Competency Statement CA Proficiency 1

Transcription

1 Chartered Accountants Ireland Competency Statement CA Proficiency 1 CAP1 Competency Statement 2017 / 2018 Acquiring and Demonstrating Competency as a Chartered Accountant

2 Copyright of this document rests in entirety with Chartered Accountants Ireland. All rights reserved. No part of this text may be reproduced or transmitted in any form or by any means, including photocopying, Internet or dissemination, without the written permission of Chartered Accountants Ireland. Such written permission must also be obtained before any part of this document is stored in a retrieval system of any nature. Products and services that are referred to within may either be trademarks and/or registered trademarks of their respective owners. Chartered Accountants Ireland makes no claim to these trademarks. Chartered Accountants Ireland 2017 CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/2018 2

3 Table of Contents Introduction... 4 Vision Statement Newly Qualified Chartered Accountant... 4 Competency Wheel... 5 The CA Route to Membership... 6 Professional Education and Assessment Structure... 7 Ongoing Development and Queries... 9 Overview: CA Proficiency 1 (CAP1) Assessment: CA Proficiency 1 (CAP1) PAPER 1: Finance PAPER 2: Management Accounting PAPER 3: Financial Accounting PAPER 4: Taxation I and Law for Accountants A: TAXATION I (Northern Ireland) A: TAXATION I (Republic of Ireland) B: Law for Accountants Appendix 1: Levels of Competency CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/2018 3

4 Introduction Membership of the Institute of Chartered Accountants Ireland is permitted to those who have completed the CA Route to Membership and attained the competencies required of an entry-level Chartered Accountant. This document sets out: Vision Statement for a Newly Qualified Chartered Accountant; A summary of the competencies required (The Competency Wheel); how they may be developed and demonstrated (The CA Route to Membership); Professional Education & Assessment Structure; the detailed requirements of the programme in relation to CA Proficiency 1 (CAP1). Vision Statement Newly Qualified Chartered Accountant A newly qualified chartered accountant: behaves with absolute integrity and professionalism; has exceptional financial reporting competence, a strong technical foundation in related disciplines and broad business acumen; communicates effectively; takes a questioning approach; recognises his/her own limitations and consults accordingly; and commits to a career of life-long learning. The skills and competencies of the newly qualified chartered accountant are articulated through the competency wheel and supporting guidance. A summary of the competency wheel is provided in this document and further detail can be obtained by contacting the Head of Assessment & Syllabus at Chartered Accountants Ireland. CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/2018 4

5 Competency Wheel The objective of the CA Route to Membership is to acquire and develop the specified CA Competencies, which are articulated within the Competency Wheel: The competencies articulated in the Competency Wheel are reflected in the learning outcomes within the Competency Statements and the CA Diary. A summary of the competency areas is provided below: CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/2018 5

6 The CA Route to Membership Recognition has been given to the fact that the acquisition and demonstration of the specified competencies may be met in different ways. Therefore, the CA Route to Membership involves a number of elements: Academic study (or equivalent) including appropriate assessment and coursework at undergraduate, and in some cases postgraduate, level; Work experience within a recognised training organisation which provides students with feedback on their ability to apply formal learning to work situations and acquire defined competencies; Further information on the work experience element of the CA Route to Membership can be found on the Institute s website at Professional education programme, provided by the Institute through its Student Services Department, which seeks to enhance further the competencies acquired in the workplace; The assessment process, including CAP1, CAP2 and FAE, which examines students on their achievement of specified knowledge and skills, as identified in each of the Competency Statements. These elements are integrated during the training period to allow the student CA to acquire, develop and demonstrate the required CA competencies. The term competency is used throughout this document. Readers should understand the term to mean the ability to apply knowledge, understanding and skills in performing to the standards required in employment. Further guidance on competency is provided in Appendix 1. CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/2018 6

7 Professional Education and Assessment Structure The competencies to be assessed have been grouped into four pillars. The first three pillars are assessed predominantly during the initial two years of the Professional Education Programme. The fourth pillar relies heavily on the mandatory training experience, which is recorded in the Online CA Diary. By the final year of the education programme, the emphasis moves to a more integrated approach, culminating in the Final Admitting Examination. CA Proficiency 1 (CAP1) & CA Proficiency 2 (CAP2) At CAP1 and CAP2 levels, the main focus is on gaining critical comprehension of key concepts and acquiring skills to facilitate the application of these concepts to core areas within each subject. Candidates will be expected to build on their subject knowledge from stage to stage. They are also expected to have an appreciation of the interconnections between different areas of the competency statement. Therefore, students should expect to be examined on more advanced aspects of topics covered in earlier papers in the same subject. The subjects assessed at CAP1 and CAP2 are: CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/2018 7

8 CA Proficiency 1 (CAP1) CA Proficiency 2 (CAP2) Paper 1 Finance Paper 1 Audit & Assurance Paper 2 Management Accounting Paper 2 Strategic Finance & Management Accounting (SFMA) Paper 3 Financial Accounting Paper 3 Financial Reporting Paper 4a Taxation I Paper 4 Taxation II Paper 4b Law for Accountants Detailed syllabi for CAP1 are included in this document. The syllabi for CAP2 can be found in the CAP2 Competency Statement. Readers should also refer to the Addendum to Competency Statements, where required, to confirm the examinable version(s) of relevant technical standards and guidance. Final Admitting Examination (FAE) The objective of the FAE is to assess candidates total competency. This completes the qualification process and marks the start of a career as a Chartered Accountant - a career of life-long learning. The FAE adopts an integrated case study approach with workshops and cases designed to integrate the knowledge, skills and values derived from earlier studies and the work environment. The FAE seeks to further develop candidates judgement and application of expertise. Core FAE. The core syllabus will be examined primarily over two days, and comprises of several case studies. The candidate will be expected to integrate knowledge, experience and skills across all technical areas when answering these case studies. One elective from three papers. Choices, in 2017/2018, are: o Advanced Auditing and Assurance o Advanced Performance Management o Advanced Taxation (RoI and NI variants) The Competency Statement for the Final Admitting Examination is published in a separate booklet. CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/2018 8

9 Ongoing Development and Queries Ongoing Review and Update of Competency Statements Competency Statements are intended to provide guidance on the objectives, format and content of future examinations and to facilitate forward planning by all concerned. Given the dynamic nature of the business environment in which the profession operates, Competency Statements will be reviewed annually. Supplementary information will be published as appropriate. Comment on the current Competency Statements is invited and is always welcome. Queries Candidates should note that the relevant Competency Statement is the examinable document for each exam and should be the first point of reference for any syllabus queries. Candidates are advised to read it carefully. Should a candidate have any queries in relation to the syllabus, course progression or examinations, please send an directly to studentqueries@charteredaccountants.ie. CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/2018 9

10 Overview: CA Proficiency 1 (CAP1) CAP1 provides a foundation in the key knowledge areas that underpin the work of chartered accountants, encompassing material that many students will cover on relevant undergraduate programmes. The subjects making up this level are: Paper 1: Paper 2: Paper 3: Paper 4a: Paper 4b: Finance Management Accounting Financial Accounting Taxation I Law for Accountants Detailed syllabi follow, including overview of assessment and relevant reading lists. Cumulative Principle At CAP2 and FAE level, courses will often have cumulative subject material, i.e. material examinable at understanding level at CAP1 may be then be included on the CAP2 syllabus at a similar or higher level of competency. Additionally, at CAP2 level, candidates will be expected to be fully conversant with material covered on the CAP1 syllabus. It is each candidate s responsibility to ensure this, as CAP1 material may not be re-covered during the CAP2 courses. CAP1 is the foundation of the overall Chartered Accountancy education programme; It provides a solid basis for the more complex material introduced at CAP2 and FAE. Students who have obtained exemptions from CAP1 subjects should note that the awarding of an exemption carries the explicit assumption that the candidate has covered the material from CAP1 and is at an appropriate standard to commence the more advanced course. All students who might be exempted from some subjects at CAP1 should review the competency statement carefully in those subject areas, to check that they are familiar with the prescribed material. CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

11 Assessment: CA Proficiency 1 (CAP1) Assessment at CAP1 comprises a blend of formal interim assessment and traditional end-of-year examinations. An overall mark of 50% is required to pass each paper (i.e. a combination of formal interim assessment and examination). Interim assessment is employed in recognition of the fact that certain skills are better assessed outside the traditional end-of-year examination format. Candidates are advised to consult the relevant examinations publications for specific regulations governing the operation of interim assessment and examinations. In particular, candidates who are not exempt from CAP1 Financial Accounting should note the requirement to pass the double-entry bookkeeping interim assessment prior to being permitted to sit any of the CAP1 examinations. An overview of the assessment requirement for each subject at CAP1 is given within the subject guidance. Unlike most university examinations, professional examination papers are set without recourse to the lecturers. All examination candidates should be mindful of this and take particular note of the Examiners Reports from previous examinations, as the examiner uses these to feedback any areas of concern or priority. These points should help to inform candidates preparation for future examinations. CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

12 CA Proficiency 1 PAPER 1: Finance Objective The purpose of this course is to provide students with a knowledge and appreciation of basic financial management and the financial environment set within the context of the small developing company. The programme will enable students to understand the principles of financial management, investment appraisal and working capital management and to provide relevant information and advice to both organisations and individuals. Topic Summary Weighting 1 Financial Environment 15% 2 Capital Investment Appraisal 20% 3 Working Capital Management 15% 4 Financing Decisions 35% 5 Finance and the Individual 15% Total 100% Topic 1: Financial Environment Weighting: 15% Objective: To understand the role of the finance function, the organisation and the financial environment in which it operates Learning Outcomes By the end of this course, you should be able to: Outline the elements of the finance decision and the contribution of finance to the organisation s objectives Describe the financial & economic environment and its impact on the organisation s finances Outline possible ethical issues facing the finance manager Topic 2: Capital Investment Appraisal Weighting: 20% Objective: To demonstrate an ability to use appropriate investment appraisal techniques Learning Outcome By the end of this course, you should be able to: Understand the context of investment appraisal decisions Select appropriate investment methods and to calculate investment returns for competing projects and justify a course of action including consideration of relevant non-financial factors and financing options CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

13 Topic 3: Working Capital Management Weighting: 15% Objective: To demonstrate an ability to understand and advise on working capital management techniques Learning Outcome By the end of this course, you should be able to: Demonstrate an awareness of the importance of cash and liquidity to the business Describe working capital methodologies and to assess working capital requirements for cash, receivables, payables and inventory Analyse medium and long term needs, highlighting strategies to address shortfalls and surpluses Topic 4: Financing Decisions Weighting: 35% Objective: To identify alternative sources of finance, to determine possible financial requirements and to be able to determine the cost of borrowing Learning Outcomes By the end of this course, you should be able to: Describe the financing decision with a specific emphasis on banking finance Describe the characteristics of alternative bank finance for short, medium and long term finance Assess the implications of terms included in loan agreements Determine the financial requirements using appropriate techniques Outline the principle alternative security types (e.g. equity, preference shares and debentures) and situations where they are suitable. Comprehend the nature and role of capital markets Describe the process of raising capital privately and the role of venture capital Understand the elements contributing to the capital structure decision and the consequences of the theory governing the possible debt equity mix Calculate the cost of capital and describe the principal capital market models and their outcomes. Understand the concept, use and limitations of WACC Select and be able to justify an appropriate discount rate Topic 5: Finance and the Individual Weighting: 15% Objective: To understand the role of the accountant in personal financial planning Learning Outcome By the end of this course, you should be able to: Describe the personal financial management process and the different financial life-cycle requirements Select appropriate methods to assess personal financial position Describe the most common forms of personal investments Outline the regulatory regime governing financial advice CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

14 Specific Functional Competencies Competency expected U = Understand (knowledge) A= Applies I = Integrates 1. Financial Environment (15%) 1.1 Financial function and environment Outline the elements of the finance decision and its contribution to the business objectives Identify the general macro-economic factors that impact on financial goals and strategies of a small developing company (e.g. interest rates, economic growth, inflation, competitiveness, global factors) and assess possible impacts Demonstrate an awareness of corporate governance & agency theory Identify potential conflicts between management and shareholders and how these may be addressed Outline possible ethical issues facing the finance manager Competency Level U A I 2. Capital Investment Appraisal (20%) 2.1 Capital Investment Appraisal Explain and demonstrate the ability to use specified investment appraisal methodologies: Payback, discounted payback, accounting rate of return Present value techniques: o Net present value method o Internal rate of return method Financing options including lease vs buy Select and use appropriate investment appraisal methodologies in identified decision situations, to include: Capital rationing (single period only) Inflation Sensitivity analysis Taxation (to include basic capital allowances and calculations involving balancing allowances & balancing charges) Risk and return Uncertainty and probability Recommend and justify a course of action, including consideration of relevant nonfinancial factors Identify and calculate the financing options, costs and benefits of activities in a given situation 3. Working Capital Management (15%) 3.1 Working Capital Management Describe the constituent elements of working capital Explain the methods by which each element can be managed by an entity to optimise its working capital Calculate the cash cycle for a business and explain its significance Demonstrate an ability to explain, quantify and apply inventory management techniques (including EOQ and perpetual inventory) Explain & advise on receivables & payables management techniques including preparing computations as needed Explain receivable techniques such as factoring and invoice discounting Analyse short, medium and long term cash needs, highlighting actions & strategies to address shortfalls and surpluses CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

15 4. Financing Decisions (35%) 4.1 Capital structure Describe the financing decision, distinguishing between internal (organic growth and the dividend decision) and external funding Demonstrate an understanding of the elements contributing to the capital structure decision Demonstrate an understanding of the consequences of the theory governing the possible debt equity mix (traditional and alternative perspectives) 4.2 Cost of capital Select and justify an appropriate discount rate for use in selected investment appraisal Explain the concept of weighted average cost of capital (WACC) and its significance from investor and lender perspectives Explain the limitations of WACC Calculate the cost of equity (using dividend valuation and CAPM methods) and calculate the value of equity Calculate the cost of debt and the value of debt and the cost/value of other forms of capital Calculate the WACC Summarize the main conclusions of Portfolio Theory Describe the theoretical principles of CAPM Outline the Efficient Market Hypothesis 4.3 Organic growth Outline the internal sources of finance available to a non-plc (including retained earnings) Describe the impact of dividend decisions and attitudes to risk External sources of finance As this course is focused on the needs of non-plcs there is a significant emphasis on the area of bank (and equivalent) finance 4.4 Determining Financial Requirements Compute and analyse appropriate ratios relevant to borrowing in the existing or planned financial position of a business (e.g. EPS, gearing and interest cover) Assess free cash flow 4.5 Managing Relationships between the entity & providers of finance Describe the relationship between an entity, its bankers and other providers of finance Demonstrate the ability to assess the lender s perspective in a prospective or existing financing arrangement (borrowing required, security offered, term matching, ability to repay, character of lender etc.) 4.6 Banks as a source of finance Explain the role of banks and institutional investors in providing finance to developing companies Identify and assess alternative bank finance products and their suitability and mix in particular circumstances Describe and explain the characteristics, terms and conditions and role of alternative short, medium and long term sources of finance available to different entities Describe the implications of terms included in loan agreements (e.g. representations and warranties, covenants, guarantees) 4.7 Other sources of external finance Outline the principle alternative security types (equity, preference shares and debentures), their characteristics and situations where they are suitable Describe the nature and role of capital markets Competency Level U A I CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

16 Describe the process by which capital is raised privately Demonstrate an understanding of the role of venture capital and alternatives Outline the requirements of a venture capitalist in terms of assessment of investment criteria and exit routes (Note: Stock Exchange requirements and the listing of securities is not examinable at this level) 5. Finance and the Individual (15%) Describe the personal financial management process and the principles of personal financial management within the context of the different financial life cycle requirements Compute appropriate investor ratios to assist the investment decision Select appropriate method to assess personal financial position (including cash flow projections) and calculate an individual s net worth Describe the most common forms of personal investments (including insurance/protection, savings, investments, mortgages and pensions) and the benefits associated with them Outline the implications of identified financial theories for the individual investor Describe the regulatory regime governing professional advice and how negligence is dealt with Competency Level U A I (Please continue to next page) CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

17 Assessment 2017/2018 CAP1 Finance Formal Interim Assessment End-of-year Examination Weighting Month Duration Outline n/a n/a n/a n/a 100% May 2018 Sept hours Section A: Two 20 mark compulsory questions Section B: Four 20 mark questions: Answer three. Please note that standard formulae reference material (including PV and Annuity tables) are issued with this examination paper Reading List: CAP1 Finance Text Author Publisher Prescribed Texts Finance: Theory and Practice (3 rd Edition) Ann Marie Ward Chartered Accountants Ireland Finance Toolkit CA Proficiency 1 (2014 Edition) Chartered Accountants Ireland Supplementary Materials Relevant Articles including: Irish Times (Friday edition) including the Personal Finance section Financial Times (Saturday) Money/Finance Section Relevant articles from Accountancy Ireland ROI Family Finance 2015 Colm Rapple Squirrel Press CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

18 CA Proficiency 1 PAPER 2: Management Accounting Objective The purpose of this course is to equip students with an understanding of management accounting as a basis for developing the tools and knowledge required to meet management information needs. Topic Summary Weighting 1 Organisational context of Management Accounting 15% 2 Budget Setting 20% 3 Control (using standard costs and variance analysis) 15% 4 Cost Accounting and Cost Management 25% 5 Decision Making 25% Total 100% Topic 1: Organisational Context of Management Accounting Weighting: 15% Objective: To understand the role of the management accountant and how this contributes to the achievement of organisational objectives Learning Outcomes By the end of this course, you should be able to: Appreciate the roles of management accountant and the management accounting information system in operating the business Understand the organisation s environment in which management accounting operates Outline possible ethical issues facing the management accountant Appreciate how progressive management accounting techniques contribute towards operating a business Apply basic cost and revenue classifications and terms for planning, controlling, decision making and evaluation Understand and apply cost behaviour patterns Topic 2: Budget Setting Weighting: 20% Objective: To understand the role of budgets and budgetary control as a tool to enable organisations to develop and assess performance Learning Outcomes By the end of this course, you should be able to: Demonstrate an understanding of business planning and strategy formulation and its links to the budgetary process Be able to use budgetary techniques to prepare budgets and financial plans Outline the behavioural aspects of budgeting and alternative budgetary approaches Appreciate the importance of subjecting budgetary assumptions to sensitivity analysis CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

19 Topic 3: Control (using standard costing and variance analysis) Weighting: 15% Objective: To understand how budgetary control can be improved by the use of standard costing and variance analysis techniques Learning Outcomes By the end of this course, you should be able to: Flex a budget for planning and control purposes Understand how standards are set Calculate, interpret and reconcile appropriate variances Topic 4: Cost Accounting and Cost Management Weighting: 25% Objective: To be able to apply appropriate costing techniques to identified circumstances Learning Outcomes By the end of this course, you should be able to: Generate appropriate product (and service) costs using traditional and modern approaches Prepare appropriate accounting records (for materials, labour and overhead) within an integrated cost accounting system including overhead apportionment and absorption Apply traditional and modern (e.g. activity) costing techniques in a manufacturing and service context for jobs Topic 5: Decision Making Weighting: 25% Objective: To be able to apply appropriate management decision tools to a specified range of scenarios Learning Outcomes By the end of this course, you should be able to: Demonstrate the ability to generate, understand and interpret relevant information for management decision making Apply breakeven analysis and margin of safety techniques Use contribution analysis to support decision making in identified situations Appreciate the impact of uncertainty upon decision making and apply appropriate techniques CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

20 Specific Functional Competencies Competency expected: U = Understand (knowledge) A= Applies I = Integrates 1. Organisational Context of Management Accounting (15%) 1.1 Organisational objectives and the role of the management accountant Describe the role of management accounting in organisations Distinguish between profit and not-for-profit organisations Describe the operating environment of the management accountant; internal and external Describe the management accounting system Outline possible ethical issues facing the management accountant, including the ability to apply fundamental ethical principles within a management accounting role 1.2 Contemporary Developments in Management Accounting Demonstrate an appreciation of the contribution of progressive management accounting techniques, to include Total Quality Management, Balanced Scorecard and Just in Time inventory management 1.3 Cost Classification ** Explain basic cost classifications, revenue classifications and typical terms used by management for planning Analyse cost by cost function and type Explain cost behaviour patterns, to include fixed, variable and semi-variable costs Explain how cost behaviour patterns vary on an activity basis and per unit basis Distinguish between contribution and gross margin and distinguish between margin and mark-up Determine a minimum price for a product or service by application of mark-up or margin to the relevant costs 2. Budget Setting (20%) 2.1 Business and operational strategy formulation Outline the process of business strategy formulation and its links to the budgetary process Explain the contents of a typical business plan 2.2 Budget Setting Process Discuss the purposes of budgeting Describe the budgetary process (the budgetary cycle) Analyse the strengths and weaknesses of traditional budgetary practices Demonstrate the ability to prepare budgets including: master budgets, functional budgets and cash budgets Appreciate the interrelationship between various budgets within a business environment 2.3 Behavioural aspects of budgeting Outline the human (behavioural) aspects of budgeting 2.4 Key budgetary assumptions and sensitivity analysis Appreciate the importance of highlighting budgetary assumptions and assessing them through sensitivity analysis 2.5 Approaches to budgeting Distinguish between various approaches to budgeting, including zero-based budgeting (ZBB), incremental budgeting and rolling budgeting Competency Level U A I CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

21 3. Control (using standard costs and variance analysis) (15%) 3.1 Budgetary control Outline the role of budgets in control Explain and show how a budget may be flexed for planning and control purposes Distinguish between feedback and feed forward controls and how these may be used to assist an organisation achieve its goals 3.2 Standard costing and Variance Analysis Determine standard costs for given scenarios Outline the process by which standards are set and types of standards Calculate variances: materials (price and usage), labour (rate and efficiency), overheads variable (expenditure, efficiency) and fixed (expenditure, volume only), sales (price and volume) Display an appreciation of the significance of variances and the possible reasons for incurrence Reconcile actual performance to budget performance using absorption and variable costing approaches 4. Cost Accounting and Cost Management (25%) 4.1 Cost accounting ** Prepare appropriate accounting records to support the accounting for materials, labour and overheads 4.2 Material ** Demonstrate the ability to record and charge materials to jobs, including the application of FIFO, LIFO and weighted average material pricing methods Analyse the common issues arising in inventory control and the techniques used to address these 4.3 Labour ** Demonstrate the ability to record and charge labour to jobs including idle time, overtime etc 4.4 Overhead and expense accounting ** Demonstrate the ability to record and charge overheads to jobs, using traditional methods, including: Apportionment of overhead to different cost centres using suitable bases Use of direct and indirect methods of apportionment Calculation of overhead rates using different bases Apportionment of service department costs with reciprocal use using either direct, repeated distribution or step down approaches Calculation & interpretation of over absorption & under absorption of overheads 4.5 Activity Based Costing (ABC) Understand the reasons for the development of ABC Demonstrate an understanding of the operation of ABC, budgeting and management Apply ABC principles in straight forward situations 4.6 Job and service costing Compute costs for jobs and services using appropriate techniques 4.7 Other costing Demonstrate an understanding of joint and by-products. Compute costs for joint products only (physical units, sales revenue and net realisable value) 4.8 Absorption and variable costing Prepare profit statements using both absorption and variable (marginal) costing approaches Reconcile the difference in profit reported under both absorption and variable (marginal) approaches Competency Level U A I CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

22 5. Decision Making (25%) 5.1 Cost volume profit (CVP) analysis and breakeven analysis (single & multi-product scenarios)** Understand the concept of contribution Compute breakeven activity and margin of safety (in monetary and unit terms) Demonstrate an awareness of the assumptions and limitations of CVP analysis Illustrate CVP analysis and breakeven analysis, using a graphical approach 5.2 Decision making scenarios Apply relevant cost analysis to support decision making in situations such as: Make or buy decisions Sell or process further decisions Continue or close down decisions Pricing - in the context of short term decision making: using a variable (marginal) and full cost basis, target pricing concepts and market influences (The economic approach to pricing is specifically excluded) 5.3 Limiting factor decisions Apply appropriate decision making techniques for situations with limiting factors with one and two constraints using: Contribution per limiting factor Graphical approach, using linear programming (excluding Simplex Tableau method) Demonstrate how constraints can be overcome for given scenarios 5.4 Decision making and uncertainty Outline the impact of uncertainty on decision making and the methods used to cope therewith Understand the difference between risk and uncertainty Appreciate the significance of uncertainty for short-term decision-making Apply basic cost separation and estimation techniques (including High/Low method and inspection of accounts method but excluding regression analysis) Use probabilities to calculate expected values and apply sensitivity analysis Demonstrate an understanding of the differing attitudes to risk and apply regret, maximin and maximax techniques to simple decision-making scenarios Calculate the value of perfect information Demonstrate an understanding of the basic principles of the learning curve (calculations are not required) Competency Level U A I (Please continue to next page) CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

23 Assessment 2017/2018 CAP1 Management Accounting Formal Interim Assessment End-of-year Examination Weighting Month Duration Outline 15% March Written assessment in Cost Accounting minutes (examinable areas are indicated by a double asterisk - ** - above) 85% May hours Section A: Two 20 mark compulsory Sept 2018 questions Section B: Four 20 mark questions: Answer three. Reading List: CAP1 Management Accounting Text Author Publisher Prescribed Texts Managerial Accounting: Costing, Decision Making & Control 3 rd Edition) Peter Clarke Chartered Accountants Ireland Supplementary Materials Management and Cost Accounting (9th Edition 2015) Management Accounting (5th Edition 2015) Management & Cost Accounting (6th Edition 2015) Relevant articles from Accountancy Ireland Colin Drury Seal, Garrison and Noreen Horngren, Bhimani, Datar & Rajan Cengage Learning McGraw Hill FT Prentice Hall Chartered Accountants Ireland CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

24 CA Proficiency 1 PAPER 3: Financial Accounting Objective The purpose of this course is to equip students with an understanding of the context of financial accounting in the business environment, and to provide fundamental accounting capabilities. Topic Summary Weighting 1 Understanding accounting fundamentals 15% 2 Double entry bookkeeping and recording information 40% 3 Accounts preparation 45% Total 100% Topic 1: Understanding Accounting Fundamentals Weighting: 15% Objective: To understand the principles of accounting and the main business & accounting structures Learning Outcomes On successful completion of this module students will have the ability to: Understand the fundamental principles which underlie financial accounting Outline the legal & regulatory framework for accounting Recognise that financial reporting can take place under multiple accounting frameworks, of which IFRS and Local GAAP (UK and Ireland) are just two Show an appreciation of the ethical dimension of the financial accountant s role Describe the most common business structures and the broad implications for financial accounting Topic 2: Double Entry Bookkeeping and Recording Information Weighting: 40% Objective: To understand and apply the principles of double entry bookkeeping to a set of financial records Learning Outcomes On successful completion of this module students will have the ability to: Explain the types of information which must be recorded to obtain a set of accounts Be able to record transactions in books of prime entry and extract to trial balance using double entry bookkeeping CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

25 Topic 3: Accounts Preparation Weighting: 45% Objective: To be able to prepare a set of accounts for a range of business structures Learning Outcomes On successful completion of this module students will have the ability to: Prepare basic financial statements for corporate and non-corporate entities (including simple groups) in accordance with IFRS Apply identified accounting standards in the preparation of financial statements Have an understanding of the importance of professional ethics in financial reporting Demonstrate the ability to highlight basic differences between Irish/UK GAAP and IFRS, as outlined in the student materials (up to 10% of the marks overall) SPECIFIC FUNCTIONAL COMPETENCIES Competency expected: U = Understand (knowledge) A= Applies I = Integrates 1. Understanding Accounting Fundamentals (15%) 1.1 Basic accounting principles/definitions Outline the basic accounting principles underlying financial accounting Explain why an entity prepares financial statements and how these can be used 1.2 Fundamental concepts and valuation bases Summarise the different bases of measurement used in financial statements Define the terms capital and capital maintenance as used in financial statements 1.3 Measurement and recognition of profit Describe the different bases of accounting Illustrate the differences between financial statements produced using the accruals basis versa those produced using the cash accounting basis 1.4 Regulatory framework of accounting Summarise the role and objectives of the International Accounting Standards Board Describe the purpose of accounting laws, standards and other requirements Summarise the standard-setting process used by Irish/UK and international (IASB) bodies and the authority of the Irish/UK, international and foreign standards 1.5 The accountant s role and ethical dimension Outline the accountant s role in the preparation and reporting process and possible ethical issues that may arise 1.6 Business structures and implications for financial statements Appreciate possible business structures and demonstrate the implications for accounting including: Competency Level U A I CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

26 Sole trader Partnership Private limited company Public company Group companies(simple groups only) Not-for-profit organisations 1.7 Elements of financial statements Describe the main components and purpose of a set of financial statements prepared under IFRS, to include Statement of Profit or Loss and other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Statement of Cash Flow List the key differences in the components of financial statements prepared under Local GAAP (UK and Ireland) Explain the qualitative characteristics of financial information and the constraints on such information 2. Double entry bookkeeping and recording information (40%) 2.1 Books of prime entry and the nominal ledger Discuss and apply the principles of double-entry accounting ** Explain the sources of information for the preparation of accounting records and financial statements including the books of prime entry and the nominal ledger ** 2.2 Control accounts Record and account for control accounts ** 2.3 Recording transactions Record and account for transactions and events resulting in income, expenses, assets, liabilities and equity, including: Accounting for property, plant and equipment ** Accounting for inventories ** Accruals and prepayments ** Provision for bad debts ** Wages and salaries ** Loans and hire purchase Cash book and bank reconciliation ** Accounting for tax Accounting for VAT & VAT Returns ** Accounting for PAYE/PRSI/NIC & PAYE/ PRSI/NIC returns ** 2.4 Trial Balance and errors Explain the uses of the trial balance & extended trial balance ** Prepare a trial balance from accounting records ** Extract a trial balance from a set of accounts ** Extended trial balance ** Identify and correct errors in accounting records and financial statements ** Competency Level U A I 3. Accounts Preparation (45%) 3.1 Sole trader accounts Prepare and present a statement of comprehensive income, statement of financial position and statement of cash flow (or parts thereof) from incomplete records 3.2 Partnership accounts Prepare and present partnership accounts covering: Preparation of partnership Income Statement Distribution of profits and losses (including guaranteed profit) Preparation of partners current accounts CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

27 3.3 Company accounts Outline the generally accepted accounting principles underlying the preparation of financial statements Explain the purpose of financial reporting Illustrate how ethics can inform the financial reporting work of the professional accountant Describe the accounting principles as contained in the IASB framework Identify and briefly explain the conditions under which businesses can or must apply the following accounting frameworks (clearly delineating between must and choice situations) IFRS (full) Local GAAP (UK & Ireland): FRS 100 to 102 FRSSE (For CAP1, candidates are not expected to recommend a framework where choice exists) Prepare and present the Primary Financial Statements (IFRS) Prepare & present Statements of Cash Flow (IFRS) Outline restrictions on the distribution of profits and assets Prepare format notes to the financial statement Outline the key differences in accounting treatment for any transaction examinable under IFRS should Local GAAP (UK & Ireland) be applied 3.4 Group accounts Outline the generally accepted accounting principles underlying the preparation of group financial statements Prepare and present simple group statements of financial position(one subsidiary only) including the calculation of: Goodwill (excludes adjustments relating to subsequent impairment of goodwill) Non-controlling interest (both methods of calculation) Consolidated reserves Unrealised profits in inventory Intercompany trading, including goods/cash in transit Fair Value adjustment of assets at date of point of acquisition (including adjustments to subsequent depreciation) Competency Level U A I Guidance & Standards Examinable are: IFRS Conceptual Framework for Financial Reporting IFRS 3 Business Combinations* IFRS 9 Financial Instruments * IFRS 10 Consolidated Financial Statements IAS 1 Presentation of Financial Statements * IAS 2 Inventories IAS 7 Statement of Cash Flows (NB: consolidated cashflow not examinable) IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 10 Events after the Reporting Period IAS 12 Income Taxes (NB: Current Taxation only) IAS 16 Property, Plant and Equipment IAS 17 Leases * IAS 20 Accounting for government grants and disclosure of CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

28 government assistance IAS 23 Borrowing costs IAS 32 Financial Instruments: Presentation * IAS 40 Investment Property Competency Level U A I Local GAAP (UK & Ireland) FRS 100 * FRS 101 * FRS 102 * *Stipulated Issues only (see below) The cut off for examination purposes for any technical guidance and standards is standards/guidance issued on or before 31st December This is valid for all standards and guidance, unless specifically noted as otherwise. For legislation, this is equivalent to legislation commenced on or before 31st December *Stipulated Issues IFRS 3 Business Combinations With respect to IFRS3 Business Combinations contingent consideration and step acquisitions is excluded. IFRS 9: Financial Instruments With respect to IFRS 9 Financial Instruments, students will only be required to understand the broad principles of recognition and derecognition of financial assets and liabilities. IAS 17 Leases Accounting for lessees is examinable. Accounting for lessors is excluded. IAS 32 Financial Instruments: Disclosure and Presentation With respect to IAS 32, students will only be required understand the definition of assets and liabilities FRS 100 Understand the differences between FRS 100 and IFRS with particular reference to: Scope Terminology used Components & Layout of Statutory Accounts FRS 101 Understand the differences between FRS 101 and IFRS with particular reference to scope of this standard. FRS 102 Understand the key similarities/differences between accounting treatments under examinable IFRS/IAS (as identified above) and the equivalent elements of FRS 102. For 2017/2018, this relates predominantly to the following sections: Sections 1 8 and 10, 13, 16, 17, 20, 24, 25, 29, 32 Section 9 (as applied to Statement of Financial Position only) CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

29 Assessment 2017/2018 CAP1 Financial Accounting Formal Interim Assessment Weighting Month Duration Outline 20% Nov Computer-based assessment in double entry Jan 2018 minutes bookkeeping End-of-year Examination 80% May 2018 Sept 2018 (examinable areas are indicated by a double asterisk - ** - above) Please note: Students who are not exempted from CAP1 Financial Accounting MUST achieve 60% (12/20) in this assessment to be permitted to sit any of the CAP1 end-ofyear examination papers. 3 hours Section A: Two 30 mark compulsory questions Section B: Three 20 mark questions: Answer two Financial Accounting Text Author Publisher Prescribed Texts An Introduction to Financial Accounting Margaret D Arcy Chartered Accountants Ireland CA Proficiency 1 Financial Accounting Toolkit (2015 edition) CA Proficiency 1 Double-Entry Book-keeping Toolkit Chartered Accountants Ireland Chartered Accountants Ireland Supplementary Materials Crack the Books June Menton Chartered Accountants Ireland Consolidated Financial Statements (2 nd Edition) (relevant sections only) Paul Mahony Chartered Accountants Ireland CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

30 CA Proficiency 1 PAPER 4: Taxation I and Law for Accountants Taxation and Law for Accountants is made of up two separate subjects. It is necessary to obtain competency at each paper in order to achieve an overall competency. The competency level is set at 50% for each paper. The Taxation competency statement is given in both ROI and NI versions. A: TAXATION I (Northern Ireland) Objective To equip students with the knowledge and skills to deal with most routine issues in personal income tax and VAT. Topic Summary Weighting 1 Income Tax 75% 2 VAT 25% Total 100% Topic 1: Income Tax Weighting: 75% Objective: To understand and apply the legislation, procedure and practice governing the taxation of the majority of individuals Learning Outcomes On successfully completing this module, participants will have the core competencies to enable them to calculate and advise on income tax, including the ability to: Apply the general principles for the administration of and computation of income tax Identify and quantify the income subject to income tax Apply the appropriate reliefs, allowances and credits to calculate personal tax liabilities Detail the timing and manner of payments required; and Identify and explain how prescribed tax cases can be used to support the interpretation of income tax legislation Topic 2: VAT Weighting: 25% Objective: To understand and apply the legislation, procedure and practice governing the charge to Value Added Tax (VAT) on routine supplies of goods and services Learning Outcomes On successfully completing this module, participants will have the core competencies to enable them to calculate and advise on VAT, including the ability to: Apply the general principles for the administration of and computation of VAT Identify transactions attracting a VAT charge CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/

31 Make the necessary arrangements for businesses to fulfil the majority of their VAT obligations Demonstrate the ability to calculate the VAT liability of a business Detail the timing and manner of VAT payments required Specific Functional Competencies Competency expected U = Understand (knowledge) A= Applies I = Integrates 1. Income Tax (75%) 1.1 Administration and Procedures Explain the operation of the self-assessment system including interest and late filing penalties Recognise and advise on straightforward ethical dilemmas which can arise when dealing with income tax issues Demonstrate an awareness of how filing on-line is used to benefit the calculation, return and payment of income tax Outline the requirements for a valid appeal and options open to taxpayers/h M Revenue & Customs Explain the basic procedures for HMRC Enquiries incorporating mitigation of penalties 1.2 Residence, domicile and ordinary residence Be able to define and explain the concepts of residence and domicile and be able to determine whether someone is resident or domiciled in Northern Ireland Be able to demonstrate an understanding of the new Statutory Residence Tests and how they will apply in practice (Determination of residency under the old rules is not examinable: If this residency status is required, this will be provided to candidates on the paper) Explain the implications of residence and domicile, excluding cross border reliefs and the provisions of double taxation treaties. (Note: this does not preclude the examination of tax payable on foreign income as detailed under SFC 1.5 below) 1.3 Computation of Income Tax Be able to compute the income tax payable by individuals Be able to apply reliefs, including: Relief for contributions to registered pension schemes Relief for maintenance payments for divorced and separated couples Relief for interest on loans Basic relief available to an investor under EIS, SEIS, Social Investment Tax Relief and Venture Capital Trusts The cap on income tax relief Be able to describe and apply the High Income Child Benefit charge 1.4 Trade & Professional Income Explain the concepts of Badges of Trade (with specified case law examples) and determine whether a trade is being carried on by application of the badges of trade to the particular facts of a scenario Compute tax adjusted trading/professional profits Explain and apply the basis of assessment including commencement and cessation, including the impact of a change of accounting date Be able to compute the taxation liability of partners in a partnership (including allocation of losses to partners, but excluding allocation of charges to partners) Determine whether assets qualify for capital allowances (including limited case Competency Level U A I CHARTERED ACCOUNTANTS IRELAND 2017 CAP1 Competency Statement 2017/