Aca Advanced Stage Syllabus 2011

ACA ADVANCED STAGE SYLLABUS 2011
ACA Advanced Stage Syllabus 2011 - Final - Version 5 Copyright ICAEW 2006 - 2011
CONTENTS
ACA Overview .................................................................................................................................... 3 Advanced Stage ................................................................................................................................. 4 The Link to Work Experience .............................................................................................................. 6 Skills Progression through the ACA qualification ................................................................................. 8 Business Reporting ............................................................................................................................. 9 Business Change .............................................................................................................................. 11 Case Study ....................................................................................................................................... 14 Technical Knowledge Grids .............................................................................................................. 15 Assurance and Audit ......................................................................................................................... 16 Business Analysis ............................................................................................................................. 19 Ethics Codes and Standards ............................................................................................................. 23 Financial Reporting ........................................................................................................................... 24 Differences between IFRS and UK GAAP ......................................................................................... 26 Taxation ............................................................................................................................................ 38 APPENDIX A: APPENDIX B: APPENDIX C: Business Reporting ................................................................................................ 45 Business Change ................................................................................................... 49 Case Study ............................................................................................................ 54
ACA OVERVIEW
Aim
The ACA is regarded globally as one of the leading business and finance qualifications and is recognised and valued in practice, industry, commerce and the public sector. The ACA qualification aims to ensure that all newly qualified chartered accountants have the technical and professional skills required to meet the professional challenges likely to be faced and to provide a platform on which to build continuing professional development.
Structure
The syllabus has been designed to develop core technical, commercial, and ethical skills and knowledge in a structured and rigorous manner. Progression through the ACA modules, in combination with integrated and monitored work experience, will equip and prepare students for the demanding multi-disciplinary case study. This final module assesses key skills of analysis, synthesis and communication, commercial and ethical awareness and the application of professional judgement. The diagram above shows the twelve modules at the Professional Stage, where the focus is on the acquisition and application of technical skills and knowledge, and the Advanced Stage which comprises two technical integration modules and the Case Study. Ethics is embedded throughout the qualification and there are specific learning outcomes included in a number of the modules. The syllabus has been designed to ensure students understand the fundamental principles of ethics, can apply relevant ethical guidance and are able to recommend actions to resolve ethical issues.
ADVANCED STAGE
Aim
The Advanced Stage of the ACA qualification is designed to ensure that students are able to integrate and apply their technical, professional and ethical skills in a variety of business environments. The Advanced Stage has been constructed to ensure that students: are able to identify and evaluate a broad range of business issues and communicate appropriate advice provide relevant and correct technical advice, whilst ensuring that the business implications of the advice given are understood apply the highest level of professional and ethical skills to business and technical issues maintain their awareness of important emerging business issues are provided with the platform to develop their skills within a continuing professional development framework
Structure and progression

There are three Advanced Stage modules: the Case Study and two underpinning technical integration modules. The two technical integration modules are Business Reporting and Business Change.
The Professional Stage consists of knowledge modules and application modules. The Knowledge modules introduce the core technical knowledge and skills required by a chartered accountant. The application modules further develop and assess practical application of technical knowledge and skills.
ACA Advanced Stage Syllabus 2011 - Final - Version 5 Copyright ICAEW 2006 - 2011 4
The technical knowledge acquired at the Professional Stage is developed to an advanced level and integrated in a broader range of business scenarios in the Advanced Stage technical integration modules. The application of technical knowledge in these modules requires an appreciation of the typical issues and problems facing businesses and their relationship to corporate reporting, assurance and taxation. A greater depth of business and financial analysis will be required to understand the implications and risks arising from the business issues. New technical topics are introduced in the technical integration modules, reflecting students greater financial and business awareness and their emerging proficiency and ability to integrate knowledge and skills both within and across technical subjects. Students will be required to use more complex financial instruments in business finance and risk management for example. Students will also be required to apply professional skills in the technical integration modules. These professional skills are then examined to a greater extent in the final ACA module: the Case Study. This module requires higher level cognitive skills, analytical and evaluative skills and emphasises the importance of communication and articulation skills. The table on page 7 identifies the skills progression through the ACA qualification.
Syllabus
This document presents the high level learning outcomes for the two technical integration modules and sets out the skills requirements for the Case Study. The appendix contains details of the technical knowledge required for the Advanced Stage.
Assessment
The two technical integration modules will be examined using traditional paper based assessments. Each paper based exam will be 3.5 hours in length. These exams will contain questions requiring the integration of knowledge both within technical disciplines and across technical disciplines. Questions integrated across all subject streams are an essential step towards the Case Study but will have more structure and guidance than those at the Case Study. The Case Study will continue in its present format of a 4 hour written exam with advance information provided to students ahead of the exam and impact information issued in the exam, containing the Case Study requirements.
Flexibility
There are no regulations stipulating the order in which students must attempt the technical integration modules. The Case Study must be the final module attempted and can only be attempted in the final year of a training contract. There is no restriction on the number of attempts permitted at each Advanced Stage module.
Open Book Policy

Students may take any written or printed material into the exam hall subject to practical space restrictions.
THE LINK TO WORK EXPERIENCE
The work experience requirements for students provide a framework to develop appropriate work experience, completion of which is essential in order to qualify for membership. Work experience is also an essential component for examination preparation. The work experience framework is built around five key skills:
Business awareness being aware of the internal and external issues and pressure for
change facing an organisation and assessing an organisations performance.

Technical and functional expertise applying syllabus learning outcomes and where
appropriate, further technical knowledge to real situations.

Ethics and professionalism recognising issues, using knowledge and experience to assess
implications, making confident decisions and recommendations.

Professional judgement making recommendations and adding value with appropriate,
targeted and relevant solutions.

Personal effectiveness developing, maintaining and exercising skills and personal
attributes necessary for the role and responsibilities. The examinations, and in particular the Advanced Stage, embrace all of these skills. The link between work experience and the examinations is demonstrated by the skills development grids produced by the examiners. This will help students see that their practical knowledge and skills gained in the workplace feed back into the exam room and vice-versa.
The message is clear students should use the work experience framework and skills development grids to ensure success in exam performance and success in their workplace performance. The appendix to this syllabus contains the following skills grids: Appendix A: Appendix B: Appendix C: Business Reporting Business Change Case Study
The grid below together with those in the appendix should be read in conjunction with the technical syllabus for each subject. They set out the learning outcomes that are addressed under each of the skills areas. In addition, for each skills area, there is a description of: The specific skills that are assessed How these skills are assessed References where included in a learning outcomes column of a grid (e.g. 3c) are direct references to learning outcomes set out in the technical syllabus.
SKILLS PROGRESSION THROUGH THE ACA QUALIFICATION

Assessed skills
Assimilating and using information
Professional Stage Knowledge modules Application modules

Simple scenarios Single information source provided
Advanced Stage Technical Integration

Complex scenarios Multiple information sources provided
Case Study
Unstructured complex business scenarios Multiple information sources including own research
Understanding the subject matter and identifying issues Accessing, evaluating and managing information Using technical knowledge and professional experience
Specific issues Information/data as provided Highly structured application of non-integrated knowledge
Structured application of non- Structured application of Unstructured application of integrated knowledge integrated and non-integrated integrated knowledge and knowledge and experience experience Specified tools Specified non-integrated problems Specified in simple scenario Options included in simple scenario Possible alternative provided Tools inferred by nature of problem Unspecified tools
Structuring problems and solutions
Using analytical tools Analysing and evaluating problems

Applying judgement
Specified tools Highly specified tasks
Specified integrated and non- Defined output but integrated problems unspecified problems Specified in complex scenario Underlying requirement within complex scenario Options included in complex scenario Alternative(s) provided Balanced judgement of priorities and risks in unstructured scenario Alternatives identified using professional experience Conclusions and recommendations supported by own evidence Professional report with appendices and executive summary
Assessing quality of information Assessing options and priorities including ethical issues Considering other perspectives Drawing conclusions and making recommendations Presenting data and written work
Objective testing Options given
Not assessed
Conclusions and recommendations and communication
Not assessed
Specified conclusions and recommendations in simple scenarios
Specified conclusions and recommendations in complex scenarios
Prescribed exam format
Exam requirements, including Short written professional some professional presentations presentation
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BUSINESS REPORTING
Module aim
To ensure that students can apply analysis techniques, technical knowledge and professional skills to resolve real-life compliance issues faced by businesses. Students may be put, for example, in the role of a preparer of financial statements, or other corporate reports such as on sustainability and corporate responsibility, an advisor or in an assurance role facing business issues where there are reporting implications. Compliance issues relating to taxation will also feature in this module. Students will be required to use professional judgement to identify and evaluate alternatives and determine the appropriate solution(s) to compliance issues, giving due consideration to the commercial impact of their recommendations.
Specification grid
This grid provides a general guide as to the subject matter within this module and assessment coverage over a period of time.
Syllabus area Weighting (%)
Ethics and law Taxation Audit and assurance Corporate reporting Business analysis
5 - 10 20 - 30 30 - 40 30 - 40 0
Examples of Business scenarios

The business scenarios listed below provide an understanding of the likely context in which technical knowledge and ethical awareness will be assessed. The scenarios relate to things that have happened or are happening within a business and will be presented in individual, group and international contexts. 1. Business and ethical issues including situations of business risk in the process of stakeholder communication 2. Business and ethical issues in the process of tax compliance work including situations with corporate reporting implications 3. Current taxation and corporate reporting issues for businesses 4. Undertaking controls and systems process assurance projects including review and testing of controls and reporting to management 5. Assessment of controls including IT and E-commerce controls 6. Breaches of laws and regulations that may require forensic accounting and investigation projects to assess risk and provide management with information to decide upon appropriate actions 7. Issues of earnings management, creative accounting and aggressive earnings management 8. Businesses undertaking major projects and/or organisational or process transformation 9. Issues arising from raising finance, including issues of compilation of financial information, production of prospective financial information and implications for corporate reporting 10. Issues arising from corporate transformations and group reorganisations 11. Issues arising from International corporate expansion including situations with taxation and corporate reporting implications
12. Issues arising from use of complex financial instruments in business finance and risk management
Integrated learning outcomes

On completion of this module students will be able to: 1. identify and explain ethical issues and recommend appropriate actions to solve ethical dilemmas in a given business scenario 2. report objectively in a complex environment of business opportunities and threats within the legal, regulatory and compliance environment when: preparing and presenting corporate reports - including preparing and presenting financial statements, other information included in reports and interim financial reporting presenting corporate governance reports in accordance with the revised combined code presenting corporate responsibility, environment, sustainability and social reports 3. evaluate and apply appropriate corporate reporting treatments to given scenarios 4. evaluate and apply appropriate corporate reporting treatments, including corporate governance reports and sustainability and/or corporate responsibility reports 5. evaluate and apply auditing, assurance and related services standards in complex scenarios 6. analyse and evaluate business risks and their implications for corporate reporting and audit opinions 7. analyse and evaluate financial risks (Including financing, currency and interest rate risks) and their implications for corporate reporting and audit opinions 8. analyse, evaluate and calculate the tax consequences of given scenarios, including circumstances where overseas taxes affect national taxes 9. analyse, evaluate and assist entities in the adherence to regulations surrounding taxation 10. recognise opportunities to use alternative tax treatments arising from past events and transactions 11. analyse and evaluate controls, including IT and E-commerce controls 12. analyse and evaluate appropriate management actions where laws and regulations have been breached 13. recognise the implications for auditors of engagements in connection with investment circulars 14. evaluate and apply appropriate laws and regulations in situations of insolvency, administration, liquidation and bankruptcy 15. evaluate and advise on appropriate corporate governance mechanisms 16. recognise money laundering transactions and related offences and the reporting responsibilities for accountants and auditors (Including proceeds of Crime Act) 17. analyse and evaluate controls over financial reporting (including in the context of COSA and S404(a) of the Sarbanes-Oxley Act) 18. analyse and evaluate strengths and weaknesses of corporate governance mechanisms and processes 19. explain and communicate current issues in corporate reporting and assurance 20. undertake appropriate financial analysis to: develop an understanding of a business from financial and operational data and information, provided in draft or published format. assess the quality of such information, by reference to its truth, fairness, credibility and plausibility as a basis for a meaningful analysis of a businesss current position, future prospects and risks. apply suitable financial analysis techniques to analyse financial and operational data to bring out and explain a businesss position, prospects and risks. review the output of such analysis to identify key sensitivities and risks. communicate the results of such analysis, including any reservations regarding transparency and objectivity of data and information.
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BUSINESS CHANGE
Module aim
To ensure that students can provide technical advice in respect of issues arising in business transformations, mergers, acquisitions, alliances and disposals. Students will be required to analyse and interpret both external and internal financial and nonfinancial data in order to plan for change and provide advice. In undertaking this analysis students will be expected to evaluate the impact of stakeholder influences on the data, including the impact of choice of reporting policies. Taxation and practical business techniques are particularly important in this module, where business techniques include aspects of business strategy, business finance, performance management and costing. There will also be assurance, ethical and legal implications to be considered when developing and assessing strategic and business plans.
Specification grid
This grid is a general guide as to the subject matter within this module and assessment coverage over a period of time.
Syllabus area Weighting (%)
Ethics and law Taxation Assurance Corporate reporting Business analysis
5 -10 25-35 10-20 15-25 30-35
Examples of Business scenarios

The business scenarios listed below provide an understanding of the likely context in which technical knowledge and ethical awareness will be assessed. The scenarios relate to future business strategies and developments and will be presented in individual, group and international contexts. 1. 2. 3. 4. 5. 6. 7. 8. Controls and systems process planning Developing management and corporate governance mechanisms Business risk management Developing business and information strategies including E-commerce and E-business Transfer pricing decisions Business start-up planning Business and asset valuations upon acquisitions and disposals for business and tax purposes Due diligence investigations of information provided to investors including those concerning risks related to sustainability and corporate responsibility 9. Raising finance Initial public offers Private equity arrangements 10. Developing performance management approaches 11. Developing remuneration and reward packages
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12. Structuring of entities Incorporation Group re-organisation Outsourcing Joint ventures and alliances Acquisitions and mergers Demergers Franchising Divestment Management buy-out Management buy-in 13. Business recovery 14. Insolvency and bankruptcy 15. Developing international operations 16. Structuring of business finance
Integrated learning outcomes

On completion of this module students will be able to: 1. identify and explain ethical issues and recommend appropriate actions to solve ethical dilemmas in a given business scenario 2. develop proposals and advise on corporate governance, corporate reporting, financial reporting, taxation, and assurance issues in organisational planning, change and business strategy implementation 3. develop business plans and proposals and advise on technical issues relating to business and organisational plans, the risks involved and how those risks should be managed 4. develop plans to manage a business in distress to avoid insolvency or to evaluate and apply 5. assurance procedures to a business in distress 6. develop proposals and advise on taxation issues relating to decisions to cease trading, 7. including communicating alternative strategies 8. develop outline proposals and advise on outline requirements for IT applications and technology to support business plans including E-commerce, E-business and virtual arrangements 9. advise on and develop proposals for organisational structuring and the financing of existing and new businesses and projects 10. advise on and apply appropriate valuation methods for assets and businesses for the purposes of acquisitions and disposals for business and taxation purposes 11. advise on and develop appropriate performance management approaches for businesses and business units 12. advise on and develop appropriate remuneration and reward packages for staff and executives 13. assess, advise on and propose appropriate business strategies to meet stated objectives and 14. apply appropriate assurance procedures 15. assess, advise on and propose appropriate costing and pricing approaches for businesses 16. appraise and advise on appropriate measures of return and risk for assessing business projects 17. appraise and advise on appropriate methods to assess and manage financial risk in businesses 18. develop proposals and advise on taxation issues relating to business start-ups, including 19. evaluating choice of business structure 20. develop proposals and advise on taxation issues relating to personal and corporate business transformations, including communicating alternative strategies 21. assess and advise on required corporate governance mechanisms 22. undertake appropriate financial and business analysis: develop an understanding of financial and operational data and information from management information systems, drawing inferences relating to its completeness,
accuracy and credibility, as a basis for a meaningful analysis of the position, future prospects and risks for a business apply suitable financial, strategic and operational analysis techniques to analyse financial and operational data to bring out and explain business position, prospects and risks, including the use of: I. traditional financial measures of profit, returns, earnings per share, returns, cash flow, gearing, liquidity and operations. II. EBITDA and residual income III. Balanced scorecard approach IV. Use of financial and non-financial performance indicators for customers, employees and other stakeholders V. Business strategic analysis techniques for businesses their resources, processes and environment communicate an explanation, including any reservations regarding transparency and objectivity of data and information, of the position, prospects and risks of a business based on analysis of financial and operational data and information. Assess and appraise the constituent elements of working capital and advise on the methods by which working capital can be managed by an entity, including treasury management.
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CASE STUDY
Module Aim
To ensure that students can provide advice in respect of complex business issues in the form of a written report. The objective of the Case Study is to assess students understanding of complex business issues and the ability to analyse financial and non-financial data, exercise professional and ethical judgement, and develop conclusions and recommendations. The limited class time available with a tutor, even when supplemented by extensive home study, is insufficient for success in the Case Study. Students must bring work experience into their preparation and development programme. Success at the Case Study requires an integration of the technical knowledge and skills acquired from all of the ACA modules, namely: the core technical knowledge and skills and practical application acquired at the Professional Stage; the technical, analytical, evaluative and integration skills from the Business Change and Business Reporting modules; and the advisory, judgemental and communication skills acquired through practical work experience undertaken during the training contract. All areas of the syllabus may be tested over time. The Case Study is designed to reproduce a typical situation in which chartered accountants find themselves. This will involve using information arising from meetings and communicated in memoranda, letters or reports from a variety of business and professional advisors and stakeholders. The situation will generally relate to a business plan or transaction and will require preparation for the submission of a report. The reality of such situations is that in drafting a report you would:

receive some materials in advance carry out some work beforehand and make use of it in the report include additional analysis in appendices to the report develop additional lines of enquiry as you assemble the report expect to discuss and advise on relevant matters
The Case Study scenario may be based on any one of a variety of different organisational structures or operations. Students will be provided with advance information on the organisation and its business environment ahead of the exam. This information will not give specific indication of the eventual requirements of the Case Study. Students will be expected to familiarise themselves with the information provided about the organisation and the industry in which it operates, undertaking some additional analysis and research. Students may take the results of their work into the examination room. The Case Study will not require the detailed computations needed for the Professional Stage or Technical Integration modules at the Advanced Stage, but students will be required to undertake financial and business analysis. Requirements will be open in that there will be no predetermined correct answers to the Case Study.
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TECHNICAL KNOWLEDGE GRIDS

Introduction
The tables contained in this section show the technical knowledge in the disciplines of financial reporting, assurance, taxation and business analysis covered in the ACA syllabus by module. For each individual topic / standard the level of knowledge required in the relevant Professional Stage module and the Advanced Stage content is shown. The knowledge levels are defined as follows: Level D An awareness of the scope of the subject matter. Level C A general knowledge with a basic understanding of the subject matter and training in the application thereof sufficient to identify significant issues and evaluate their potential implications or impact. Level B A working knowledge with a broad understanding of the subject matter and a level of experience in the application thereof sufficient to apply the subject matter in straightforward circumstances. Level A A thorough knowledge with a solid understanding of the subject matter and experience in the application thereof sufficient to exercise reasonable professional judgement in the application of the subject matter in those circumstances generally encountered by chartered accountants. Key to other symbols: the knowledge level reached at Professional Stage is assumed to be continued
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ASSURANCE AND AUDIT

Advanced Stage C A A C C B A B B B B B A A A A A A C A
Professional Stage
Assurance
Title
The International Auditing and Assurance Standards Board The Authority Attaching to Standards Issued by the International Auditing and Assurance Standards Board The Authority Attaching to Practice Statements Issued by the International Auditing and Assurance Standards Board Discussion Papers Working Procedures
International Standards on Auditing (UK and Ireland)
200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing 210 Agreeing the Terms of Audit Engagements 220 Quality Control for an Audit of Financial Statements 230 Audit Documentation 240 The Auditors Responsibilities Relating to Fraud in an Audit of Financial Statements 250 A Consideration of Laws and Regulations in an Audit of Financial Statements 250 B The Auditors Right and Duty to Report to Regulators in the Financial Sector 260 Communication with Those Charged with Governance 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management 300 Planning an Audit of Financial Statements 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its environment 320 Materiality in Planning and Performing an Audit 330 The Auditors Responses to Assessed Risks 402 Audit Considerations Relating to an Entity Using a Service Organisation 450 Evaluation of Misstatements Identified during the Audit 500 Audit Evidence 501 Audit Evidence - Specific Considerations for Selected Items 505 External Confirmations
B C C
C B B
Audit and Assurance
B B A A A B C A A A B
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Title
510 Initial Audit Engagements - Opening Balances 520 Analytical Procedures 530 Audit Sampling 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates & Related Disclosures 550 Related Parties 560 Subsequent Events 570 Going Concern 580 Written Representations 600 Special Considerations Audits of Group Financial Statements (including the Work of Component Auditors) 610 Using the Work of Internal Auditors 620 Using the Work of an Auditors Expert 700 The Auditors Report on Financial Statements 705 Modifications to the Opinion in the Independent Auditors Report 706 Emphasis of Matter Paragraphs and Other Matter(s) Paragraphs in the Independent Auditors Report 710 Comparative Information Corresponding Figures and Comparative Financial Statements 720 A The Auditors Responsibility in relation to Other Information in Documents Containing Audited Financial Statements 720 B The Auditors Statutory Reporting Responsibility in Relation to Directors Reports 800 Special Considerations Audits of Financial Statements prepared in Accordance with Special Purpose Frameworks 805 Special Considerations Audits of Single Financial Statements and Specific Elements, Accounts or items of a Financial Statement 810 Engagements to Report on Summary Financial Statements
International Auditing Practice Statements (IAPSs)
B C C C B C B B B A C B C C C B A B A B B
A A A A A A
B B
1000 Inter-bank Confirmation Procedures 1004 The Relationship Between Banking Supervisors and Banks External Auditors 1006 Audits of the Financial Statements of Banks
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Advanced Stage A A A A A A B A A D D D
Professional Stage
Assurance Audit and Assurance
Title
1010 The Consideration of Environmental Matters in the Audit of Financial Statements 1012 Auditing Derivative Financial Instruments 1013 Electronic Commerce: Effect on the Audit of Financial Statements
International Standards on Review Engagements (ISREs)
2400 Engagements to Review Financial Statements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity
International Standards on Assurance Engagements (ISAEs)
3000R Assurance Engagements Other than Audits or Reviews of Historical Financial Information 3400 The Examination of Prospective Financial Information
International Standards on Related Services (ISRSs)
C C
4400 Engagements to Perform Agreed-upon Procedures Regarding Financial Information 4410 Engagements to Compile Financial Information
IFAC Statements
ISQC1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements
APB Bulletins
2009/22 Audit Reports on Financial Statements in the UK
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Advanced Stage A B A B B B B B B B B
Professional Stage
Assurance Audit and Assurance
BUSINESS ANALYSIS
Advanced Stage B A A C C C A A A A A C B C B B Professional Stage
Management Information Financial Management
Business & Finance
Topic
STRATEGIC ANALYSIS
Environmental and market analysis tools PEST analysis Porters five forces Product life cycle Boston consulting group matrix Competitor analysis Positional and other analysis tools Resource audit Resource-based strategy Value chain analysis SWOT analysis Gap analysis Competitor analysis Marketing analysis Competitor advantage Benchmarking Directional policy matrix Business process analysis Strategic risk analysis Balanced scorecard
STRATEGIC CHOICE
C C C C C C C C C
Strategy formulation, evaluation and choice Business risk management Financial analysis and data analysis Stakeholder analysis Objectives and stakeholders preferences Corporate responsibility and sustainability
STRATEGIC IMPLEMENTATION
Business Strategy
A A A A A A A A A A A A A A
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Management Information
Financial Management
Topic
Business plans Organisational structure Information management Change management Project management
COST ANALYSIS FOR DECISION MAKING
C C C
B B B A
Costing Cost classification Costing systems direct, marginal, absorption Activity based costing (ABC) Break even analysis Multi-product break even analysis Budgeting and performance management Pricing Pricing decisions Transfer pricing
BUSINESS AND SHAREHOLDER VALUE
A B C B B B B A A
B A B A
Valuation Techniques Income dividend yield Income P/E Income discounted cash flow Asset based measures Options approach Shareholder value Value based management (VBM) Value drivers Shareholder value analysis (SVA) Short and long term growth rates and terminal values Economic profit Cash flow return on investment (CFROI) Total shareholder return (TSR)
B B B B
B B A A A A A A
Advanced Stage A A A A A A A
Professional Stage
Business & Finance
Business Strategy
Topic
Market value added (MVA)

INVESTMENT APPRAISAL AND BASIC RISK ANALYSIS
Project appraisal NPV IRR Payback Relevant cash flows Tax and inflation Replacement analysis Capital Rationing Adjusted present value (APV) Assessing risk Project appraisal and sensitivity analysis Project appraisal and simulation Expected values Scenario planning Gap analysis Continuous vs. event risk
FINANCIAL ANALYSIS
B B B
A A A A A A A A B B B B B
A A A A
Cost of capital Cost of equity Cost of debt Cost of preference shares Cost of bank loans Weighted average cost of capital (WACC) Effective interest rates Splitting convertibles into equity and debt elements Public sector discount rates Portfolio theory and CAPM Portfolio theory CAPM
B B B B B
B B
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Advanced Stage A A A A A A A A A A A
Professional Stage
Business & Finance
Business Strategy
Topic
APT and MCPM CAPM and cost of capital International cost of capital Bonds Bond pricing using NPV Yields to maturity Duration and price volatility Convexity Term structure of interest rates Corporate borrowing and default risk
SOURCES OF FINANCE AND FINANCING ARRANGEMENTS
Short, medium and long term sources of finance Loan agreement conditions (warranties; covenants; guarantees) Raising capital Gearing and capital structure Loan agreements and covenants Dividend policy Financing reconstructions (eg: group reconstruction, spin off, purchase of own shares, use of distributable profits) Working capital management
FINANCIAL ENGINEERING
B B B A A A B C
A A
Futures, options and swaps Options Interest rate futures Interest rate options Interest forward rate agreements (FRAs) Interest rate swaps Foreign exchange Currency forward contracts Currency money market cover
B B B B B B B
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Advanced Stage A A A A A A A A A A A A A A A A A A A
Professional Stage
Business & Finance
Business Strategy
Topic
Currency options Currency swaps Operational techniques for managing currency risk Theoretical determinants of foreign exchange rates Option value Value of a call and put option Black Scholes option pricing model Binomial Option Pricing Model Real options
B B B B C
ETHICS CODES AND STANDARDS

Ethics Codes and Standards IFAC Code of Ethics for Professional Accountants (parts A, B and C) Level A Professional Stage modules Assurance Business and Finance Law Principles of Taxation Audit and Assurance Business Strategy Financial Reporting Taxation Assurance Audit and Assurance
ICAEW Code of Ethics (section 1.2 of the members handbook)
APB Ethical Standards 1-5 (revised) Provisions Available to Small Entities (revised)
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Advanced Stage A A A A B B B B
Professional Stage
Business & Finance
Business Strategy
FINANCIAL REPORTING
Professional Stage
Title
Preface to International Financial Reporting Standards Framework for Preparation and Presentation of Financial Statements IAS1 Presentation of Financial Statements IAS2 Inventories IAS7 Statement of Cash Flows IAS8 Accounting Policies, Changes in Accounting Estimates and Errors IAS10 Events after the Reporting Period IAS11 Construction Contracts IAS12 Income Taxes IAS16 Property, Plant and Equipment IAS17 Leases IAS18 Revenue IAS19 Employee Benefits IAS20 Accounting for Government Grants and Disclosure of Government Assistance IAS21 The Effects of Changes in Foreign Exchange Rates IAS23 Borrowing Costs IAS24 Related Party Disclosures IAS26 Accounting and Reporting by Retirement Benefit Plans IAS27 Consolidated and Separate Financial Statements IAS28 Investments in Associates IAS29 Financial Reporting in Hyperinflationary Economies IAS31 Interests in Joint Ventures IAS32 Financial Instruments: Presentation IAS33 Earnings per Share IAS34 Interim Financial Reporting IAS36 Impairment of Assets IAS37 Provisions, Contingent Liabilities and Contingent Assets IAS38 Intangible Assets
A C B C A A A B A A A
A C
A A A
A A A
A A B B A A A C A B B A B A A
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D D A A
Advanced Stage
Accounting
Financial Accounting
Financial Reporting
IAS39 Financial Instruments: Recognition and Measurement IAS40 Investment Property IAS41 Agriculture IFRS1 First-Time Adoption of IFRS IFRS2 Share-based Payment IFRS3 Business Combinations IFRS4 Insurance Contracts IFRS5 Non-current Assets Held for Sale and Discontinued Operations IFRS6 Exploration for and Evaluation of Mineral Resources IFRS7 Financial Instruments: Disclosures IFRS8 Operating Segments IFRS9 Financial Statements IFRS for SMEs
B A
A D A A
C B
B A
A D D
B A
A C C
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DIFFERENCES BETWEEN IFRS AND UK GAAP

The following table identifies the scope of the differences examinable in the ACA qualification and where they will be introduced. In general, the differences will become examinable where the relevant IFRS is set at knowledge level A. The differences may also be examined in subsequent modules but only in a different context, for example at the Advanced Stage where knowledge of the differences forms part of an integrated question. Where a general awareness only of an accounting standard is expected (knowledge level D) any differences will also be dealt with at this level. Key: First Module FR = Financial Reporting AS = Advanced Stage
First Module FR FR
Title
Key examinable differences between IFRS and UK GAAP
Preface to International Financial Reporting Standards
No examinable differences
ASB Statement of Principles for Financial Reporting Framework for Preparation and Presentation of Financial Statements
Includes chapters on the reporting entity, presentation and accounting for interests in other entities
where there is no direct equivalent in the IASB Framework

Measurement chapter is more detailed with an emphasis on the deprival value model.
Companies Act
Format 1 and 2 profit & loss account classifications of expenses are similar to IAS1. However,
IAS1 requires further detail, but not necessarily as individual line items in the statement of comprehensive income. CA balance sheet formats are less flexible than IAS1 formats that allow a wider choice of classification formats. Differences in terminology used, including a balance sheet which is described as a statement of financial position under IAS 1.
First Module
Title
FRS3 Reporting Financial Performance

Specifies certain mezzanine exceptional items that must be presented on the face of the profit &
loss account after operating profit. IAS1 doesnt specify items and doesnt contain the strict concept of exceptional items. Requires separate presentation of profit & loss account and STRGL. IAS1 allows a single statement of comprehensive income which combines both. Requires a sub-total for operating profit which is not explicitly required by IAS1. FRS18 Accounting Policies IAS1 Presentation of Financial Statements
The disclosure requirements for estimation techniques are not as extensive. FRS18 only requires
FR
a discussion of significant estimation techniques. FRS28 Corresponding Amounts

Does not specifically require comparative information for narrative and descriptive information to
be disclosed. SSAP9 Stocks and Long Term Contracts IAS2 Inventories FR

No examinable differences.
FRS1 Cash Flow Statements

Allows certain exemptions from preparing a cash flow statement for certain subsidiaries and small
companies. No exemptions in IAS7. IAS7 Statement of Cash Flows FR

The definition of cash is more restrictive and only includes cash and deposits repayable on
demand (within 24 hours). IAS7 uses the wider terminology of cash and cash equivalents.
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First Module
Title
Cash flows are classified under eight standard headings rather than three. There is less flexibility
as to where certain cash flows, such as interest paid, are presented. FRS3 Reporting Financial Performance
Comparative financial information is restated where a fundamental prior period error has occurred
which is more restrictive than IAS 8 which requires restatement for material prior period errors. IAS8 Accounting Policies, Changes in Accounting Estimates and Errors FR FRS18 Accounting Policies
Impending changes to accounting policies are not required to be disclosed
FRS28 Corresponding Amounts

FRS21 Events After the Balance Sheet Date IAS10 Events after the Reporting Period FR
SSAP9 Stocks and Long-Term Contracts IAS11 Construction Contracts FR

Unlike IAS11, service contracts may fall within its scope. Requires the asset representing the gross amount due from customers for contract work to be split
between amounts recoverable on contracts (debtors) and long-term contract balances (stocks).
Inequalities in profit generation from different stages of a contract should be considered in
determining the attributable profit. IAS11 is silent on this. FRS19 Deferred tax
First Module
Title
Requires deferred taxation to be recognised on the basis of timing differences rather than IAS12s
temporary differences.
May require deferred taxation to be recognised at a different rate than IAS12 for intra-group
IAS12 Income Taxes
AS
transactions eliminated on consolidation.

FRS19 permits, but does not require, the discounting of deferred tax balances, whereas IAS12
prohibits this. FRS 19 does not normally recognise deferred taxation on the revaluation of assets
FRS15 Tangible Fixed Assets

Where assets have been revalued FRS15 requires the use of existing use value (EUV) rather than
fair value.
FRS15 specifies a maximum period of five years between full valuations and an interim valuation
IAS16 Property, Plant and Equipment
FR
every three years. IAS16 does not specify a maximum period and the timing of revaluations depends on changes in market values. FRS15 requires impairment losses to be debited first against any revaluation surplus in respect of the asset unless it reflects a consumption of economic benefits. IAS16 does not include such a limitation. The residual values of assets are assessed at the date of acquisition and not adjusted for expected future price changes. However, residual values should be reviewed at each balance sheet date and revised if appropriate. IAS16 requires them to be reassessed at the end of each reporting period taking into account current price changes. This may affect the depreciation expense. Annual impairment reviews are required for all assets, which are either depreciated over a period of more than 50 years or not depreciated. IAS16 does not include such a requirement. SSAP21 Accounting For Leases and Hire Purchase Contracts
29
First Module
Title
SSAP21 contains the 90% test rebuttable presumption for determining the classification of
finance and operating leases.

IAS17 specifically requires leases of land and buildings to be split at inception as a separate lease
IAS17 Leases
FR
of the land and a separate lease of the buildings. Under SSAP21 they are considered together.
The net cash investment method is used for lessor accounting. IAS17 requires the net investment
method.
UK GAAP requires operating lease rental incentives to be spread over the shorter of the lease
term and the period until the next rent review. IAS requires any incentives to be spread over the whole lease term.
IAS18 Revenue
FR
There is no comprehensive UK accounting standard covering revenue. The main principles in FRS 5 Reporting the Substance of Transactions and IAS 18 are consistent. FRS17 Retirement Benefits
The scope of IAS19 is wider and covers different types of employee compensation. IAS19 allows a similar immediate recognition approach to actuarial gains and losses as FRS17.
IAS19 Employee Benefits
AS
However, it alternatively permits the deferral from recognition of actuarial gains and losses that remain within a 10% corridor. Deferred tax balances are netted off the net pension scheme asset\liability under FRS17. Under IAS19 they must be shown separately.
IAS20 Accounting for Government Grants and Disclosure of Government Assistance
Companies Act FR
There are no examinable differences
30
First Module AS
Title
FRS23 The Effects of Changes in Foreign Exchange Rates IAS21 The Effects of Change in Foreign Exchange Rates
FRS15 Tangible Fixed Assets

FRS 15 allows the option for borrowing costs to be capitalised and this is a choice of accounting
IAS23 Borrowing Costs
FR
policy. IAS 23 requires directly attributable costs, including borrowing costs, to form part of the cost of the asset. FRS 15 limits the capitalisation of borrowing costs to the finance costs incurred on the expenditure incurred. IAS23 limits the amount to the borrowing costs on the total related funds raised less the investment income from any temporary investment of those funds. FRS8 Related Party Disclosures
Unlike IAS24, parent companys individual financial statements are exempt from providing
disclosures when consolidated financial statements are presented. IAS24 Related Party Disclosures
Unlike IAS24, wholly owned UK subsidiaries are exempt from disclosing transactions with the
FR
parent entity. Disclosure requirements differ. In general FRS8 requires the disclosure of the name of the related party where a transaction has occurred whereas IAS24 does not. Management compensation disclosures are included in CA rather than FRS8 as well as disclosures on loans and other transactions involving directors. IAS24 does not consider the materiality of related party transactions. FRS8 considers materiality from the perspective of both the company and the related party.
IAS26 Accounting and Reporting by Retirement Benefit Plans
AS
31
First Module
Title
FRS2 Accounting for Subsidiary Undertakings

Includes an exclusion of a subsidiary from consolidation on the grounds of severe long-term
restrictions. No exemption exists under IAS27. (FR)

Under IAS27 the existence of potential voting rights should be considered in assessing control. No
IAS27 Consolidated and Separate Financial Statements
FR, AS
consideration is required under UK GAAP. (FR) Requires the non-controlling interest to be presented separately from shareholders funds. IAS27 requires it to be shown as a separate component of equity. (FR) IAS27 requires changes in a parents ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity. (AS) IAS27 requires any investment retained in the former subsidiary following a loss of control to be measured at its fair value at the date when control is lost. FRS2 does not require this. (AS) FRS9 Associates and Joint Ventures
Prescribes detailed format for equity accounting. IAS 28 does not prescribe guidance for the
IAS28 Investments in Associates
FR
statement of comprehensive income. However, IAS1 provides limited guidance which uses a pretax presentation of the associates income. FRS9 shows the components separately. Requires investors to recognise their share of any interest in net liabilities. IAS28 only requires this where there is a legal or constructive obligation to make good those losses. FRS24 Financial Reporting in Hyperinflationary Environments
IAS29 Financial Reporting in Hyperinflationary Economies
AS
32
First Module FR
Title
FRS9 Associates and Joint Ventures IAS31 Interests in Joint Ventures

Requires the use of the gross equity method rather than proportionate consolidation or equity
methods allowed by IAS31. FRS25 Financial Instruments: Disclosure and Presentation IAS32 Financial Instruments: Presentation FR
FRS22 Earnings Per Share IAS33 Earnings per Share FR

IAS34 Interim Financial Reporting
AS
No UK accounting standard on interim financial reporting. IAS34 is broadly comparable with the ASB statement on interim reports. FRS11 Impairment of fixed assets and goodwill
Impairment losses on previously revalued assets are taken to the profit & loss account where they
relate to a consumption of economic benefits (see IAS16\FRS15 above)

Impairment losses are allocated to goodwill, intangible assets and tangible assets in that order.
IAS36 Impairment of Assets
FR
IAS36 allocates the losses to goodwill first and then on a pro-rata basis to intangible and tangible assets. FRS11 is more restrictive on the recognition of the reversal of intangible assets other than goodwill. Unlike IAS36, where cash flows have been used to demonstrate the recoverable amount, FRS11 requires future cash flows to be monitored against those forecasts for the 5 subsequent years (look back test). FRS12 Provisions, Contingent Liabilities and Contingent Assets
33
First Module FR
Title
IAS37 Provisions, Contingent Liabilities and Contingent Assets
SSAP13 Accounting for Research and Development

The capitalisation of development expenditure is optional. IAS38 requires it to be capitalised
where it meets the recognition criteria.

Development expenditure recognition criteria include a requirement to have a reasonable
expectation of future benefits. IAS38 is more stringent as the requirement is to demonstrate future benefits. IAS38 Intangible Assets FR FRS10 Goodwill and Intangible Assets
Only intangible assets that can be sold separately from the business are recognised under UK
GAAP. IAS38 allows non-separable assets to be recognised where they arise from contractual or other legal rights. Allows amortisation of intangibles over economic life or no amortisation where an indefinite life is assessed. Under IAS38 goodwill and indefinite life assets should not be amortised but instead tested annually for impairment. FRS26 Financial Instruments: Measurement IAS39 Financial Instruments: Recognition and Measurement AS
SSAP19 Accounting for Investment Properties IAS40 Investment Property FR

Requires measurement at open market value. IAS40 allows a choice between cost and fair value. Investment gains and losses are taken to STRGL unless they represent a permanent deficit in fair
value. Under IAS40 all gains and losses are recognised in profit or loss.
First Module AS AS AS
Title
IAS41 Agriculture IFRS1 First-Time Adoption of IFRS IFRS2 Share-based Payment IFRS3 Business Combinations
No equivalent UK accounting standard. Not applicable not relevant to UK GAAP FRS20 Share-based Payment
FR, AS FRS6 Acquisitions and Mergers

Merger accounting is required when criteria are met. Not permitted under IFRS. Group reconstructions are merger accounted for (AS). Common control transactions are not within scope of IFRS3 (AS). IFRS3 contains explicit option (not in UK GAAP) to measure minority interest (or non-controlling interest (NCI)) as fair value.
FRS7 Fair Values in Acquisition Accounting

Provides specific guidance on fair value measurement. IFRS3 only offers brief guidance on fair
value measurement.
Only requires separable intangible assets to be fair valued. Hence, more intangibles could be
recognised under IFRS3.

Requires acquisition-related costs to be included in the cost of the investment. IFRS3 requires
them to be treated as period costs. Post-acquisition changes to the estimates of contingent consideration affect the amounts of goodwill recognised. IFRS3 permits few subsequent changes to be reflected in goodwill. FRS10 Goodwill and Intangible Assets
Goodwill is often amortised over its estimated useful economic life. There is a rebuttable
First Module
Title
presumption that it is not more than 20 years. IFRS3 prohibits amortisation and requires annual impairment reviews. Negative goodwill is capitalised as a separate item within goodwill and amortised over the period over which any related losses are expected and as acquired non-monetary assets are realised. IFRS3 requires immediate recognition as a gain in the profit & loss account. Companies Act IFRS4 Insurance Contracts AS
Contains specific requirements for insurance companies
Specific requirements in SORP and FRS27, Life Assurance FRS3 Reporting Financial Performance
Continuing and discontinued activities must be analysed. Unlike IFRS5 detailed analysis is shown
on face of P&L account. Discontinued classification will often be at a later date than IFRS5 as disposal must be completed during the reporting period or before the earlier of the approval of the financial statements and three months after year-end. IFRS5 Non-current Assets Held for Sale and Discontinued Operations FR FRS15 Tangible Fixed Assets
Classification and measurement of assets generally continues as normal without regard for the
disposal. This includes depreciation until the date of disposal. IFRS5 on the other hand requires depreciation to cease while a non-current asset is held for sale. FRS1 Cash flow Statements
Encourages the separate disclosure of cash flows from discontinued operations. This is required
rather than encouraged by IFRS5.
36
First Module AS AS
Title
IFRS6 Exploration for and Evaluation of Mineral Resources
SORP discusses the issues surrounding oil and gas exploration and production.
FRS29 Financial Instruments: Disclosures IFRS7 Financial Instruments: Disclosures

SSAP25 Segmental Reporting

Omission of segment information is allowed where disclosure may be seriously prejudicial to the
entitys interests. No exemption exists under IFRS8.

Requires disclosures for both geographic and business segments. IFRS8 requires disclosure
IFRS8 Operating Segments
FR
about the components of the entity that management uses to make decisions about operating matters. Requires segment information to be prepared in accordance with accounting policies. IFRS8 requires the amounts reported to be on the same basis as for internal decision making. SSAP25 does not require unlisted subsidiaries of listed parents to disclose segment information where the parent has prepared such information.
IFRS in individual company accounts.

Candidates may be required to discuss the key issues that need to be considered when considering whether UK companies should retain UK GAAP for their individual company accounts or to move to IFRS. This is examinable in the Financial Reporting module.
37
TAXATION
Advanced Stage A A A B A B A A A A A A
38
Professional Stage
Principles of Taxation
Objectives of taxation Ethics HM Revenue & Customs Tax evasion and avoidance
Business Tax
C A B C
Administration Administration Appeals Payments Penalties and interest Self assessment Chargeable gains Chargeable assets Chargeable disposals Chargeable persons Chattels: wasting and non wasting Costs of acquisition and disposal Indexation Leases Nil gain/nil loss transfers Part disposals Pre 31 March 1982 assets Qualifying corporate bonds Relief for capital losses Reorganisations and reconstructions Shares and securities (including bonus and rights issues) Chargeable gains reliefs Entrepreneurs relief Gift relief Incorporation relief Roll-over relief
B C B B B C C C B C B
A A A B B B B A
Taxation
Title
A A
Substantial shareholding exemption Trading profits Adjustments to profits Badges of trade Capital allowances Foreign currency transactions Long periods of account Pension contributions Royalty payments Royalty receipts Unincorporated businesses Basis of assessment current year basis Change of accounting date Commencement and cessation of trade Overlap profits and treatment of opening year losses Partnerships Trading losses Profits chargeable to corporation tax Property income (including lease premiums) Trading profits Loan relationships Intangible assets Research and development expenditure Research and development tax credits Miscellaneous income Chargeable gains Charges on income gift aid Trading losses Use of deficit on non-trading loan relationships Corporation tax computation Chargeable accounting periods Close companies
Taxation
Title
A B B B C A A A A B B B B B B B A B A A A A A B B A A B B B B B A A A A A C B A
39
A A A A A A
Advanced Stage
Professional Stage
Corporation tax liability Corporate Venturing Scheme Distributions Double tax relief (including underlying tax and withholding tax) Liquidation Onshore pooling provisions Provision of services through a company Rates of tax Residence Groups Associated companies Capital gains groups Changes in group structure Change in ownership Consortium relief Controlled foreign companies Degrouping charges Group loss relief Group relationships Non-coterminous accounting periods Overseas companies and branches Pre-acquisition gains and losses Roll-over relief Transfer of assets Transfer pricing Stamp Duty and Stamp Duty Land Tax Basic principles Chargeable occasions Exemptions VAT Administration Appeals
Taxation
Title
A B
A B A C A
B C C
A B B A B
A A A A A A
A A A
A A
A A
B C

40
Advanced Stage B B B
Professional Stage
Capital goods scheme Group aspects Input VAT Output VAT Overseas aspects Partial exemption Payments Penalties and interest Property transactions Registration and deregistration Small business reliefs Taxable person Taxable supplies Transfer of a business as a going concern VAT records and accounts
Personal tax
Taxation
Title
A A A A B A A A A A A A A B
Administration Administration Appeals PAYE Payments Penalties and interest Self assessment Employees Allowable deductions against employment income Employment income Share schemes Statutory Mileage Rates Scheme Taxable and exempt benefits Termination payments Other income Dividends from UK companies
B C B B B B
A A A A
A
41
A A
A B
Advanced Stage A
Professional Stage
Enterprise Investment Scheme Investment income ISAs Property income Lease premiums Savings income Venture Capital Trusts Income tax computation Exempt income Gift aid Income tax liable and payable Independent taxation and jointly owned assets Married couples allowance Pension contributions - Provisions for retirement - Tax reliefs Personal age allowance Personal allowance Rates of tax Taxable persons Capital gains tax Annual exemption Chargeable assets Chargeable disposals Chargeable persons Chattels: wasting and non wasting Connected persons Converted trading losses Costs of acquisition and disposal Indexation Leases Nil gain/nil loss transfers
Taxation
Title
B B C B
A B A A A
B B B B
A A A B A B B
A A A A
42
B B B C B C C C B
A A A A A B B B A B
B A A
Advanced Stage B
Professional Stage
Part disposals Pre 31 March 1982 assets Qualifying corporate bonds Rate of tax Relief for capital losses Reorganisations and reconstructions Shares and securities (including bonus and rights issues) Capital gains tax reliefs Letting relief Principal private residence relief Reinvestment relief under EIS National insurance contributions Administration Classes of NIC Directors Maximum contributions Taxable benefits Basic principles of inheritance tax Chargeable persons Chargeable property Excluded property Inter-spouse transfers Rates of tax Related property Seven year accumulation period Inheritance tax on lifetime transfers Discretionary trusts Potentially exempt transfers Inheritance tax on death Death estate Deeds of variation Lifetime transfers
Taxation
Title
B A A B A A A A
A
A
C C
B B B C B B B B A A B A A A A B A
43
Advanced Stage
Professional Stage
Reliefs & exemptions from inheritance tax Agricultural property relief Annual exemption Business property relief Gifts to charities and political parties Gifts with reservation of benefit Marriage exemption Normal expenditure out of income Quick succession relief Small gifts exemption Taper relief Overseas aspects of personal taxation Arising basis Deemed domicile for IHT Domicile Foreign assets income and gains Double tax relief Ordinary residence Remittance basis Residence Temporary absence UK taxation of non-domiciled individuals A A A A A A A A A A B B A A B A A B A A
Taxation
Title
44
Advanced Stage
Professional Stage
APPENDIX A: BUSINESS REPORTING

Learning outcomes Assessed skills How skills are assessed

1. identify and explain ethical dilemmas 10. recognise opportunities to use alternative tax treatments arising from past events and transactions 13. recognise the implications for auditors of engagements in connection with investment circulars 16. recognise money laundering transactions and related offences and the reporting responsibilities for accountants and auditors (Including Proceeds of Crime Act) 19. explain and communicate current issues in corporate and financial reporting and assurance 20. undertake appropriate financial analysis to develop an understanding of a business from financial and operational data and information, provided in draft or published format. Questions will contain both structured and unstructured details in scenarios of varying Assessing, evaluating and complexity with technical content and business context. managing information provided in multiple sources The scenarios will normally be based on historic events. Operating to a brief in Information may need to be structured situations assimilated from various sources within the question. Explaining the nature of ethics and its significance Some issues may need to be deduced by inference or in the business analysis. environment and understanding the Questions will require importance of ethical behaviour in respect of the candidates to have a detailed understanding of relevant public interest, the accounting profession, the regulations in tax, financial reporting, auditing, business law and other value analysis and ethics, which will systems. need to be related to practical business scenarios and applied Understanding the importance of contributing to to any data provided. The data provided will be based largely the profession and appreciating the ethos and on historic events and focus on culture of the accountancy technical compliance and understanding. profession Understanding the subject matter Understanding the public interest and corporate responsibility Candidates will be required to respond to instructions from a line manager, a client request or from other senior personnel. The requests may be specific, or they may be more general requiring interpretation by the candidate. Candidates will be required to: assimilate information provided by internal and external sources evaluate inconsistencies in information provided from multiple sources use different sources of evidence to confirm financial statement assertions

2. report objectively in a complex environment of business threats and opportunities within the legal, regulatory and compliance environment when preparing corporate reports - including financial statements, other information included in reports and interim financial reporting 6. analyse business risks and their implications for corporate reporting and audit opinions 7. analyse financial risks (Including financing, currency and interest rate risks) and their implications for corporate reporting and audit opinions 8. analyse and calculate the tax consequences of given scenarios, including circumstances where overseas taxes affect national taxes 11. analyse controls, including IT and E-commerce controls 12. analyse appropriate management actions where laws and regulations have been breached 17. analyse controls over financial reporting (including in the context of COSA and S404(a) of the Sarbanes-Oxley Act) 20. undertake appropriate financial analysis to: assess the quality of such information apply suitable financial analysis techniques to analyse financial and operational data to bring out and explain a businesss position, prospects and risks. Understanding data & information given: identifying Scenarios will be of two types: & understanding issues questions restricted to one arising in given scenarios technical area integrated questions Using the data & information covering more than one given: analysing data and technical area information to support requirement. Examples of the elements that Drawing upon technical and candidates may be required to professional knowledge consider are: learnt to analyse issues Audit and Assurance Applying knowledge from business risks in complex different technical areas: scenarios analysing problems that the control environment combine technical skills in a tests of controls and single disciplinary substantive procedures environment selective financial analysis risk in the context of IT or eFinancial statement analysis: business performing the required professional scepticism calculations; explaining or stating the issues Ethics Using new concepts: ethical problems in complex evaluating new ideas and scenarios concepts ethical codes and structured argument. Recognising ethical issues arising from situations likely Financial reporting to be encountered by trainee unstructured information chartered accountants; a range of financial identifying possible courses reporting treatments of action to resolve them; complex financial reporting and appreciating the ethical information. dimensions of situations, problems and proposals. Tax range of appropriate tax Identifying & explaining the treatments consequences of unethical descriptive analysis and behaviour explanations Identifying & using relevant integrate different taxes and jurisdictions up to date content of taxation impact of a International & ICAEW Code transaction of Ethics Identifying and selecting appropriate courses of action using an ethical framework
46
Applying judgement
3. evaluate and apply appropriate financial reporting treatments to given scenarios 4. evaluate and apply appropriate corporate reporting treatments, including corporate governance reports and corporate responsibility reports 5. evaluate and apply auditing, assurance and related services standards in complex scenarios 6. evaluate business risks and their implications for corporate reporting and audit opinions 7. evaluate financial risks (Including financing, currency and interest rate risks) and their implications for corporate reporting and audit opinions 8. evaluate the tax consequences of given scenarios, including circumstances where overseas taxes affect national taxes 9. analyse, evaluate and assist entities in the adherence to regulations surrounding taxation 11. evaluate controls, including IT and E-commerce controls 12. evaluate appropriate management actions where laws and regulations have been breached 14. evaluate and apply appropriate laws and regulations in situations of insolvency, administration, liquidation and bankruptcy (including a basic appreciation of Chapter 11) 17. evaluate controls over financial reporting Assessing arguments & considering evidence against set criteria Judgement will be applied in the context of scenarios of varying complexity, involving calculations and the drawing of Applying discrimination: inferences from information filtering information provided provided. to identify critical factors Examples of how candidates Relating parts and wholes: may be required to apply their discerning particular issues judgement include: selecting between technical within complex scenarios choices Demonstrating an filtering data to identify understanding of critical elements prioritising information, sensitivities to change (sensitivity analysis): flexing issues or tasks a range of inputs and identifying omissions in the assessing the outcomes information evaluating inconsistencies Demonstrating an in information understanding of different distinguishing between the perspectives analysing and various qualities of the data interpreting related provided problems and situations evaluating the impact of from alternative given economic and political stances factors evaluating the effects of Change management known events evaluating the (appreciating the appropriateness of impacts/effects of change): accounting policy choice consider and evaluate the evaluating options effects of given alternative comparing the effects of a scenarios range of estimates, Appreciating when more outcomes or financial expert help is required treatments assessing the materiality of Applying a sceptical and errors critical approach exercising own ethical judgement Conducting critiques: identifying key linkages critically reviewing situations and problems Seeking opportunities to add value: thinking imaginatively in a business context Prioritising key issues Applying the concept of
47
materiality 18. analyse and evaluate strengths and weaknesses of corporate governance mechanisms and processes 20. review the output of financial analysis to identify key sensitivities and risks. Develop arguments, having first appreciated the perspective of other parties Exercise ethical judgement
Drawing conclusions, making recommendations and communication

1. recommend appropriate actions to solve ethical dilemmas 2. report objectively within the legal, regulatory and compliance environment when: presenting corporate reports presenting corporate governance reports in accordance with the revised combined code presenting corporate responsibility, environment, sustainability and social reports 15. evaluate and advise on appropriate corporate governance mechanisms 20. communicate the results of financial analysis, including any reservations regarding transparency and objectivity of data and information. Using technical knowledge and evidence to support reasoning and conclusions Assimilating data from different sources, data types in making decisions Identifying the best explanation, solution or steps against defined criteria considering risk. Identifying a range of solutions based on analysis and developing recommendations which combine different technical skills in a defined situation Examples of how candidates may be required to draw conclusions are: from data, facts, calculations, judgements and own analysis on complex assurance engagements by identify weaknesses in financial information systems and their potential consequences by distinguishing between the qualities of data provided or other evidence generated by developing risk management solutions by making strategic decisions by valuing a company or investments.
Formulating opinions, advice, recommendations, plans, solutions, options and reservations based on valid Examples of how candidates evidence may be required to present their recommendations are: Presenting analysis and a report/memorandum in recommendations in response to a specific accordance with instructions technical issue and in accordance with client Providing specified requirements responses to a specialist or reasoned advice supported non-specialist audience by calculations or analysis of technical/business issues identified justifying a specific recommended action when a variety of options are available Candidates may be required to explain the limitations of their conclusions or recommendations.
48
APPENDIX B: BUSINESS CHANGE

Learning outcomes Assessed skills How skills are assessed

1. identify and explain ethical dilemmas 18. undertake appropriate financial and business analysis to develop an understanding of financial and operational data and information from management information systems Questions will contain both structured and unstructured details in scenarios of varying complexity with technical Assessing, evaluating and content and business context. managing information provided in multiple sources The scenarios will normally consider the implications of future events. Operating to a brief in structured situations Information may need to be assimilated from various Explaining the nature of ethics and its significance in sources within the question. Some issues may need to be the business environment deduced by inference or and understanding the analysis. importance of ethical behaviour in respect of the Questions will require public interest, the candidates to have a detailed accounting profession, the law and other value systems understanding of relevant regulations in tax, financial reporting, auditing, business Understanding the analysis and ethics, which will importance of ethical behaviour to a professional need to be related to practical accountant and the reasons business scenarios and applied to any data provided. The data for the adoption of ethical provided may include both codes within practice, historic information and business contexts and the projections/ forecasts. regulatory structure of the profession. Candidates will be required to respond to instructions from a line manager, a client request Understanding the importance of contributing to or from other senior personnel. The requests may be specific, the profession and or they may be more general appreciating the ethos and requiring interpretation by the culture of the accountancy candidate. profession Understanding the subject matter Understanding the public interest and corporate responsibility Understanding the role of the professional accountant within the public interest, practice and business contexts and the regulatory structure of the profession Candidates will be required to: assimilate information provided by internal and external sources evaluate inconsistencies in information provided from multiple sources use different sources of evidence to confirm financial statement assertions extrapolate given information into the future based upon given or own
49
assumptions

2. develop proposals on corporate governance, corporate reporting, financial reporting, tax, auditing and assurance issues in organisational planning, change and business strategy implementation 3. develop business plans and proposals on technical issues relating to business and organisational plans, the risks involved and how those risks should be managed 4. develop plans to manage a business in distress to avoid insolvency 5. develop proposals on taxation issues relating to decisions to cease trading 6. develop outline proposals for IT applications and technology to support business plans including E-commerce, Ebusiness and virtual arrangements 8. apply appropriate valuation methods for assets and businesses for the purposes of acquisitions and disposals for business and tax purposes 11. assess business strategies to meet stated objectives 12.assess costing and pricing approaches for businesses 15. develop proposals on taxation issues relating to business start-ups 16. develop proposals on taxation issues relating to personal and corporate business transformations 18. undertake appropriate financial and business analysis by applying suitable financial, Scenarios will be integrated to cover more than one technical discipline, and will include one case study style question. Examples of the elements that Using the data & information candidates may be required to given: analysing and consider are: evaluating requirements, Audit and Assurance data, information, issues and business risks in complex situations scenarios the control environment Financial data analysis: tests of controls and prioritising and trading off substantive procedures solutions to complex selective financial analysis problems risk in the context of IT or ebusiness Financial statement professional scepticism analysis: comparing and contrasting more than one Business analysis element of financial valuations where the statements to inform information is incomplete, decision making suspect or inadequate. key business and financial Analysing and evaluating risks new and complex ideas data from various sources within a defined situation impact of a strategy Ethics Identifying the relevant ethical codes and structured technical argument. knowledge/professional ethical problems in complex experience required scenarios generating and validating Financial reporting solutions; identification of unstructured information risks and ethical issues a range of financial within the scenario reporting treatments Recognising ethical issues complex financial reporting arising from situations likely information to be encountered by trainee impact of future events on chartered accountants; financial statements as a identifying possible courses whole of action to resolve them delaying or modifying future and appreciating the ethical decisions dimensions of situations, business position, prospects problems and proposals. and risks Tax Approaching decision range of appropriate tax making using an ethical treatments framework descriptive analysis and explanations Identifying and using integrate different taxes and relevant up to date content jurisdictions of the International and taxation impact of a ICAEW Codes of Ethics transaction Understanding data & information given, clarifying the information & identifying gaps
50
strategic and operational analysis techniques
delaying or modifying future decisions
Applying judgement
6. advise on outline requirements for IT applications and technology to support business plans including E-commerce, Ebusiness and virtual arrangements 9. develop appropriate performance management approaches for businesses and business units 10. develop appropriate remuneration and reward packages for staff and executives 11. propose appropriate business strategies to meet stated objectives 13. appraise measures of return and risk for assessing business projects 14. appraise methods to assess and manage financial risk in businesses 17. assess corporate governance mechanisms 18. communicate an explanation, including any reservations regarding transparency and objectivity of data and information, of the position, prospects and risks of a business based on analysis of financial and operational data and information Assessing arguments & considering evidence against set criteria Applying discrimination: filtering information to identify critical factors Relating parts and wholes: discerning particular issues within complex scenarios Demonstrating an understanding of sensitivities to change (sensitivity analysis): flexing a range of inputs and assess the outcomes Demonstrating an understanding of different perspectives, analysing and interpreting related problems and situations from alternative given stances Change management (appreciating the impacts/effects of change): consider and evaluate the effects of given alternative future scenarios Appreciating when more expert help is required Applying a sceptical and critical approach Conducting critiques: critically reviewing situations and problems Seeking opportunities to add value: thinking imaginatively in a business context Prioritising key issues Applying the concept of materiality Develop arguments, having first appreciated the
Judgement will be applied in the context of scenarios of varying complexity, involving calculations and the drawing of inferences from information provided. Examples of how candidates may be required to apply their judgement include: selecting between technical choices filtering data to identify critical elements prioritising information, issues or tasks identifying omissions in the information evaluating inconsistencies in information distinguishing between the various qualities of the data provided evaluating the impact of economic and political factors evaluating the effects of future events evaluating the appropriateness of accounting policy choice evaluating options comparing the effects of a range of estimates, outcomes or financial treatments assessing the materiality of errors exercising own ethical judgement identifying key linkages
perspective of other parties Exercise ethical judgement

Examples of how candidates may be required to draw conclusions are: from data, facts, 2. advise on corporate calculations, judgements governance, corporate Assimilating data from and own analysis on complex assurance reporting, financial reporting, different sources, data types tax, auditing and assurance engagements in making decisions by identify weaknesses in issues in organisational Identifying the best financial information planning, change and business explanation, solution or systems and their potential strategy implementation steps against defined criteria consequences considering risk. by distinguishing between 3. advise on technical issues the qualities of data relating to business and Identifying a range of provided or other evidence organisational plans, the risks solutions based on analysis generated involved and how those risks and developing by developing risk should be managed recommendations which management solutions combine different technical by making strategic 5. advise on taxation issues skills in a defined situation decisions relating to decisions to cease by valuing a company or trading Formulating opinions, investments. advice, plans, options and 7. advise on and develop reservations based on valid Examples of how candidates proposals for organisational may be required to present their evidence structuring and the financing of recommendations are: existing and new businesses Presenting analysis and and projects a report/memorandum in recommendations in response to a specific accordance with instructions. 8. advise on appropriate technical issue and in valuation methods for assets Providing specified responses accordance with client and businesses for the to a specialist audience requirements purposes of acquisitions and reasoned advice supported disposals for business and by calculations or analysis taxation purposes of technical/business issues identified 9. advise on appropriate justifying a specific performance management recommended action when approaches a variety of options are available 10. advise on appropriate remuneration and reward Candidates may be required to packages for staff and explain the limitations of their executives conclusions or recommendations. 11. advise on appropriate business strategies to meet stated objectives 1. recommend appropriate actions to solve ethical dilemmas Using technical knowledge, evidence and analysis to support reasoning and conclusions 12. advise on appropriate costing and pricing approaches for businesses
13. advise on appropriate measures of return and risk for assessing business projects 14. advise on appropriate methods to assess and manage financial risk in businesses 15. advise on tax issues re business start-ups 16. advise on tax issues relating to personal and corporate business transformations 17. advise on corporate governance mechanisms
53
APPENDIX C: CASE STUDY

Assessed skills How skills are assessed

Understanding the subject matter Accessing, evaluating and managing data Uses the Advance Information (AI), Exam
and information provided in multiple sources (some pre-disclosed) and from independent research plans Using technical knowledge & professional experience to assess interaction of information from different sources Understanding an organisational framework: evaluating the strengths and weaknesses of an organisation and comparing with benchmarks Planning, controlling and evaluating operations in a global context Understanding the needs of customers (internal and external) Demonstrating an understanding of the significance of ethics in the business environment and the importance of ethical behaviour Using relevant content of the International & ICAEW Codes of Ethics Demonstrating an understanding of the regulatory structure of the profession, its ethos, culture and role in corporate and social responsibility
Paper (EP), knowledge of ethical codes and professional experience to define the specific issue / situation Uses own understanding of context and findings Describes wider context Identifies business issues - Understanding of business entity - Position in industry sector - Appreciation of wider economy Recognises where business is in its life cycle

Using the information given: analysing and
evaluating requirements, information, issues and business context Analysing, evaluating and synthesising new and complex ideas Displaying an enquiring and questioning mind Identifying faults in arguments and gaps in evidence Demonstrating an understanding the pressures on professional ethical behaviour, including the interaction between professional ethics, the law and other value systems
Identifies and uses key information Demonstrates technical knowledge Uses professional experience Uses relevant strategic analytical tools (SWOT, PEST, Porters 5 Forces) Performs relevant analysis Produces quality analysis - Depth - Breadth - Logic - Reasonableness Uses knowledge of ethical codes and professional experience to perform relevant analysis
Financial data analysis: Uses appropriate analytical tools
Financial data analysis:
- analysing and evaluating data by selecting appropriate analytical and technical tools and applying technical knowledge and professional experience
(valuations methodologies, sensitivity analysis) Performs relevant analysis on

54
- demonstrating an understanding of sensitivities to change: flexing a range of inputs and evaluating potential outcomes - evaluating, prioritising and trading off solutions to complex problems, considering various perspectives, including competitive reaction and internal reaction
Financial statement analysis:
- Numerical data - Other information Integrates numbers and words

Financial statement analysis: Uses appropriate analytical tools to
- analysing and evaluating financial statements by selecting appropriate analytical and technical tools and applying technical knowledge & professional experience - linking all elements of financial statements, evaluating & making comparisons where there are complex interactions - evaluating financial statements in the context of other business information
measure financial performance, identify trends and make comparisons Performs relevant analysis on - Financial statements - Other information Integrates numbers and words
Applying judgement
Using technical knowledge, & professional
experience and evidence to support reasoning Applying discrimination: filtering information to identify critical factors Applying a sceptical and critical approach Interpreting information from a range of stances and developing arguments, having first appreciated the perspective of other parties Conducting critiques: considering alternative views in testing the validity of ideas in practice Considering and evaluating the effects of a range of alternative future scenarios Seeking opportunities to add value Prioritising key issues Applying the concept of materiality to interrelated situations Appreciating the ethical dimensions of situations, exercising ethical judgement and explaining the consequence of unethical behaviour Appreciating when more expert help is required
Builds on implications of analysis Identifies and uses key financial
information
Recognises linkages Evaluates key points Discusses output
- Pros / cons
Demonstrates professional scepticism Demonstrates objectivity / balance Demonstrates an appreciation of more
than one side / bias Evaluates options Prioritises key points Uses knowledge of ethical codes and professional experience to: - build on implications of analysis - discuss output - recognise linkages - evaluate key points - evaluate options
55

Generating solutions for complex Draws conclusions linked to analysis and
problems using information from multiples sources Using technical knowledge, professional experience, evidence and analysis to support conclusions Formulating opinions, advice, plans, solutions, options and reservations, based on valid and different technical skills Making decisions and recommendations in unstructured situations with risks and uncertainty Specifying the criteria for the most appropriate proposal Assessing the costs and benefits that may flow from a decision Approaching decision making using an ethical framework
judgement
Makes practical commercial
recommendations
Integrative and multidisciplinary skills

Time awareness: recognising time Provides appropriate terms of reference
constraints and prioritising given tasks

Preparing, describing, outlining the advice,
(purpose, scope, disclaimer)

Provides an executive summary that is
report, notes required in a clear and concise style Relating parts and wholes: discerning interrelated issues as part of complex scenarios, employing a sense of perspective in over-viewing situations Providing a report to specialist or nonspecialist audience
consistent with the main report Demonstrates appropriate balance between topics Uses sufficient but not excessive subdivisions Uses appropriate but not excessive use of notes and bullets Uses correct style and language for audience with appropriate tact Contains appropriate appendices - calculations easy to follow - assumptions clearly set out - no excessive text Provides a coherent answer to the question - covers the major elements - suitable use of numbers - figures clearly derived - structured discussion, not just a list of facts
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Aca Advanced Stage Syllabus 2011

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ACA ADVANCED STAGE SYLLABUS 2011

Structure and progression

Open Book Policy

THE LINK TO WORK EXPERIENCE

change facing an organisation and assessing an organisations performance.

appropriate, further technical knowledge to real situations.

implications, making confident decisions and recommendations.

targeted and relevant solutions.

SKILLS PROGRESSION THROUGH THE ACA QUALIFICATION

Professional Stage Knowledge modules Application modules

Advanced Stage Technical Integration

Specific issues Information/data as provided Highly structured application of non-integrated knowledge

Structuring problems and solutions

Using analytical tools Analysing and evaluating problems

Specified tools Highly specified tasks

Objective testing Options given

Conclusions and recommendations and communication

Specified conclusions and recommendations in simple scenarios

Specified conclusions and recommendations in complex scenarios

Prescribed exam format

Examples of Business scenarios

Integrated learning outcomes

Ethics and law Taxation Assurance Corporate reporting Business analysis

5 -10 25-35 10-20 15-25 30-35

Examples of Business scenarios

Integrated learning outcomes

TECHNICAL KNOWLEDGE GRIDS

ASSURANCE AND AUDIT

Audit and Assurance

2009/22 Audit Reports on Financial Statements in the UK

Business & Finance

Business & Finance

Market value added (MVA)

Business & Finance

Business & Finance

ETHICS CODES AND STANDARDS

ICAEW Code of Ethics (section 1.2 of the members handbook)

Business & Finance

DIFFERENCES BETWEEN IFRS AND UK GAAP

Key examinable differences between IFRS and UK GAAP

Preface to International Financial Reporting Standards

where there is no direct equivalent in the IASB Framework

Key examinable differences between IFRS and UK GAAP

FRS3 Reporting Financial Performance

a discussion of significant estimation techniques. FRS28 Corresponding Amounts

be disclosed. SSAP9 Stocks and Long Term Contracts IAS2 Inventories FR

FRS1 Cash Flow Statements

companies. No exemptions in IAS7. IAS7 Statement of Cash Flows FR

Key examinable differences between IFRS and UK GAAP

FRS28 Corresponding Amounts

SSAP9 Stocks and Long-Term Contracts IAS11 Construction Contracts FR

Key examinable differences between IFRS and UK GAAP

IAS12 Income Taxes

transactions eliminated on consolidation.

FRS15 Tangible Fixed Assets

IAS16 Property, Plant and Equipment

Key examinable differences between IFRS and UK GAAP

finance and operating leases.

IAS19 Employee Benefits

IAS20 Accounting for Government Grants and Disclosure of Government Assistance

Key examinable differences between IFRS and UK GAAP

FRS15 Tangible Fixed Assets

IAS23 Borrowing Costs