CA Final – Group 1

CA Final – Group 1

• Paper 1: Financial Reporting

  Paper 1: Financial Reporting
  (One paper – Three hours – 100 marks)
  

  Level of Knowledge: Advanced knowledge
  Objectives:
  (a) To gain ability to analyze financial statements including consolidated financial statements of group companies and financial reports of various types of entities,
  (b) To gain ability to apply valuation principles,
  (c) To familiarise with recent developments in the area of financial reporting,
  (d) To gain ability to solve financial reporting and valuation cases.
  
  Contents:
  

  1. Accounting Standards (ASs) and Guidance Notes on various accounting aspects issued by the ICAI and their applications.
  2. Corporate Financial Reporting - Issues and problems with special reference to published financial statements.
  3. Accounting for Corporate Restructuring (including inter-company holdings).
  4. Consolidated Financial Statements of Group Companies
     • Concept of a Group, purposes of consolidated financial statements, minority interest, Goodwill, Consolidation procedures – Minority interests, Goodwill, Treatment of pre- acquisition and post - acquisition profit.
     • Consolidation with two or more subsidiaries, consolidation with foreign subsidiaries.
     • Consolidated profit and loss account, balance sheet and cash flow statement.
     • Treatment of investment in associates in consolidated financial statements.
     • Treatment of investments in joint ventures in consolidated financial statements.
  5. Accounting and Reporting of Financial Instruments
     • Meaning, recognition, derecognition and offset, compound financial instruments
     • Measurement of financial instruments
     • Hedge accounting
     • Disclosures
  6. Share based payments
     • Meaning, Equity settled transactions, Transaction with employees and non-employees
     • Determination of fair value of equity instruments
     • Vesting conditions
     • Modification, cancellation and settlement
     • Disclosures
  7. Financial Reporting by Mutual funds, Non-banking finance companies, Merchant bankers, Stock and commodity market intermediaries.
  8. Valuation
     1. Concept of Valuation
     2. Valuation of Tangible Fixed Assets
     3. Valuation of Intangibles including Brand Valuation and Valuation of Goodwill
     4. Valuation of Liabilities
     5. Valuation of Shares
     6. Valuation of Business
  9. Developments in Financial Reporting
  1. Value Added Statement
  2. Economic Value Added, Market Value Added, Shareholders’ Value Added
  3. Human Resource Reporting

  
  
  Note: If either old Accounting Standards (ASs), Guidance Notes (GNs), Announcements and Limited Revisions to ASs are withdrawn or new ASs, GNs, Announcements and Limited Revisions to AS are issued by the Institute of Chartered Accountants of India in place of existing ASs, GNs, Announcements and Limited Revisions to AS, the syllabus will accordingly exclude / include such new developments in the place of the existing ones with effect from the date to be notified by the Institute.

• Paper 2: Strategic Financial Management

  Paper 2: Strategic Financial Management
  (One paper – Three hours – 100 marks)
  

  Level of Knowledge: Advanced knowledge

  Objective:
  To apply financial management theories and techniques for strategic decision making.
  
  Contents:
  

  1. Financial Policy and Corporate Strategy
     • Strategic decision making framework
     • Interface of Financial Policy and strategic management
     • Balancing financial goals vis-à-vis sustainable growth.
  2. Project Planning and Capital Budgeting
     • Feasibility study
     • Cash flow Projections – Impact of taxation, depreciation, inflation and working capital
     • Capital Budgeting Decisions - Certainty Equivalent approach, Evaluation of Risky Investment Proposals, Risk and Return analysis, Simulation and decision tree analysis, Sensitivity analysis, Capital Rationing, Adjusted Net Present Value, Replacement decisions, Application of Real Options in capital budgeting, Impact of inflation on capital budgeting decisions
     • Preparation of Project Report
     • Social cost benefit analysis.
  3. Leasing decision including cross border leasing
  4. Dividend Decisions
     • Dividend theories, Determinants of dividend policies.
  5. 1. Indian Capital Market including role of various primary and secondary market institutions
     2. Capital Market Instruments
        • Financial derivatives – stock futures, stock options, index futures, index options
        • Option valuation techniques : Binomial model, Black Scholes Option Pricing Model, Greeks – Delta, Gamma, Theta, Rho and Vega
        • Pricing of Futures – Cost of carry model
        • Imbedded derivatives
     3. Commodity derivatives
     4. OTC derivatives -Swaps, Swaptions, Forward Rate Agreements (FRAs), Caps, Floors and Collors.
  6. Security Analysis
     • Fundamental analysis - Economic analysis, Industry analysis and Company Analysis
     • Bond valuation, Price Yield relationship, Bond Price forecasting – application of duration and convexity, Yield curve strategies
     • Technical Analysis – market cycle model and basic trend identification, different types of charting, support and resistance, price patterns, moving averages, Bollinger Bands, momentum analysis.
  7. Portfolio Theory and Asset Pricing
     • Efficient Market Theory – Random walk theory ; Markowitz model of risk return optimization
     • Capital Asset Pricing Model (CAPM)
     • Arbitrage Pricing Theory (APT)
     • Sharpe Index Model
     • Portfolio Management - Formulation, Monitoring and Evaluation
     • Equity Style Management
     • Principles and Management of Hedge Funds
     • International Portfolio Management.
  8. Financial Services in India
     • Investment Banking
     • Retail Banking
     • On Line Share Trading
     • Depository Service.
  9. 1. Mutual Funds: Regulatory framework, formulation, monitoring and evaluation of various schemes of Mutual funds, Money market mutual funds.
     2. Exchange Traded Funds.
  10. Money Market operations
  11. 1. Foreign Direct Investment, Foreign Institutional Investment.
      2. International Financial Management
         • Raising of capital abroad - American Depository Receipts, Global Depository Receipts, External Commercial Borrowings and Foreign Currency Convertible Bonds
         • International Capital Budgeting
         • International Working Capital Management.
  12. Foreign Exchange Exposure and Risk Management
  • Exchange rate determination, Exchange rate forecasting
  • Foreign currency market
  • Foreign exchange derivatives – Forward, futures, options and swaps
  • Management of transaction, translation and economic exposures
  • Hedging currency risk.
  13. Mergers, Acquisitions and Restructuring
  • Meaning of mergers and acquisition, categories, purposes
  • Process of mergers and acquisition – Identification and valuation of the target, acquisition through negotiation, due diligence, post – merger integration
  • Legal and regulatory requirements
  • Merger and Acquisition agreement
  • Reverse merger
  • Potential adverse competitive effects of mergers
  • Corporate Takeovers: Motivations, Co-insurance effect, Cross-border takeovers, Forms of takeovers, Takeover defenses
  • Going Private and Other Control Transactions: Leveraged Buyouts (LBOs), Management Buyouts (MBOs), Spin Offs and Asset Divestitures
  • Corporate Restructuring : Refinancing and rescue financing, reorganizations of debtors and creditors, Sale of assets, targeted stock offerings, downsizing and layoff programmes, negotiated wage give-backs, employee buyouts.

• Paper 3: Advanced Auditing and Professional Ethics

  Paper 3: Advanced Auditing and Professional Ethics
  (One Paper- Three hours - 100 marks)

  Level of Knowledge: Advanced knowledge
  Objectives:
  (a) To gain expert knowledge of current auditing practices and procedures and apply them in auditing engagements,
  (b) To develop ability to solve cases relating to audit engagements.
  

  Contents:

  1. Auditing Standards, Statements and Guidance Notes
     Auditing and Assurance Standards (AASs); Statements and Guidance Notes on Auditing issued by the ICAI; Significant differences between Auditing and Assurance Standards and International Standards on Auditing.
  2. Audit strategy, planning and programming
     Planning the flow of audit work; audit strategy, planning programme and importance of supervision: review of audit notes and working papers; drafting of reports; principal’s ultimate responsibility; extent of delegation; control over quality of audit work; reliance on the work of other auditor, internal auditor or an expert.
  3. Risk Assessment and Internal Control
     Evaluation of internal control procedures; techniques including questionnaire, flowchart; internal audit and external audit, coordination between the two.
  4. Audit under computerized information system (CIS) environment
     Special aspects of CIS Audit Environment, need for review of internal control especially procedure controls and facility controls. Approach to audit in CIS Environment, use of computers for internal and management audit purposes: audit tools, test packs, computerized audit programmes; Special Aspects in Audit of E-Commerce Transaction.
  5. Special audit techniques
     1. Selective verification; statistical sampling: Special audit procedures; physical verification of assets, direct confirmation of debtors and creditors
     2. Analytical review procedures
     3. Risk-based auditing
  6. Audit of limited companies
     Relevant Provisions under the Companies Act, 2013 relating to Audit and Auditors and Rules made thereunder; Audit of branches: joint audits; Dividends and divisible profits - financial, legal, and policy considerations.
  7. Rights, duties, and liabilities of auditors; third party liability.
  8. Audit reports; Qualifications, notes on accounts, distinction between notes and qualifications, detailed observations by the statutory auditor to the management vis-a-vis obligations of reporting to the members.
  9. Audit Committee and Corporate Governance
  10. Provisions under the Companies Act, 2013 in respect of Accounts of Companies and Rules made thereunder. Audit of Consolidated Financial Statements, Audit Reports and Certificates for Special Purpose engagements; Certificates under the Payment of Bonus Act, import/export control authorities, etc.; Specific services to non-audit clients; Certificate on Corporate Governance.
  11. Special features of audit of banks, insurance companies, co-operative societies and non-banking financial companies.
  12. Audit under Fiscal Laws, viz, Direct and Indirect Tax Laws.
  13. Cost audit
  14. Special audit assignments like audit of bank borrowers, audit of stock and commodity exchange intermediaries and depositories; inspection of special entities like banks, financial institutions, mutual funds, stock brokers.
  15. Special features in audit of public sector companies. Directions of Comptroller and Auditor General of India to statutory auditors; Concepts of propriety and efficiency audit.
  16. Internal audit, management and operational audit Nature and purpose, organisation, audit programme, behavioural problems; Internal Audit Standards issued by the ICAI; Specific areas of management and operational audit involving review of internal control, purchasing operations, manufacturing operations, selling and distribution, personnel policies, systems and procedures. Aspects relating to concurrent audit.
  17. Investigation and Due Diligence.
  18. Concept of peer review
  19. Salient features of Sarbanes – Oxley Act, 2002 with special reference to reporting on internal control.
  20. Professional Ethics
      Code of Ethics with special reference to the relevant provisions of The Chartered Accountants Act, 1949 and the Regulations thereunder.

  Note:
  

  1. The provisions of the Companies Act, 1956 which are still in force would form part of the syllabus till the time their corresponding or new provisions of the Companies Act, 2013 are enforced.
  2. If new legislations are enacted in place of the existing legislations, the syllabus would include the corresponding provisions of such new legislations with effect from a date notified by the Institute.

• Paper 4: Corporate and Allied Laws

  Paper 4: Corporate and Allied Laws
  (One paper – Three hours – 100 marks)

  Section A: Company Law (70 Marks)
  Level of Knowledge: Advanced knowledge
  Objective:
  To be able to analyze and apply various provisions of the Companies Act in practical situations
  

  Contents:
  

  1. The Companies Act, 2013 and Rules framed thereunder in its entirety with specific reference to
     1. Declaration and payment of Dividend
     2. Accounts and audit
     3. Appointment and Qualifications of Directors
     4. Appointment and remuneration of Managerial Personnel
     5. Meetings of Board and its powers
     6. Inspection, inquiry and Investigation
     7. Compromises, Arrangements and Amalgamations
     8. Prevention of Oppression and Mismanagement
     9. Revival and Rehabilitation of Sick Companies
     10. Winding Up
     11. Producer Companies
     12. Companies incorporated outside India
     13. Offences and Penalties
     14. E-governance
     15. National Company Law Tribunal and Appellate Tribunal
     16. Special Courts
     17. Miscellaneous Provisions
  2. Corporate Secretarial Practice – Drafting of Resolution, Minutes, Notices and Reports

  
  
  

  Note: The provisions of the Companies Act, 1956 which are still in force would form part of the syllabus till the time their corresponding or new provisions of the Companies Act, 2013 are enforced.

  Section B: Allied Laws (30 Marks)
  Objective:
  To develop ability to analyse the requirements of laws stated in the Section.
  
  Contents:
  

  3. An overview of the following laws –
     1. The Securities and Exchange Board of India Act, 1992, Rules, Regulations and Guidelines issued thereunder.
     2. Securities Contracts (Regulation) Act, 1956
     3. The Foreign Exchange Management Act, 1999
     4. The Competition Act, 2002
     5. The Banking Regulation Act, 1949, The Insurance Act, 1938, The Insurance Regulatory and Development Authority Act, 1999, The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
     6. The Prevention of Money Laundering Act,2002
  4. Interpretation of Statutes, Deeds and Documents.

  Note: If new legislations are enacted in place of the existing legislations, the syllabus would include the corresponding provisions of such new legislations with effect from a date notified by the Institute.