INSTITUTE OF COST & EXECUTIVE ACCOUNTANTS

Associateship Level 3

9_Cost_&_Management_Accountancy, 10_Advanced_Accountancy, 11_Statutory_&_Internal_Auditing, 12_Taxation_&_Tax_Management

9. Cost & Management Accountancy:

Objective

To demonstrate an understanding of the reasons for maintaining management accounting systems and financial control. This paper builds on the overview of costing and seeks to establish the candidate's sound knowledge of the selection of appropriate management accounting systems and their application to the current business situation.

Syllabus

Cost Accounting:

1. Costing and data control for management information systems
2. All aspects of marginal costing, standard costing, process costing
3. Problems of common costs in manufacturing and service industries
4. Allocation and apportionment to cost centres, jobs, batches, contracts, operations, projects, processes
5. Collection, classification and overhead recovery

Budget and Budgetary Control:

1. Problems of budget centre selection and control
2. Preliminary budgets and final budget
3. Master and subsidiary budget
4. Involvement of Executive Accountant in preparation of budgets and standards

Project Appraisal and Variance Accounting:

1. Discounted cash flow (DCF) theory, rate of return, replacement theory, post project analysis
2. Residual income, return on investment, investment centres
3. Analysis of budget with standards
4. Zero base and incremental approaches
5. Learning curve theory and practice
6. Elasticity of demand
7. Behavioural considerations

Management Accounting Information:

1. Designing information systems
2. Interpretation of information for decision making
3. Technological development - adaptation of planning and control systems

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10. Advanced Accountancy:

Objective

To demonstrate a comprehensive knowledge of the practical implications of maintaining a full set of accounts in groups of companies and multinational companies and of accepted accounting rules and practices. This includes the advanced study of accounting, performance evaluation, international harmonisation of the accounting profession and financial reporting, as well as Financial Accountancy.

Syllabus

Accounting Regulations:

1. Detailed accounting requirements of the current Companies Acts, intercompany transactions, transfer pricing
2. Preparation and presentation of company accounts involving one or more subsidiaries and associated companies
3. Compliance with standard accounting practices (SSAP's), Financial Reporting Standards (FRS's) and regulations of Accounting Standards Board (ASB)
4. Treatment of taxation in accounts, accounting for deferred taxation
5. Accounting for acquisitions, mergers, reconstructions, reduction of share capital, purchase of company's own shares
6. Pension fund accounting, foreign currency taxation
7. Current expose draft issues

Accounting Policies:

1. Systems of depreciation
2. Research and development
3. Earnings per share
4. Leasing, long term contracts, foreign currency transactions
5. Minority interests

Income and Value Measurement:

1. Problems of preparing Trading and Profit and Loss Accounts extra-ordinary and exceptional items
2. Current cost accounting, inflation accounting, current purchasing power
3. Valuation of assets; stock, work in progress, investments
4. Intangible assets

Interpretation of Accounts:

1. Examination and interpretation of accounts regarding capital structure, asset base, liquidity, working capital level and control
2. Cash flow statements and operating capabilities
3. Use and limitations of ration analysis
4. Reporting with recommendations after analysis of accounts

International Regulations:

1. International standards of accounting
2. International regulatory framework for accounting
3. Comparative study of accounting systems

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11. Statutory & Internal Auditing:

Objective

To demonstrate an understanding of the nature and scope of scrutiny in such detail as will enable the auditor to form an opinion as to the accuracy, truth and fairness of records and accounts. The syllabus seeks to demonstrate knowledge of the procedural aspects of auditing and internal auditing, the legal liability of auditors, investigations, specialised assignments, and an awareness and understanding of modern techniques and practices used in internal auditing.

Syllabus

Scope and Purpose of Audit:

1. The development of modern auditing
2. The ethical base of auditing
3. ICEA Professional and ethical guide for members
4. Social concept of modern audit and auditors role

Regulatory Framework:

1. Auditing standards, legislation, case laws, European Directives, Financial Services Act
2. Role of the Government and DTI, Audit Commission, National Audit Office, Recognised Supervisory Body (RSB), Recognised Professional Qualifications (RPQ), Independent Accountant
3. Supervision and monitoring of auditors

Principles and Concepts:

1. Integrity and confidentiality
2. Verification of vouchers and documents
3. Due care, skill and competence
4. Audit planning, supervision and risk
5. Audit report

Framework and Planning of Audit:

1. Application of auditing standards and guidelines
2. Professional obligations and legal liability of auditors
3. Auditors' responsibility for the detection and reporting of fraud
4. Developing the audit plan
5. Determining the areas of risk and analysing information

Collecting and Analysing Evidence:

1. Collecting, selecting and analysing evidence+
2. Sampling techniques for audit purposes
3. Co-operation between internal and external auditors
4. Need for and limitation of use of specialists

Auditing Procedures:

1. Preparing the audit programme
2. Determining the internal control system
3. Test checks of the system and evaluation of test results
4. Review of management accounts
5. Role of working papers
6. Analytical review
7. Computer and audit
8. Reliance on other auditors for group accounts
9. Management certificates/letters
10. Review of financial statements

Audit Reports:

1. Small and medium sized companies
2. Group accounts
3. Abbreviated accounts
4. Qualified and unqualified reports
5. Report to management on internal controls and polices
6. Writing style

Overview of Internal Auditing:

1. Definition of internal auditing
2. Internal auditing as a profession
3. Internal control and reporting

Audit Techniques:

1. Systems approach to auditing
2. Internal Control Questionnaires
3. Document flowcharting
4. Audit interviewing
5. Communication audit findings and recommendations

Management of Internal Auditing:

1. The report line and other reporting relationships
2. Risk analysis
3. Quality and quality audit
4. Value for money from internal auditing
5. Audit committees
6. Internal audit and the future

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12. Taxation & Tax Management:

Objective

To examine the candidate's knowledge of the principles of the various taxes and his/her ability to apply such knowledge to practical situations involving the minimisation of actual and potential tax liabilities of individuals and corporate bodies.

Syllabus

Administration of the Inland Revenue:

1. Assessment and collection: appeals procedure

The Scheduler System of Taxation:

1. The basis of assessment under the various Schedules and Cases

Income Tax Relating to Employees, Sole Traders and Partnerships with Particular reference to:

1. Basis of assessment under Schedule E
2. Benefits in kind
3. the PAYE system
4. Basis of assessment under Schedule D Cases I and II - normal basis; new businesses; cessations, (candidates will not be examined as regards change of accounting date)
5. Computation of profits and losses; utilisation of losses

Corporate Taxation:

1. Principles and scope of Corporate Tax
2. Ascertainment of Corporation Tax Liability
3. Utilisation of relief's and allowances including treatment of groups and consortia
4. Minimising liability in varying situations - actual and potential
5. Treatment of foreign tax on UK income, double taxation relief
6. The effect of a company being classed as a close or investment company

Capital Gains Tax:

1. Principles and scope; persons affected
2. Computation of gains and losses; calculation of tax liability
3. Utilisation of available allowances and relief's
4. CGT planning with reference to both private and business situations, and its application to individuals and corporate bodies

Value Added Tax:

1. The principles and scope of VAT as it affects individuals and corporate bodies
2. Applying the tax to various business transactions; (a knowledge of the various schemes for retailers is not required)

Inheritance Tax:

1. The principles and scope of inheritance tax
2. Calculation of liability; exemptions and relief's and the minimisation of liability

Personal Finance:

1. Individual circumstances and personal financial objectives
2. Sources and costs of different types of finance
3. Tax saving and other investment

Trusts:

1. Treatment of tax for charities and trusts

National Insurance:

1. Scope of the various NI classes; computation of Class 4 liability

General:

1. The inter-relationship of taxes and their effect on particular situations
2. The effect of legal decisions; (names of tax cases are not required by the examiner provided the subject matter is adequately portrayed)
3. An appreciation of the more usual areas of anti-avoidance legislation and of Inland Revenue investigation procedures

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