Unrelated to Syllabus of INTEC

FAU

A Purpose and scope of audit and regulatory framework

1. The purpose and scope of an audit a) Explain the nature of an audit.[K] b) Explain the purpose of an audit, including the advantages and disadvantages of an audit.[K] c) Explain the nature of accounting records, including proper records.[K] d) Explain the concepts of true and fair presentation (being presented fairly in all material respects) and reasonable assurance.[K] e) Define professional scepticism and explain how it should be exercised during an audit.[K] f) Define professional judgement and identify when it should be applied during an audit.[K] g) Identify the form and content of the auditors’ report.[S]
2. Auditor responsibilities a) Describe the duties of auditors.[K] b) Describe the rights of auditors.[K]
3. Professional ethics and ACCA’s Code of Ethics and Conduct a) Discuss the fundamental principles of professional ethics of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.[S] b) Describe the detailed requirements, and application of professional ethics, in the context of integrity, objectivity and independence.[S] c) Describe the auditor’s responsibility with regard to confidentiality.[S]
4. Auditor engagement and liability a) Explain the factors that auditors should consider before accepting an audit engagement.[S] b) Explain the purpose and nature of an engagement letter.[K] c) Explain the liability of auditors under contract and negligence to clients.[K] d) Explain the liability of auditors to third parties.[K]
5. Audit regulation a) Explain the purpose and scope of ISAs.[K]
6. Internal audit a) Explain the purpose, scope and reporting function of an internal audit function.[K] b) Identify the factors that external auditors should consider when evaluating the internal audit function and work of internal auditors.[K]

B Audit planning and risk

assessment 7. Audit risk a) Define audit risk, including inherent risk, control risk and detection risk.[K] b) Explain the risk-based approach to an audit.[K] c) Define the concept of materiality and how materiality levels are calculated from financial information.[K]

8. Understanding the entity and its environment and the applicable financial reporting framework a) Explain how auditors obtain an initial understanding of the entity and its environment and the applicable financial reporting framework.[K]
9. Audit strategy and the audit plan a) Identify and explain the need for planning an audit.[K] b) Identify and describe the contents of the overall audit strategy and the audit plan.[S] c) Explain the use of analytical procedures in planning.[K] d) Describe general planning issues including the availability and management of audit resources, the effect of information technology (IT) on audit procedures, the audit of complex areas and the need to use experts.[S] e) Explain the role of audit programmes and the advantages and disadvantages of using standard audit programmes.[K]
10. Audit documentation a) Describe the reasons for maintaining audit documentation.[K] b) Explain the purpose and contents of the current file and the permanent file.[K] c) Explain the quality management procedures that should exist over the review of audit working papers.[K] d) Explain how IT may be used in the documentation of audit work.[K]

C Internal control

8. General principles of internal control a) Describe the components of a system of internal control.[K] b) Describe the objectives of a system of internal control.[K] c) Describe the inherent limitations of internal control.[K] d) Explain the importance of internal control to auditors.[K]
9. Techniques to understand, record and evaluate accounting systems a) Describe the techniques used by auditors to understand and record accounting systems including narrative notes and flowcharts.[K] b) Describe the techniques used by auditors to evaluate accounting systems including internal control questionnaires (ICQs), internal control evaluation questionnaires (ICEQs) and checklists.[K] c) Provide examples of, and explain the format and contents of, ICQs and ICEQs.[S] d) Evaluate the system of internal control, identifying and defining significant internal control deficiencies.[S]
10. Test of controls a) Describe and provide examples of control procedures to meet specified objectives for each of the following areas:[S]  purchases and trade payables  sales and trade receivables  wages and salaries (payroll)  tangible non-current assets  inventory  bank and cash b) Explain the purpose of tests of controls.[K]

c) Identify and explain the testing of controls over the following areas:[K]  purchases and trade payables  sales and trade receivables  wages and salaries (payroll)  tangible non-current assets  inventory  bank and cash d) Distinguish between tests of controls and substantive procedures.[K] e) Distinguish between information processing controls and general IT controls and identify the objectives of each control type.[S] f) Provide examples of specific information processing controls and general IT controls.[S] 4. Communicating control deficiencies a) Explain the requirements and methods for communicating significant deficiencies to management and those charged with governance.[S]

D Audit evidence and

procedures 5. Audit evidence a) Explain the importance of audit evidence, including sufficient appropriate audit evidence.[K] b) Identify the factors that influence the relevance and reliability of audit evidence.[K] 6. Audit procedures and assertions a) Explain the importance of the use of the assertions by the auditor.[K] b) Explain the assertions in relation to classes of transactions and related disclosures, and account balances and related disclosures.[K] c) Describe and give examples of procedures used by auditors to obtain audit evidence, including inspection, observation, external confirmation, recalculation, reperformance, analytical procedures and inquiry.[K] 7. Substantive procedures a) Identify and demonstrate the link between audit programmes and audit objectives.[K] b) Identify and explain the substantive procedures to meet the specific objectives for the audit of each of the following:[K]  tangible non-current assets  trade receivables, prepayments and other receivables  trade payables, accruals and other payables  bank and cash  non-current liabilities  provisions c) Explain why the audit of inventory is often an area of high inherent risk.[K] d) Describe the audit procedures that should be undertaken before, during and after attending an inventory count.[K] e) Explain the extent to which an auditor may rely on a system of perpetual inventory.[K] f) Identify and explain the substantive procedures to meet the specific objectives for the audit of inventory.[K] 8. Audit sampling a) Define audit sampling and the relevance of sampling to the auditor.[K] b) Identify sampling selection methods, including random selection, systematic selection and haphazard selection.[K]

c) State the main factors affecting sample sizes.[K] 5. Automated tools and techniques a) Explain the use of automated tools and techniques (ATTs) in an audit including the use of audit software, test data and other data analytics tools.[K] b) Explain the advantages and disadvantages of the use of ATTs to the auditor.[K]

E Audit completion

5. Going concern a) Define and discuss the significance of going concern.[S] b) Discuss indicators of going concern problems.[S] c) Explain the procedures to be applied in performing going concern reviews.[K]
6. Subsequent events a) Explain the responsibilities of the auditor regarding subsequent events occurring up to the date of the auditor’s report.[K] b) Explain the procedures to be applied in performing subsequent events reviews.[K]
7. Written representations a) Explain the purpose of written representations.[K] b) Describe the circumstances where written representations are necessary.[S]
8. Independent auditor’s report a) Describe the form and content of the independent auditor’s report, including an unmodified opinion.[S] b) Describe the circumstances in which an auditor should express a modified audit opinion in the auditor’s report.[S] c) Identify the type of opinion which is appropriate for the auditor to express, based on the given circumstances.[S]

F Employability and technology

skills 9. Use computer technology to efficiently access and manipulate relevant information 10. Work on relevant response options, using available functions and technology as would be required in the workplace 11. Navigate windows and computer screens to create and amend responses to exam requirements, using the appropriate tools 12. Present data and information effectively, using the appropriate tools

FFM

A Working capital management

1. Working capital management cycle a) Define working capital.[K] b) Explain why working capital management is important.[K] c) Explain the relationship between cash flows and the working capital cycle.[S] d) Demonstrate the calculation of the working capital cycle (also known as the cash operating cycle).[S] e) Outline the possible relationships between inventory levels and sales.[S] f) Define and explain over-trading and overcapitalisation.[S] g) Identify and calculate over-trading and over-capitalisation financial indicators.[S]
2. Inventory control a) Discuss the key considerations when developing an inventory ordering and storage policy.[S] b) Define and explain work in progress.[K] c) Define economic order quantity (EOQ).[K] d) Apply the EOQ model.[S] e) Discuss the effects of just-in-time on inventory control.[S] (Note: Economic Batch Quantities, where all items in a batch do not arrive simultaneously, will not be examined)
3. Accounts payable and receivables control a) Explain the role of accounts payables in the working capital cycle.[K] b) Explain the role of accounts receivables in the working capital cycle.[K] c) Explain the need to monitor accounts payables.[S] d) Explain accounts payables control operations and the importance of accounts payables management.[S] e) Describe the various types and form of accounts payables.[K] f) Describe the various accounts payables payment methods and procedures (for example, direct debit).[S] g) Evaluate and demonstrate the issues involved with early payment and settlement discounts.[S] h) Identify the risks of taking increased credit and buying under extended credit terms.[S]

B Cash budgeting

1. Nature and sources of cash a) Define cash, cash flow and funds.[K] b) Explain the importance of cash flow management and its impact on liquidity and company survival.[S]

c) Outline the various sources and applications of finance.[K] i) Regular revenue receipts and payments ii) Capital receipts and payments iii) Drawings or dividends and disbursements iv) Exceptional receipts and payments d) Distinguish between the cash flow patterns of different types of organisations.[S] e) Explain the importance of cash flow for sustainable growth of such organisations.[S]

f) Define “cash accounting” and “accruals accounting”.[K] g) Explain the difference between cash accounting and accruals accounting.[K] h) Reconcile cash flow to profit.[S] 2. Cash budgeting and forecasting a) Explain the objectives of a cash budget.[K] b) Explain and illustrate statistical techniques used in forecasting cash flows.[S] c) Explain inflation and the impact on cash flow and profit.[K] d) Prepare a cash budget, including adjustments for timing of receipts and payments.[S] e) Discuss and illustrate how cash budgets can be used as a mechanism for monitoring and control.[S] f) Carry out simple sensitivity analysis on a cash budget or forecast.[S] g) Prepare a simple cleared funds forecast.[S]

C Managing cash balances

2. Treasury function a) Outline the basic treasury functions.[K] b) Discuss the advantages and disadvantages of a centralised treasury function.[K] c) Discuss the advantages and disadvantages of centralised cash control.[K] d) Describe cash handling procedures (including recording practises.[K] e) Describe the issues to be considered when attempting to hold optimal cash balances.[S] f) Outline the statutory and the other regulations relating to the management of cash.[K]
3. Overview of financial markets a) Explain the role and functions of various types of banks (including the structure of the banking system).[K] b) Identify the major financial intermediaries.[K] c) Outline the general roles of financial intermediaries.[K] d) Outline the key benefits of financial intermediation.[K] e) Outline the relationships between financial institutions.[K] f) Explain the purpose and main features of:[S] i) Bank deposits ii) Certificates of deposit iii) Government stocks iv) Local authority bonds v) Bills of exchange g) Explain the purpose and main features of:[S] i) Equity ii) Preferred shares iii) Secured loan note iv) Unsecured loan note v) Convertible and redeemable debt vi) Warrants h) Explain the basic nature of a money market.[K] i) Describe the way in which a stock market (both main and second tier) operates.[K]

j) Discuss ways in which a company may obtain a stock market listing and the advantages and disadvantages of having a stock market listing.[S] 3. Managing deficit cash balances a) Discuss situations where it may be appropriate to raise short-term finance.[S] b) Describe the different forms of bank loans and overdrafts, their terms and conditions.[S] c) Explain the legal relationship between bank and customer.[K] d) Explain the nature of trade credit and its use as a short-term source of finance.[S] e) Evaluate the risks associated with increasing the amount of short-term finance in an organisation.[S] f) Discuss the relative merits and limitations of short term finance.[S] 4. Managing surplus cash balances a) Define what is meant by “surplus funds”.[K] b) Explain how surplus funds may arise.[K] c) Discuss the objectives to be considered in the investment of surplus funds.[S] d) Invest surplus funds according to organisational policy and within defined financial authorisation limits.[S] e) Define the risk-return trade-off.[K] f) Outline what is meant by risk of default, systematic risk and unsystematic risk.[K] g) Outline how the Baumol cash management model works (note – calculations are not required).[K] h) Discuss the limitations of the Baumol cash management model.[K] i) Suggest appropriate liquidity levels for a range of different organisations.[S]

D Financing decisions

3. Money in the economy a) Define what is meant by “money supply” in an economic context.[K] b) Outline how money supply may be controlled in an economy.[K] c) Outline the basic relationship between the demand for money and interest rates.[K] d) Explain briefly and illustrate the interaction between inflation and interest rates.[S] e) Discuss the possible consequences of inflation in an economy and its effect on organisations in general.[K] f) Describe how the application of different monetary policies can affect the economy.[K]

2 Medium term financing a) Discuss situations where it may be appropriate to raise medium-term finance.[S] b) Describe the main features of hire purchase, and leases.[K] c) Compare and contrast the main features of hire purchase, and leases (NB – lease or buy decisions are not examinable).[S] d) Discuss the relative merits and limitations of medium term finance.[S] 3. Long term financing a) Discuss situations where it may be appropriate to raise long-term finance.[S]

b) Describe the key factors to be considered when deciding on an appropriate source of long term finance (debt or equity).[S] c) Calculate relative gearing and earnings per share under different financial structures.[S] d) Discuss the relative merits and limitations of long term finance.[S] e) Describe the key factors that should be considered in deciding the mix of short/medium/long term finance in an organisation.[S] f) Discuss the nature and importance of internally generated funds.[K] g) Outline the major sources of government funds e.g. grants, regional and national schemes.[K] 4. Financing for small and medium sized enterprises a) Outline the requirements for finance of SMEs (purpose, how much, how long).[K] b) Describe the nature of the financing problem for SMEs in terms of the funding gap, maturity gap and inadequate security.[S] c) Discuss the contribution of lack of information in SMEs to help explain the problems of SME financing.[K] d) Describe and discuss the response of government agencies and financial institutions to the SME financing problem.[S] e) Describe the main features of venture capital.[K] f) Describe the key areas of concern to venture capitalists when evaluating an application for funding.[S] g) Explain how the use of such measures as credit suppliers, hire purchase, factoring and second tier listing can help to ease the financial problems of SMEs.[S] h) Outline appropriate sources of finance for SMEs.[S]

E Investment decisions

4. Financing concepts a) Explain the differences between simple and compound interest.[K] b) Calculate future values.[S] c) Discuss the concept of time value of money.[S]

d) Discuss the concept of discounting.[S] e) Calculate present values, making use of present value tables to establish discount factors.[S]

2. Capital budgeting a) Discuss the importance of capital investment planning and control.[K] b) Outline the issues to consider and the steps involved in the preparation of a capital expenditure budget.[S] c) Define and distinguish between capital and revenue expenditure.[K] d) Compare and contrast investment in noncurrent assets and investment in working capital. [K] e) Describe capital investment procedures (authorisation and monitoring).[K]
3. Capital investment appraisal a) Calculate the payback and discounted payback of a project and assess its usefulness as a method of investment appraisal.[S] b) Calculate the accounting rate of return of a project and assess its usefulness as a method of investment appraisal.[S]

c) Discuss the concept of relevant cash flows for decision making.[K] d) Identify and evaluate relevant cash flows for individual investment decisions.[S] e) Explain the concept of net present value and how it can be used for project appraisal.[K] f) Calculate net present value and interpret the results.[S] (Note: NPV calculations will not include adjustments for inflation, tax or working capital) g) Outline the concept of internal rate of return and how it can be used for project appraisal.[K] h) Calculate internal rate of return and interpret the results.[S] i) Discuss the relative merits of NPV and IRR, including mutually exclusive projects and multiple yields.[K] j) Explain the superiority of DCF methods over payback and accounting rate of return.[K]

F Credit management

1. Legal issues a) Explain the key elements of a basic contract offer, acceptance, remedies for breach of contract etc).[K] b) Briefly outline specific terms and conditions that may be included in contracts with credit customers (e.g. length of credit period, amount of interest on late payments, retention of title.[S] c) Outline the basic legal procedures for the collection of debts.[K]

d) Identify the main data protection issues that should be considered when dealing with accounts receivables records.[K] e) Explain bankruptcy and insolvency.[K] 2. Credit granting a) Explain the importance of credit management, including the level of trade credit, the role of the credit control function and the activities of the credit control function.[K] b) Explain the need to establish a credit policy and outline the steps involved, including setting maximum credit amounts and periods and total credit levels.[S] c) Explain the key categories that should be considered when assessing the creditworthiness of a customer.[K] d) Outline the various internal sources of information that may be used in assessing the credit-worthiness of a customer.[S] e) Outline the various external sources of information that may be used in assessing the credit-worthiness of a customer.[S] f) Define and explain credit scoring.[K] g) Identify possible reasons for rejecting an application for credit or extending credit.[S] h) Describe how the financial statements of a customer can be used to assess the credit-worthiness of a customer.[S] i) Identify and apply the common ratios that may be used to analyse the financial statements of a customer in order to assess their credit-worthiness.[S] j) Evaluate the usefulness and limitations of ratio analysis in assessing creditworthiness.[S] 3. Monitoring accounts receivables a) Identify the main contents of accounts receivables records.[S]

b) Describe the main internal sources that may be used to monitor accounts receivables (including aged trade receivables analysis, average periods of credit, incidence of bad debts).[S]

(Note - you may be required to prepare an aged accounts receivables analysis) c) Describe the main external sources that may be used to monitor accounts receivables (including credit rating agencies, industry sources, financial reports, press coverage, official publications, bank or supplier reference).[S] 4. Debt collection a) Identify the main methods used to identify potential problems with credit customers meeting their payment obligations.[K] b) Describe ways in which credit customers could be encouraged to pay promptly including effects of offering discounts.[S] c) Describe the main techniques and methods that may be used to assist in the collection of overdue debts.[S] d) Identify debt recovery methods appropriate to individual customers.[S] e) Explain procedures for writing off debts (double entry recording is excluded).[K] f) Describe how factoring works and the main types of service provided by factors.[S] g) Define invoice discounting and outline how this form of factoring works.[S] h) Calculate the cost of factoring arrangements, invoice discounting and changes in credit policy.[S]