Higher Diploma in Accounting

Specification 2012Edition

Higher Diploma in Accounting Specification

Qualification Summary

Unit ID H1: FA H2: MA H3: BF H4: FM H5: AS H6: TX H7: BCL H8: AMA H9: BS H10: EM

Unit Title Financial Accounting Management Accounting Business & Finance Financial Management Assurance Taxation (UK) Business Law & Company Law Advanced Management Accounting Business Strategy Business Economics & Business Mathematics

Page Number 2 5 10 15 18 22 27 31 38 42

Higher Diploma in Accounting Specification

H1: Financial Accounting Description of Unit This unit provides the opportunity to develop knowledge and understanding of the techniques used for recording and maintaining financial transactions and preparing relevant documents or statements. This unit also provides the opportunity to develop knowledge and understanding of the techniques used to maintain accounting records for incomplete accounts, partnership firms and prepare final accounts for companies.

Learning Outcome 1) Understand the context and purpose of financial reporting

Contents Introduction to accounting The reasons for, and objectives of, financial reporting Users and stakeholders needs The main elements of financial reports The regulatory framework Accounting conventions The qualitative characteristics of financial reporting Alternative bases used in the preparation of financial information Double-entry book-keeping principles including the maintenance of accounting records Sources, records and books of prime entry, and journals Ledger accounts and double entry Cycle from trial balance to financial statements

2) Understand the use of double entry and accounting systems

Higher Diploma in Accounting Specification

3) Complete recording of transactions and events

Record transactions and events related to: Sales tax Inventory Cash Tangible non-current asset Intangible non-current asset Accruals and prepayments Irrecoverable debts and allowances Provisions and contingencies Capital structure and financing costs Control accounts and reconciliations Basic reconciliations Correction of errors Preparation of trial balance Suspense accounts Statements of financial position Income statements and statements of comprehensive income Disclosure notes Events after the reporting period Statements of cash flows (excluding partnerships) Incomplete records Reporting reserves in a companys statement of financial position Preparation of statement of financial position from given information

4) Prepare trial balance

5) Preparing basic financial statements

Higher Diploma in Accounting Specification

Preparation of statement of comprehensive income from given information Treatment of Income tax in financial statement Items requiring disclosures Interrelationship between statement of comprehensive income and statement of financial position

6) Preparing simple consolidated financial statements

Subsidiaries Associates Importance and purpose of analysis of financial statements Ratios Analysis of the financial statements

7) Interpretation of financial statements

Study Materials: ACCA F3 (INT) Exam Details: Exam Duration: 120 Min; 40 MCQ each carrying 2.5 marks, ACCA F3 Standard MCQs

Higher Diploma in Accounting Specification

H2: Management Accounting Description of Unit This unit develops knowledge and understanding of how to prepare and process fundamental cost and quantitative information to support management in planning and decision-making in a variety of business contexts. In this unit learners will also consider different costing methods. Cost data will be collected, compiled and analysed, and will be processed into information of use to management. The unit goes on to deal with basic budgetary planning and control, preparing forecasts and budgets; and then comparing them to actual results. Learners will consider fundamental management techniques to make and support decision-making.

Learning Outcome 1) Explain the nature and purpose of cost and management accounting

Contents purpose and role of cost and management accounting within an organisation Compare and contrast financial accounting accounting Outline the managerial processes of planning, decision making and control. difference between strategic, tactical and operational planning data and information; attributes of good information; limitations of management making. impact of general economic environment on costs/revenue. sampling techniques (random, systematic, stratified, multistage, cluster and quota) ; choose an appropriate sampling method in a specific situation. information in providing guidance for managerial decisionwith cost and management

2) Classify cost and present information for management

production and non-production costs; elements of non-production costs; Describe the different elements of production cost; distinction between production and non-production costs; classifications used in the analysis of the

Higher Diploma in Accounting Specification

Learning Outcome

Contents product/service costs including by function, direct and indirect. fixed and variable, stepped fixed and semi variable costs. Use of high/low analysis to separate the fixed and variable elements of total costs; linear functions and equations Concept of cost objects, cost units, and cost centres; distinguish between cost, profit, investment and revenue centres Written reports representing management information in suitable formats according to purpose; presenting information using tables, charts and graphs Interpret information presented in the management reports Procedures for the ordering, receiving and issuing of inventory; the entries and balances in the material inventory account; costs of ordering and holding costs; optimal order quantities; minimisation of inventory cost; and establishment of re-order level Calculation of direct and indirect cost of labour; journal and ledger entries to record labour cost inputs and outputs; and labour efficiency capacity and production volume ratios The procedures involved in determining production overhead absorption rates; apportionment of production overheads to cost centres using appropriate basis; re-apportionment of service cost centre costs to production cost centre; journal and ledger entries for manufacturing overheads absorbed; and under and over absorption of overheads incurred and

3) Apply accounting techniques for material, labour and overheads

Higher Diploma in Accounting Specification

Learning Outcome 4) Understand techniques of marginal and absorption costing

Contents The concept of contribution; the effect of absorption and marginal costing on inventory valuation and profit maximisation; profit or loss under absorption and marginal costing; and advantages and disadvantages of absorption and marginal costing.

5) Understand techniques of cost accounting and alternative cost accounting

The characteristics of process costing; concepts of normal and abnormal looses and abnormal gains; calculation of cost per unit of process outputs; the concept of equivalent units; and apportionment of process costs between work-in-progress and transfer out of a process

6) Apply statistical techniques and prepare budget

The issue of by products and joint products The characteristics of job and batch costing; preparation of cost records; and accounts in job and batch costing situations Suitable unit cost measures used in different service/operation situations; and service cost analysis in simple service industry situations Activity based costing (ABC), target costing, life cycle costing and total quality management (TQM) as alternative cost management techniques ABC, Target costing vs life cycle costing High low method to estimated fixed and variable cost; scatter diagram and lines of best fit; analysing cost data by using correlation coefficient, coefficient of determination, regression coefficient

Forecast data; time series analysis; variation; index numbers

moving averages; trend and seasonal

Higher Diploma in Accounting Specification

Learning Outcome

Contents Computer spreadsheet system; applications for computer spreadsheets and their use in cost and management accounting Nature and purpose of budgeting; planning and control cycle in an organisation; administrative procedures used in budgeting process; stages in budgeting process Administrative procedures used in the budgeting process; the stages in the budgeting process; the concept of principal budget factor; budgets for sales, production, materials, labour and overheads; and fixed, flexible and flexed budgets Capital investment planning and control; NPV, IRR and discounted and nondiscounted payback and their interpretation

7) Understand budgetary control and standard costing

Simple variances between flexed budget, fixed budget and actual sales, costs and profits; significance of variances; control reports for presentation to management

Sale price and volume variance; Materials price and usage variance; labour rate and efficiency variance; variable overhead expenditure and efficiency variance; and variances for fixed overhead

Purpose and principles of standard costing; and the standard cost per unit under absorption and marginal costing Reconcile budgeted profit with actual profit under standard absorption costing and or marginal costing

Higher Diploma in Accounting Specification

Learning Outcome 8) Measure and report performance

Contents Purpose of strategic and operational and tactical objectives; Mission statement; government regulation on performance measurement Measure profitability, liquidity, activity and gearing and non-financial measures; balanced scorecard; economy, efficiency and effectiveness; performance measures in contract and process costing; return on investment and residual income; performance measure of service industries Compare cost control and cost reduction; cost reduction methods; value analysis Nonfinancial performance measures; performance of non-profit and government organisations; reports highlighting key areas for management attention and recommendations for improvement.

Study Materials: ACCA F2 (INT) Exam Details: Exam Duration: 120 Min; 40 MCQ each carrying 2.5 marks, ACCA F2 Standard MCQs

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H3: Business & Finance Description of Unit This unit aims to provide students with an understanding of how businesses operate and how accounting and finance functions support businesses in achieving their objectives.

Learning Outcome 1) Identify the general objectives of businesses and the functions and tasks that businesses perform in order to meet their objectives

Contents The general objectives of businesses The general objectives of strategic management and specify the strategic management process and interrelationship between a businesss vision, mission and strategic objectives The various functional areas within businesses and show how the functions assist the achievement of business objectives The nature and functions of organisational management, human resources management and operations management and show how these are influenced by human behaviour The relationship between a businesss overall strategy and its functional strategies The nature and purpose of strategic plans, business plans and operational plans The process of how a strategic plan is converted into fully-integrated business and operational plans

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Learning Outcome

Contents The main components of the risk management process and show how they operate The key issues in relation to risk and crisis management. The differences between businesses carried out by sole traders, partnerships, limited liability partnerships, alliances and groups, and show the advantages and disadvantages of each of these business structures The differences between unincorporated businesses and companies, and show the advantages and disadvantages of incorporation. Different organisational structures and specify their disadvantages advantages and

2) Specify the nature, characteristics, advantages and disadvantages of different forms of business and organisational structure

3) Identify the purpose of financial information produced by businesses, specify how accounting and finance functions support business operations, and identifying sources and methods of financing for businesses and individuals

The use of financial information Accounting and finance functions in support businesses in pursuit of their objectives The main considerations in establishing and maintaining accounting and financial reporting functions and financial control processes In the context of accounting and other systems, the issues surrounding: information processing, information security, information management The need of the management of a business of information about performance measurement including non-routine areas such as in supporting an entitys sustainability management

The accountants role in preparing and presenting information for the management of business

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Learning Outcome

Contents The relationship between a business and its bankers and other providers of financial products The characteristics, terms and conditions and role of alternative short, medium and long term sources of finance available to different businesses The processes by which businesses raise equity, capital and other long term finance Appropriate methods of financing exports, including: bills of exchange, L/C, Islamic Finance The general objectives of personal financial management The principles of personal financial management and personal financial management process

4) Specify the role of the accountancy profession and why the work of the profession is important

The importance to the public interest of high quality, accurate financial reporting and assurance The rationale for key parts of the professions work and the links between technical competence and professional responsibility, including accounting principles, accounting standards, sound business management and the public interest

The key features of the structure of the accountancy profession, the regulatory framework within which professional accountants work and the ways in which the accountancy profession interacts with other professions.

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Learning Outcome 5) Identify the role that governance plays in the management of a business and specify how a business can promote corporate governance, sustainability, corporate responsibility and an ethical culture

Contents The reasons why governance is needed and identify the role that governance plays in the management of a business The key stakeholders and their governance needs for a particular business The distinction between the roles and responsibilities of those charged with corporate governance and those charged with management. The roles and responsibilities of the members of the executive board, any supervisory board, the audit committee and others charged with corporate governance, internal audit and external audit The roles and responsibilities of those responsible within a business for internal audit and for the external audit relationship The nature of responsibility The policies and procedures a business should implement in order to promote an ethical culture. ethics, business ethics, sustainability and corporate

6) Specify the impact on a business of the economic environment in which it operates.

The signalling, rewarding and allocating effects of the price mechanism on business (including the concept of price elasticity) The potential types of failure of the market mechanism and their effects on business The key macroeconomic factors that affect businesses The principal effects of regulation upon businesses The needs of different stakeholders in a business (e.g. shareholders, the local community, employees, suppliers, customers)

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Learning Outcome

Contents The effects of key international legislation (including the Sarbanes- Oxley Act and trade restrictions) on businesses.

Study Materials: ICAEW Business Finance Exam Details: Exam Duration: 120 Min; 40 MCQ each carrying 2.5 marks, ICAEW Business Finance Standard MCQs

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H4: Financial Management Description of Unit This unit aims to provide students with an understanding of how to finance with options, how to manage financial risks and how to evaluate and take proper investment decision to achieve the objective of the business.

Learning Outcome 1) Explain the objectives of financial management

Contents the general objectives of financial management and the financial strategy process for a business the impact of financial markets and other external factors on a businesss financial strategy, using appropriate examples to illustrate the impacts the implications of terms included in loan agreements in a given scenario (e.g. representations and warranties; covenants; guarantees) the roles played by different stakeholders, advisors and financial institutions in the financial strategy selected by a business the possible conflicts of objectives between different stakeholders in a business the features of different means of making returns to owners and lenders, their effects on the business and its stakeholders, and recommendation of appropriate options in a given scenario

2) Identify capital requirements of businesses and assess financing options

a businesss future requirements for capital, taking into account current and planned activities referring to levels of uncertainty and making reasonable assumptions which are consistent with the situation

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Learning Outcome

Contents the suitability of different financing options for a given business the business and financial environment factors that may affect financing for investment in a different country the financing costs and benefits (including those that are not separately quantifiable) of various courses of action, using appropriate appraisal techniques the costs of different financing methods (before and after tax) and the weighted average cost of capital the effect of capital gearing/leverage on investors perception of risk and reward options for reconstruction (e.g. group reconstruction, spin-off, purchase of own shares, use of distributable profits)

3) Identify the financial risks facing a business and the principal methods of managing those risks

the key financial risks facing a business in a given scenario utilisation of financial instruments (e.g. derivatives, hedging instruments) to manage financial risks and the characteristics of those instruments different methods of managing interest rate exposure appropriate to a given situation and non-complex calculations to determine the cost of the hedge explain different methods of managing currency risks appropriate to a given situation and perform non-complex calculations to determine the cost of the hedge

methods of managing other key financial risks and perform non-complex calculations to determine the cost of particular methods

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Learning Outcome 4) apply appropriate investment appraisal techniques and calculate the value of shares and businesses

Contents investment appraisal techniques appropriate to the objectives and

circumstances of a given business the investment decision making process appropriate discount or interest rate for use in selected investment appraisal techniques from information supplied appropriate values to be used in selected appraisal techniques from information supplied, taking account of inflation and tax appraisal techniques and how the interpretation of results from the techniques can be influenced by an assessment of risk the results of the appraisal of projects or groups of projects are affected by the accuracy of the data on which they are based and factors which could not be included in the computational analysis the optimal investment plan when capital is restricted a course of action which is based upon the results of investment appraisal and consideration of relevant non-financial factors such as sustainability and which takes account of the limitations of the techniques being used a straightforward investment and financing plan for a given business scenario. value shares and businesses using income and asset based approaches (including performing appropriate sensitivity calculations)

Study Materials: ICAEW Financial Management Exam Details: Exam Duration: 180 Min; Four broad questions of ICAEW Financial Management Qs standard

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H5: Assurance Description of Unit The core objective of this unit is to ensure that students understand the assurance process and fundamental principles of ethics, and are able to contribute to the assessment of internal controls and gathering of evidence on an assurance engagement.

Learning Outcome 1) Explain the concept of assurance, why assurance is required and the reasons for assurance engagements being carried out by appropriately qualified professionals

Contents The concept of assurance Exploring the reasons why users desire assurance reports and provide examples of the benefits gained from them such as to assure the quality of an entitys published corporate responsibility or sustainability report. The functions and responsibilities of the different parties involved in an assurance engagement The purposes and characteristics of, and levels of assurance obtained from, different assurance engagements The issues which can lead to gaps between the outcomes delivered by the assurance engagement and the expectations of users of the assurance reports, and suggest how these can be overcome The assurance process, including: obtaining the engagement continuous risk engagement, assessment, engagement acceptance, the scope of the the engagement, performing the engagement, planning

obtaining evidence, evaluation of results of assurance work, concluding and reporting on the engagement, reporting to the engaging party, keeping

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Learning Outcome

Contents records of the work performed The need to plan and perform assurance engagements with an attitude of professional skepticism The concept of reasonable assurance. The reasons for organisations having effective systems of control The fundamental principles of effective control systems The main areas of a business that need effective control systems The components of internal control in both manual and IT environments, including: the overall control environment, preventative and detective controls, internal audit Different types of internal control, with particular emphasis upon those which impact upon the quality of financial information The demonstration of how specified internal controls mitigate risk and state their limitations Internal controls for an organisation in a given scenario Internal control weaknesses in a given scenario The sources of information which will enable a sufficient record to be made of accounting or other systems and internal controls.

2) Explain the nature of internal controls and why they are important, document an organisations internal controls and identify weaknesses in internal control systems

3) Select sufficient and appropriate methods of obtaining assurance evidence and recognise when conclusions can be drawn from evidence obtained or where issues need to be referred to a senior colleague

The reasons for preparing and keeping documentation relating to an assurance engagement The different methods of obtaining evidence from the use of tests of control and substantive procedures, including analytical procedures

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Learning Outcome

Contents The strengths and weaknesses of evidence The situations within which the different methods of obtaining evidence should and should not be used The reliability of different types of assurance evidence Appropriate methods of obtaining evidence from tests of control and from substantive procedures for a given business scenario Recognition of when the quantity and quality of evidence gathered from various tests and procedures is of a sufficient and appropriate level to draw reasonable conclusions on which to base a report The circumstances in which written confirmation of representations from management should be sought and the reliability of such confirmation as a form of assurance evidence Recognition issues arising whilst gathering assurance evidence that should be referred to a senior colleague. the different methods of obtaining

4) Understand the importance of ethical behaviour to a professional and explain issues relating to integrity, objectivity, conflicts of interest, conflicts of loyalty, confidentiality and independence.

The role of ethical codes and their importance to the profession The differences between a rules based ethical code and one based upon a set of principles The key features of the system of professional ethics adopted by IFAC and ICAEW The fundamental principles underlying ethics the IFAC and the ICAEW code of

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Learning Outcome

Contents Recognition of the importance of integrity and objectivity to professional accountants, identifying situations that may impair or threaten integrity and objectivity Courses of objectivity Appropriate response to the request of an employer to undertake work outside the confines of an individuals expertise or experience Recognition of the importance of confidentiality and identify the sources of risks of accidental disclosure of information Steps to prevent the accidental disclosure of information Situations in which confidential information may be disclosed Definition of independence and recognition of why those undertaking an assurance engagement are required to be independent of their clients The threats to the fundamental ethical principles and the independence of assurance providers Safeguards to eliminate or reduce threats to the fundamental ethical principles and the independence of assurance providers action to resolve ethical conflicts relating to integrity and

Study Materials: ICAEW Assurance Exam Details: Exam Duration: 120 Min; 40 MCQ each carrying 2.5 marks, ICAEW Assurance Standard MCQs

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H6: Taxation Description of Unit This unit provides the opportunity to develop and apply knowledge and skills in the understanding of the taxation framework of UK with specific and detail reference to personal taxation (partnership areas inclusive). This unit will also give the opportunity to develop the ability to prepare computations of tax liability of businesses resident in the UK for the purposes corporation tax and value added tax. In addition, this unit will give the opportunity to develop the ability to prepare computations of tax liability for both individuals and businesses resident in the UK for the purposes of capital gains tax.

Learning Outcome 1) Explore UK tax system and issues of personal taxation

Contents UK tax system: the purpose (economic, social, etc.) of UK tax system in a modern economy; the types and structure of UK tax system; the need for an ethical and professional approach for taxation; the scope of income tax and those assessable; and the criteria for being resident and non-resident in UK Personal taxation: different types of taxable income and preparation of the computation of income tax liability and payable based on comprehensive income; the qualifying relief deductible with effect on the tax; application of the tax treatment of charitable donations; application of the personal age allowance in different situations; the treatment of reliefs against total income; the treatment of gift aid donations; the treatment of property owned jointly by a married couple and civil partners; and the principles of inheritance tax and computing inheritance tax payable after allowing for tax reduction and deferring techniques

2) Explore the issues related to taxes on employment income and property

Employment income: Identification of the factors that states whether an

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Learning Outcome business profit

Contents engagement is treated as employment or self-employment; identification of the basis of assessment for exempt income; the computation of assessable income; and the application of the treatment of benefits for tax purpose Property business income: identification and calculation of property business profits; the treatment of furnished holiday lettings; application of the treatment of premium received from short lease, sub-lease; and the relief available for property business loss

3) Assess individual income tax from trade and profession and capital allowances

Income from self-employment: the basis of assessment for self employment income; the badges of trade for self-employment; the allowable expenditure in the computation of trading profit; the relief available for pre trading expenditure; the assessable profits on commencement and on cessation of trades; the treatment of Class 2 and Class 4 national insurance contributions; the factors that influence the choice of accounting date; the conditions that must be met for a change of accounting date to be valid; and preparation of the assessable profits on a change of accounting date

Capital allowances: statutory definition of plant and machinery for capital allowances purpose; writing down allowances; first year allowances and annual investment allowances; the computation of capital allowance for plant and machinery with the effects of balancing allowance and charges on total allowance; the treatment of short life assets and long-life assets; the treatment of special rate pool items; and computation of allowances available for industrial building purposes

Partnership: the rules for assessing income arising from partnership; the

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Learning Outcome

Contents assessable profits/losses following changes in profit sharing ratio; the allocation of profit and loss between partners for the period of accounts; and the loss relief restriction for limited liability partnership. Relief for trading losses: carrying forwarding trading losses following the incorporation of a business; ways of claiming trading losses against total profits and capital gains; and computation of terminal loss relief

4) Explore the issues related to pension, national insurance contributions and tax administration

PAYE system and self-assessment system: the basis for annual contributions to a registered pension scheme for an individual; the calculation of tax relief available; and the concepts of implications of the allowance being exceeded; explain and apply the features of the self-assessment system as it applies to individuals; the time limits for the submission of information, claims and payment of tax, including payments on account.

National insurance contributions: The computations of national insurance contributions for Class 1, Class 1A, Class 2 and Class4 types.

5) Explore the concepts and principles of Capital Gains Tax

The scope of capital gains tax; the basic principles of CGT for individual and company; the treatment of assets transferred between married couple and civil partnership; calculation of the available deductions for part disposals; the treatment of assets damaged, lost or destroyed; the implications of receiving insurance proceeds and reinvesting such proceeds; the conditions for exempt chattels and wasting assets; the computations of chattels and wasting assets; issues related to principle private residence; the treatment of quoted shares valued at time of gift; the matching rules for shares and securities for

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Learning Outcome

Contents individual and companies; the pooling provisions; the treatment of bonus issues, rights issues, takeovers and reorganisations; the treatment for gains and losses on disposal of shares and securities; the reliefs available for entrepreneurs; and the rollover / holdover reliefs available both for individuals and companies

6) Undertake the scope of corporation tax

Payments on account, accounting period and financial year; determination of the starting and ending of accounting period; determination of the residence of a company; identification of the allowable expenditure for the purpose of adjusting trading profits; issues of the pre-trading reliefs available; the treatment of capital allowances, property business income for companies; the treatment of interest paid and received under loan relationship rules; the treatment of losses arises from different sources of income; the computation of profit chargeable to corporation tax; exemptions and reliefs leading to deferral or minimisation of corporation tax

7) Examine other aspects of corporation tax

The features of the self-assessment system as it applies to companies; the time limits that apply to the filing of returns and the making of claims; the information and records that companies need to retain for tax purposes; HMRCs role into a self-assessment tax return; the procedures for dealing with appeals and disputes; the calculation of interest on overdue tax; and comprehensive issues related to the penalties that can be charged; the effect of a group corporate structure for corporation tax purposes

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Learning Outcome 8) Explore the issues related to VAT

Contents The scope of VAT; identification of the principal, zero-rated and exempt supplies; VAT registration on requirements; accountability of VAT and its administration; identification of the tax point when goods or services are supplied; requirements provided on VAT invoices; the principles regarding the valuation of supplies; identification of situations where input VAT is non deductible; the reliefs available for impairment losses on trade debts; the issues of default surcharge, serious misdeclaration penalty and default interest; and the issues connected with cash accounting scheme, annual accounting scheme and flat rate scheme

Study Materials: ACCA F6 (UK) Exam Details: Exam Duration: 240 Min; Eight broad questions, ACCA F6 Standard Qs

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H7: Business Law & Company Law Description of Unit This unit provides the opportunity to develop knowledge and skills in the understanding of contractual agreements, the agency relationship and the consequences of negligence. The aim of this unit is also to provide a foundation to incorporation, including the roles of shareholders and directors, and the main implications of insolvency law. It focuses on criminal behaviour that may be encountered by professional accountants and other key areas in which the law affects the role and work of the professional accountant.

Learning Outcome 1) Explore the impact of civil law on business and professional services

Contents recognise when a legally binding contract exists between two parties and how a contract may be enforced identify the circumstances under which a contract can be terminated and possible remedies for breach of contract identify the methods by which agency can be created identify the duties and rights of agents including commercial agents recognise the authority an agent has to enter into contracts on behalf of a principal, including express, implied and apparent authority; and that given to partners under legislation identify instances and consequences of negligence (particularly negligent misstatement) in a given scenario identify instances and consequences of vicarious liability in a given scenario

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Learning Outcome 2) understand the implications of incorporation and the main implications of insolvency law.

Contents identify the differences between partnerships and companies and recognise the circumstances when the veil of incorporation can be lifted identify the procedures required to form a registered company or a limited liability partnership, including any practical considerations, and identify the advantages and disadvantages of off-the-shelf companies identify the administrative consequences of incorporation or the formation of a limited liability partnership including requirements regarding statutory books, accounts, meetings and the role of the Company Secretary identify the procedures for the issue of shares, including issues at a premium or at a discount identify share transfer requirements and disclosure requirements recognise how a shareholder can influence the management of a company through meetings and resolutions, including shareholders rights to requisition a meeting identify the various statutory rights of shareholders to challenge the management of the company under the Companies Acts and the Insolvency Act 1986 identify the rights and duties which a member of a limited liability partnership possesses identify the ways in which a director may be appointed and removed identify directors duties, explaining the consequences of any major breach identify the powers of directors and in what circumstances they will bind the company in a contract with third parties

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Learning Outcome

Contents identify the nature of fixed and floating charges and the procedures for registering them identify the nature and function of receivership, an administration order, a compulsory and a voluntary winding up (including relevance of secured debt) identify the main implications of insolvency law, including: the principal means of termination of companies or other business entities the priorities on a liquidation of the distribution of assets including rights of creditors and employees (including secured assets) bankruptcy and other responses to personal insolvency

3) identify instances of criminal behaviour that may be encountered by professional accountants

identify circumstances where a professional accountant is required to follow an organisations internal, or externally mandated, whistleblowing procedures identify instances and consequences of fraud in a given scenario identify instances and consequences of bribery and corruption identify instances and consequences of money laundering and select appropriate courses of action for a professional accountant in accordance with international and national regulations and law

recognise the relationships and interaction between legal principles, legislation, case law, ethics and ethical codes.

4) identify other key areas in which the law affects the role and work of the professional accountant.

identify the key requirements of the Data Protection Act 1998, on the use of personal information and how the act can affect the manner in which information systems are used by businesses.

identify the main effects of the Freedom of Information Act on public and

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Learning Outcome

Contents private organisations identify who is an employee and the main legal consequences of employment status identify the key features of employment contracts and recognise circumstances in which an employment contract may be terminated and the consequences arising identify when dismissal constitutes: a wrongful dismissal an unfair dismissal

identify the circumstances where an employee can claim a statutory redundancy payment.

Study Materials: ICAEW Law Exam Details: Exam Duration: 120 Min; 40 MCQ each carrying 2.5 marks, ICAEW Law Standard MCQs

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H8: Advanced Management Accounting Description of Unit This unit provides the opportunity to analyse financial information for short-term decision making. This unit deals with mathematical models and linear programme for decision making. One of the core areas of this unit is cost planning and analysis for strategic advantage for organisations. The unit also addresses the treatment of uncertainty in decision making. This unit will develop the skills to apply both traditional and contemporary approaches to cost accounting in a variety of contexts. Principles of standard costing, variances, standard costing and budget preparation have been included in this unit. This unit will also address issues related to appropriate statements for cost, profit and investment centre managers, financial performance indicators, alternative transfer pricing policies and behavioural consequences of management control systems.

Learning Outcome 1) Analyse financial information for decision making

Contents Pricing decisions: Conflict between marginal cost principles and the need for full recovery of all costs incurred; straight line demand equation and elasticity of demand; pricing decisions for profit maximising in imperfect markets; increasing production/sales level with consideration to incremental cost/revenues; and pricing strategies and the financial consequences of market skimming, premium pricing, penetration pricing, loss leaders, costplus, complementary product, volume discounting, price-discrimination, product bundling/optional extras and product differentiation to appeal to different market segments Make-or-buy decisions: Comparative analysis of cost and benefits associated with making (producing in-house) and outsourcing (buying from suppliers); and application of comparative results and qualitative or strategic issues for

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Learning Outcome

Contents decisions to make or buy Relevant costing for decisions: Relevant cash flows and their use in short-term decisions, criteria for acceptance/rejection of contracts, pricing and cost/benefit comparisons; application of relevant costing principles in situations involving shut down, one-off contracts and the further processing of joint products; the allocation of joint costs and decisions concerning process and product viability based on relevant costs and revenues; and environmental accounting

2) Apply mathematical models and linear programming for decision-making

Application of variable/fixed cost analysis in multiple product contexts to break-even analysis and product mix decision making (including circumstances where there are multiple constraints and linear programming methods are needed to reach 'optimal' solutions)

The meaning of 'optimal' solutions and application of linear programming methods for profit maximising, revenue maximising and satisfying objectives Implications of shadow prices (dual prices) on decision-making and performance management Linear programming for complex situations involving multiple constraints (scarce resources); solution by graphical methods of two variable problems; and the implications of the existence of slack for decision-making and performance management

3) Explore cost planning and analysis for competitive advantage

Activity based costing: Activity-based management in the analysis of overhead and its use in improving the efficiency of repetitive overhead activities; the

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Learning Outcome

Contents implications of switching to ABC for pricing, sales strategy, performance management and decision-making; and the techniques of activity-based management in identifying cost drivers/activities and usage of the process reengineering to eliminate non-value adding activities and reduce activity costs Life-cycle costing: The concept of life cycle costing and how life cycle costs interact with marketing strategies at each stage of the life cycle; and implications of life-cycle costing for marketing strategies Target costing: Derivation of target costs from target prices and the relationship between target costs and standard costs; and the implications of using target costing on pricing, cost control and performance management Throughput accounting: Application of Throughput accounting to decisionmaking situations; Throughput accounting as a system of profit reporting and stock valuation; and the benefits of just-in-time production, total quality management and theory of constraints and the possible impacts of these methods on cost accounting and performance measurement Marginal and Absorption Costing: Marginal (or variable) costing as a system of profit reporting and stock valuation; Absorption costing as a system of profit reporting and stock valuation; and the integration of standard costing with marginal cost accounting, absorption cost accounting and throughput accounting

4) Understand the issue of uncertainty in decision making

The nature of risk and uncertainty: Impact of uncertainty and risk on decision models that may be based on CVP analysis, relevant cash flows, learning curves, discounting techniques etc.; and different research techniques to

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Learning Outcome

Contents reduce or mange such risk Expected Values and Sensitivity analysis: Application of sensitivity analysis on both short and long-run decision models to identify variables that might have significant impacts on project outcomes; preparation of expected value tables and ascertaining the value of information; and analysis of risk and uncertainty by calculating expected values and standard deviations (together with probability tables and/or histograms); value of perfect and imperfect information Profit tables and decision trees: Application of the techniques of maximax, maximin, and minimax to decision-making problems including the production of profit tables and the application of decision trees for simple decision problems

5) Apply budgeting tools and techniques for financial planning

Time series analysis including moving totals and averages, treatment of seasonality, trend analysis using regression analysis and the application of these techniques in forecasting product and service volumes

Fixed, variable, semi-variable and activity-based categorisations of cost and their application in projecting financial results What-if analysis based on alternate projections of volumes, prices and cost structures and the use of spreadsheets in facilitating these analyses Different types of budgets including incremental approaches, zero-based budgeting and activity-based budgets, 'rolling budgets' for adaptive planning The use of budgets for control: controllable costs and variances based on fixed and flexed budgets

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Learning Outcome

Contents Behavioural issues in budgeting: participation in budgeting and its possible beneficial and adverse consequences Criticisms of budgeting and the recommendations of the advocates of the balanced scorecard and beyond budgeting

6) Explore the principles of standard costing and variances

Manufacturing standards for material, labour, variable overhead and fixed overhead Price/rate and usage/efficiency variances for materials, labour and variable overhead. Further subdivision of total usage/efficiency variances into mix and yield components

7) Apply performance measurement and control procedure

Fixed overhead expenditure and volume variances Planning and operational variances Standards and variances in service industries, public services and the professions Application of sales price and sales revenue/margin volume variances to all sectors, including professional services and retail analysis Interpretation of variances: interrelationship and significance The concept of Benchmarking Behavioural implications of setting standard costs Financial performance indicators (FPIs) for profitability, liquidity and risk in both manufacturing and service businesses Non-financial performance indicators (NFPIs) to improve the performance indicated

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Learning Outcome

Contents Causes and problems created by short-termism and financial manipulation of results Performance measurement based on ratio analysis and difficulties of target setting in qualitative areas The Balanced Scorecard, and the Building Block model proposed by Fitzgerald and Moon The theory of transfer pricing, including perfect, imperfect and no market for the intermediate good Use of negotiated, market, cost-plus and variable cost based transfer prices; and 'Dual' transfer prices and lump sum payments as means of addressing some of the issues that arise. Return on investment and its deficiencies: the emergence of residual income and economic value added to address these. Typical consequences of a divisional structure for performance measurement as divisions compete or trade with each other Likely consequences of different approaches to transfer pricing for divisional decision making, divisional and group profitability, the motivation of divisional management and the autonomy of individual divisions.

8) Understand performance measure in not-for-profit and public-sector organisations

Problems in measuring performance of not-for-profit and public-sector organisations Value for money criteria of economy, efficiency and effectiveness Measuring economy, efficiency and effectiveness for performance

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Learning Outcome

Contents measurement Quantitative and qualitative performance measures for not-for-profit and public-sector organisations

Study Materials: ACCA F5 Exam Details: Exam Duration: 240 Min; Eight broad questions, ACCA F5 Standard Qs

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H9: Business Strategy Description of Unit This unit provides the opportunity to analyse a businesss performance and position, current market and competitive position. analyses different business plans to develop the correct business strategy. This unit deals with the strength, weaknesses, opportunities and threats of a business to take the appropriate decision for fulfilling the objectives of the business. This unit specifically deals with data and

Learning Outcome 1) Analyse and identify the consequences of a businesss current objectives, market position and direction

Contents businesss purpose, in terms of its stated mission, objectives and critical success factors, highlighting omissions, inconsistencies and weaknesses in its strategic management systems and the different objectives of stakeholders the external factors which may impact upon a businesss performance and position, identifying significant issues in areas such as: sustainability issues global macroeconomic forces international trade and financial systems government policies industry developments cultural environment stakeholder impact current markets markets for finance, labour and other resources

businesss current markets and competitive strategy in sufficient detail for

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Learning Outcome

Contents decisions to be made, drawing conclusions consistent with the data and results and highlighting relevant issues in terms of their likely impact on the strategy of the business the significance and effect of the internal factors in a given situation which affect or may influence a businesss ability to achieve its chosen strategy, including its: current resources product/service portfolio

organisational and operational capabilities (including core competencies existing business processes, human resource capabilities and information systems capabilities)

the governance structure of a business identifying strengths and weaknesses the risk attached to a businesss present position, considering all relevant factors (including attitudes to risk). business current position and performance from both a financial perspective and a non-financial perspective, using a variety of information sources and data analysis.

2) Evaluate the likely consequences of strategic choices and recommend strategies to meet the objectives of a business

the alternative strategies available to a business financial and other data in order to provide information for strategic decision making identify the implications for stakeholders, including shareholder value, of choice between strategies the risks attached to proposed courses of action in a given situation, considering

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Learning Outcome

Contents all relevant factors (including attitudes to risk) stating all assumptions made and identifying strategies for managing risk how a business chooses from competing strategies in order to maximise the achievement of its key objectives, including those relating to corporate responsibility and sustainability the ethical implications of a businesss strategies and operations including those for the organisation and for individuals a strategy or combination of strategies which will achieve the businesss objectives and take account of known constraints, including stakeholder risk preferences how products and services must evolve in the face of changing consumer demand how to position particular products and services in the market place to maximise competitive advantage and develop a marketing strategy

3) Develop a business plan to achieve a businesss strategic objectives, demonstrate how data and information can be used to help implement and monitor strategy recommend an appropriate organisational structure and explain the process of effective change management.

the functional strategies necessary to achieve a businesss overall strategy. evaluate the different types of organisational structure and recommend an appropriate structure for a given strategy identify the steps needed for a given business to enable it to meet the appropriate regulations, codes of conduct and disclosure requirements in respect of its governance

identify methods of further developing a specific business which take account of positional analysis and risk and would be most likely to achieve the businesss strategic objectives, and justify the methods selected

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Learning Outcome

Contents a simple business plan, or extracts there from, which will achieve given or implied objectives critically assess an entitys business plan how financial and non financial data can be analysed in order to implement and manage a businesss strategy and to monitor the performance of its projects, divisions and other strategic units how a business can use an information system to implement and monitor a strategy in order to create competitive advantage the key issues which should be addressed by the management of a business during the planning and implementation of change.

Study Materials: ICAEW Business Strategy Exam Details: Exam Duration: 180 Min; Three broad questions, ICAEW Business Strategy Standard Qs

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H10: Business Economics and Business Mathematics Description of Unit This first part of this unit primarily deals with the tools and techniques to understand the mathematics associated with managing business operations. The later part of this unit primarily deals with the economic context of business and how competition, the behaviour of financial markets, and government economic policy can influence an organisation. Learning Outcome 1) Demonstrate the use of basic mathematics and probability Contents Use of formulae, including negative powers as in the formula for the learning curve. Percentages and ratios, rounding of numbers. Basic algebraic techniques and solution of equations, including simultaneous equations and quadratic equations, Graphs of linear and quadratic equations, Manipulation of inequalities. Probability and its relationship with proportion and percent, Addition and multiplication rules of probability theory, Venn diagrams, Expected values and expected value tables, Risk and uncertainty 2) Demonstrate the use of ability to summarise and analyse data Data and information, Tabulation of data, Graphs, charts and diagrams: scatter diagrams, histograms, bar charts and ogives, Summary measures of central tendency and dispersion for both grouped and ungrouped data Frequency distributions, Normal distribution, Pareto distribution and the 80:20 rule, Index numbers 3) Understand forecasting relationship between variables and techniques used for Scatter diagrams, Correlation coefficient: Spearmans rank correlation coefficient and Pearsons correlation coefficient, Simple linear regression

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Learning Outcome

Contents Time series analysis graphical analysis, Trends in time series graphs, moving averages and linear regressions, Seasonal variations using both additive and multiplicative models Forecasting and its limitations Simple and compound interest, Present value, Annuities and perpetuities, Loans and mortgages, Sinking funds and savings funds (including using formulae for the sum of a geometric progression), Discounting to find net present value (NPV) and internal rate of return (IRR) The concept of shareholder value, Interpretation of NPV and IRR Features and functions of commonly used spreadsheet software: workbook, worksheet, rows, columns, cells, data, text, formulae, formatting, printing, graphics and macros Advantages and disadvantages of spreadsheet software, when compared to manual analysis and other types of software application packages Use of spreadsheet software in the day-to-day work of Accountant: budgeting, forecasting, reporting performance, variance analysis, what-if analysis, discounted cash flow calculations

4) Demonstrate the use of financial mathematics and apply spreadsheets to calculate and present data

5) Understand the macroeconomic context of organizations

Changes to equilibrium level of national income using an aggregate demand and supply analysis Types and consequences of unemployment, inflation and balance of payments deficits The circular flow of income, the main injections and withdrawals and their

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Learning Outcome

Contents determinants The trade cycle and the implications for unemployment, inflation and trade balance of each stage (recession, depression, recovery, boom) and relevant government policy Government macroeconomic policy goals: low unemployment, inflation, external equilibrium and growth Impacts of recession and boom on forecast sales of capital and consumption goods, industry profitability and employment levels in the firm The main principles of public finance: the central government budget and forms of direct and indirect taxation, incidence of taxation (progressive, regressive) and potential impact of high taxation on incentives and avoidance The main principles of public finance: fiscal, monetary and supply side policies The effects on organisations of changes to interest rates, government expenditure and taxation The effects on organisations of direct government macroeconomic policies The main flows measured in the balance of payments accounts Arguments for and against free trade and policies to encourage free trade The effect of changing exchange rates The nature of globalisation and factors driving it The main trade agreements and trading blocks The social and political impacts of globalisation and its influence The impacts of modern ICT on international trade and patterns of

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Learning Outcome

Contents development The principal institutions encouraging international trade (e.g. WTO/GATT, EU, G8)

6) Understand the goals and decisions of organisations

The forms of public, private and mutual ownership of organisations and their goals Concept of returns to shareholder investment Impact on share price of changes to a companys forecast cash flows or its required rate Role of stakeholders in setting goals and influencing decisions in organisations Types of not-for-profit organizations and the status of economic considerations as constraints of not-for profit organisations The principal-agent problem, its likely effect on decision making in organisations Changing efficiency in the short run and the long run Graphical treatment of short run cost and revenue behaviour Long run cost behaviour and the long run average cost curve Increased competition and lower prices from the impact of e-business Short-run profit maximisation using graphical techniques Profit maximising output using data on price, quantity and unit costs The price mechanism, determinants of supply and demand and their interaction to form and change equilibrium price, The price elasticity of demand and supply, Influences on the price elasticities of demand and supply.

7) Understand the market system and the competitive process

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Learning Outcome

Contents Implications of price fluctuations for producer incomes, industry stability and supply. Government price stabilisation policies, deficiency payments, set-aside, subsidies. Impact of employment costs, minimum price (minimum wage) and maximum price policies Measures of market concentration and the impacts of market concentration Business integration and Effect of monopolies and collusive practices Competition policy and fair trading regulations Positive and negative externalities in goods markets, merit goods and demerit goods. Government response to market failure: indirect taxes, subsidies, polluter pays policies and regulation, public assurance of access to public goods, healthcare, education and housing, public versus private provision of services

8) Understand the financial system

Finance for households, Finance for firms and the Finance for government Role of financial assets, markets and institutions Role and influence of commercial banks on the supply of liquidity to the financial system through their activities in credit creation. Yield on financial instruments and relation between rates, role of risk, the yield curve. Role and common functions of central banks Influence of central banks on yield rates through market activity and as

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Learning Outcome

Contents providers of liquidity Role of foreign exchange markets in facilitating international trade and in determining the exchange rate Influences on exchange rates: interest rates, inflation rates, trade balance, currency speculation Governmental and international policies on exchange rates Role of major international institutions (e.g. World Bank Group, International Monetary Fund, European Central Bank) in fostering international development and economic stabilisation

Study Materials: CIMA CBA Exam Details: Exam Duration: 120 Min; 40 MCQ each carrying 2.5 marks, CIMA CBA Standard MCQs

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