analysis.

08. Working Capital ManagementWorking Capital Policies; Factors Affecting Working Capital of a Firm; Forecasting

Working Capital Requirement; Management of Debtors, Inventory and Cash.

09. Cost of Capital, Capital Structure and Leverage

(i) Cost of Capital-Component Costs of Capital, Marginal Cost of Capital,Weighted Cost of Capital; Modigliani and Millers Views on Cost of Capital; Costof Capital and Adjusted Cost of Capital.

(ii) Capital Structure: Capital Structure and Financial Structure; Theories of CapitalStructure-Traditional Approach and MM Approach; Designing Capital Structure.

(iii) Leverage: Financial Leverage; Operating Leverage; Combined Leverage;Effects of Financial Planning on Leverage.

10. Dividend Policy

Dividend Policy-Constant Payment Ratio, Stable Dividend Residual DividendPolicy; Determinate of Dividend Policy; Scrip Dividend and Stock Dividend; Theory ofDividend Irrelevancy

11. Introduction of Derivatives and Option Theory

Types of Options; Simple Option Strategies; Call Options and Future Compared;Factors Affecting Option Values; Application of Option Pricing Theory to CorporateFinance; Swaps.

12. Mergers and Acquisitions

Merger and Takeover Activity; Motives for Merging; Takeover Tactics; FinancingAcquisition.

13. Foreign Exchange Management

Factor Influencing Exchange Rates; Managing Transaction Risk; Currency FutureContracts; Foreign Exchange Risk.


# L. J. Gitman -Principales of Managerial Finance (8th Edn.)(Addison Wesley)# R Charles Moyer, James R. Mcguian and William J Kretlow -Contemporary financialManagement (8th Edn.)(West)# J.M. Samuels, FM Wilkis and R.E. Brayshaw - Management of CompanyFinance (6th Edn.) (International Thomson Business Press).

***


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Paper IV : StrategicManagement 03hours


Objectives

The course is designed to test candidates analytical ability in multidisciplinary areas toprovide effective information for proactive management decisions in strategic businessplanning and effective resources allocation.

Specification Grid



Concepts of Strategic ManagementStrategic AnalysisStrategic FormulationStrategy Implementation

15%25%30%30%

100%

Contents

01. Concepts of Strategic Management

Strategy and Strategic Management Defined; Importance of Strategic Management;Tasks of Strategic Management; Strategery Managers and their Roles; Strategy-

Making Tasks; Factors shaping the Strategy and Ethics.02. Strategic Analysis: The Role of Situation Analysis is Strategy-Making;

The Methods of Industry and Competitive Analysis; Identifying DominantEconomic Characteristics of Industry, Forces that change Industry,Analyzing Strength of Competitive Forces, Competition Analysis,Pinpointing the Key Factors for Competitive Success.

Company Situation Analysis.Evaluating Current Strategy; SWOT Analysis; Strategic Cost Analysis and Activity-

Cost Chains; Competitive Strength Assessment; Determining Strategic Issues thatneed to be addressed.

03. Strategic Formulation: Managing for Competitive Advantage:Competitive Advantages; Market Focus and Competitive Advantages;Strategic Management in different stages of Market Life Cycles.

Managing for Customer Value: Managing Strategically at the Functional Level;Kaizen-Continually Improving Customer Value; Strategic developments in Six CriticalFunctions.

Corporate Diversification Strategic: Role of Diversification; Evaluating Benefit ofDiversification; Managerial Behavior that Limits Benefits of Diversification; Forms ofDiversification, Means of Diversification; Divestments-Neglected side ofDiversification.

04. Strategy Implementation: Translating Strategy in Action and

Achieving Integration. Framework for understanding ImplementationIssues; Technical aspects of Strategy Implementation; AchievingIntegration.


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Strategy ImplementationOrganisation Structure, Budgets and Support Systems:Dimensions of Structure, Type of Structures-Linkages to Strategy; Linking Budgetswith Strategy; Putting Internal Administrative Support Systems in Place-CreatingStrategy-Supportive Policies and Procedures, Installing Supporting Systems.

Strategy Implementation-Control, Commitment, Culture and Leadership: Strategic

Control and Evaluation; Developing an Effective Reward Structure; Developing aStrong Organisational Culture; Exerting Strategic Leadership.


# Arthur A Thompson, Jr. and A.J Strickland III Strategic Management: concepts andCases (Irwin, 7th Edn.)# Gregory G Dess and Alex Miller - Strategic Management

***