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Paper 9

FINANCIAL REPORTING AND ANALYSIS

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This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to account for more complex financial transactions and to prepare as well as analyse financial statements in the private and public sectors.

On completion, a candidate should be able to

  • Account for various assets and liabilities
  • Prepare financial statements including published financial statements for various types of organisations
  • Account for specialised transactions
  • Prepare group financial statements
  • Analyse and interpret financial statements
  • Apply International Financial Reporting Standards (IFRSs) and International Public Sector Accounting Standards (IPSASs) in preparing non-complex financial statements.

Content

  1. 1

    Accounting for Assets and Liabilities [Assets and liabilities as covered in Financial Accounting (Foundation Level) are also relevant here]

    1. 1.1

      Investment Property: IAS 40 (Investment Property)

    2. 1.2

      Assets used in exploring for and evaluation of mineral resources: IFRS 6 (Exploration for and Evaluation of Mineral Resources)

    3. 1.3

      Non-current assets held for sale: IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations)

    4. 1.4

      Financial Assets and Financial Liabilities (Recognition, Classification, Initial measurement, subsequent measurement, reclassifications and de-recognition) IFRS 9 (Financial Instruments)

    5. 1.5

      Leases (Exclude Sale and Leaseback and dealers in leasing assets) IFRS 16 (Leases)

    6. 1.6

      Current and Deferred tax: IAS 12 (Income Taxes)

    7. 1.7

      Government grants: IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance)

    8. 1.8

      Provisions, contingent liabilities and assets: IAS 37 (Provisions, Contingent Liabilities and Contingent Assets)

  2. 2

    Accounting for Specialized Transactions

    1. 2.1

      Revenue recognition (Basic application of revenue recognition principles to Hire Purchase, Consignment sales, construction contracts and joint arrangements)

    2. 2.2

      Effects of changes in exchange rates (Only foreign currency denominated transactions): IAS 21 (The Effects of Changes in Foreign Exchange Rates)

    3. 2.3

      Borrowing Costs: IAS 23 (Borrowing Costs)

  3. 3

    Preparation of Financial Statements for different entities/Transactions

    1. 3.1

      Conversion of a partnership into a company

    2. 3.2

      Professional firms (Accountants, Lawyers, doctors, engineers)

    3. 3.3

      Agricultural activities and farming: IAS 41 (Agriculture)

    4. 3.4

      Pension plans: IAS 26 (Accounting and Reporting by Retirement Benefit Plans)

    5. 3.5

      Cooperative Societies

  4. 4

    Preparation of Published Financial Statements

    1. 4.1

      Presentation of Financial Statements (Statement of Profit or Loss, other comprehensive incomes, Statement of Financial Position and Statement of cash flows)

    2. 4.2

      Accounting Policies, Changes in Accounting Estimates and Errors: IAS 8 (Accounting Policies, Changes in Accounting Estimates and Errors)

    3. 4.3

      Events after the Reporting Period: IAS 10 (Events after the Reporting Period)

    4. 4.4

      Discontinued Operations: IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations)

  5. 5

    Accounting and Financial Statements for Interests in Other Entities

    1. 5.1

      Subsidiaries (Basic Consolidated Financial Statements with one subsidiary - excluding disposals and statement of cash flows): IFRS 3 (Business Combinations); IFRS 10 (Consolidated Financial Statements); IAS 27 (Consolidated and Separate Financial Statements);

    2. 5.2

      Associates and Joint ventures: IAS 28 (Investments in Associates and Joint Ventures); IFRS 11 (Joint Arrangements)

    3. 5.3

      Accounting treatment of investments in subsidiaries, associates and jointly controlled entities in the financial statement of the investor (Separate financial statements)

    4. 5.4

      Branches (Only autonomous and local branches)

  6. 6

    Public Sector Accounting Standards

    1. 6.1

      Presentation of Financial Statements: IPSAS 1 (Presentation of Financial Statements)

    2. 6.2

      Accounting Policies, Changes in Accounting Estimates and Errors: IPSAS 3 (Accounting Policies, Changes in Accounting Estimates and Errors)

    3. 6.3

      Effects of Changes in Foreign Exchange Rates: IPSAS 4 (The Effects of Changes in Foreign Exchange Rates)

    4. 6.4

      Revenue from exchange transactions (IPSAS 9) and revenue from non-exchange transactions (IPSAS 23)

    5. 6.5

      Property, plant and equipment (IPSAS 17); investment property (IPSAS 16); and intangible assets (IPSAS 31)

    6. 6.6

      Provisions, contingent liabilities and contingent assets (IPSAS 19)

    7. 6.7

      Presentation of budget information in Financial Statements (IPSAS 24)

  7. 7

    Analysing Financial Statements

    1. 7.1

      Analysing financial statements using ratios covered in Financial Accounting

    2. 7.2

      Analysing Financial Statements using common size approach for the statement of profit or loss and statement of financial position