DEPARTMENT OF COMMERCE & FINANCE
GOVERNMENT COLLEGE UNIVERSITY
LAHORE
COURSE HANDBOOK
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Financial Accounting
Course Title
BC ACC-1201
Course Code
03
Credit Hours
II
Semester
Course Instructor
Supporting Team Members
3 hours per week
Contact Hours (Theory)
Not Applicable
Contact Hours (Lab)
Office Hours
Course Objectives
The objective of the course is to provide further understanding of basic accounting concepts as
well as application of accounting principles and rules for preparation of financial statements.
Topics include:
 IASB conceptual framework
 Accruals basis of measuring incomes and expenses (application)
 Accounting for receivables and doubtful debts
 Control accounts (Receivables & Payables)
 Accounting for Fixed Assets – Depreciation and Disposal (Cost Model)
 Accounting for Inventory - Measurement and Recognition
 Impact of errors on profit/loss and working capital
 Bank reconciliation statement
 Financial statements of partnership
 Accounting for cost of production
Learning Outcomes
On successful completion of this course, students will have in-depth understanding of
i.
Accounting elements, recognition, measurement of financial information.
ii.
Objective and use of financial statements for different stakeholders
iii.
Basis of preparing financial statements.
iv.
Accounting for bad and doubtful trade receivables.
v.
Reconciliation of receivable and payable control accounts.
vi.
Different methods of depreciation and recognition of gain or loss on disposal of fixed
assets.
vii.
Accounting policy for inventory valuation and accounting impacts of delayed physical
count of inventory.
viii.
Practical approach required for preparing financial statements of partnership.
ix.
Core concept of profit distribution arrangement among the partners and preparing
current accounts of partners in a partnership firm.
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Week 1.
Week 2.
Week 3.
Identifying impacts on financial position for the changes/rectification of financial
information.
xi.
Presenting the financial statements of a manufacturing entities.
Course Contents
i.
IASB conceptual framework
ii.
Application of accrual basis of accounting
iii.
Accounting for bad and doubtful debts
iv.
Reconciliation of control accounts in main ledger with the list of balances in the
subsidiary ledgers.
v.
Accounting for depreciation and disposal of fixed assets
vi.
Inventory measurement and impact of delayed inventory count
vii.
Impact of errors on profit/loss and working capital
viii.
Adjusted trial balance and financial statements of partnership.
ix.
Profit distribution statement and current accounts of partnership firm
x.
Cost flow in a manufacturing entity
Outline of Weekly Lectures & Reading list/Recommendations Books
IASB conceptual framework
Reading
Interpretation and application of IFRS by Wiley, Notes & Handouts.
Accrued and prepaid expenses (opening and closing balances) impact on SOPL and SOFP
Reading
Business Accounting by Frank Wood, Financial Accounting by Sir Kieso, Financial Accounting
by M. Hanif and A. Mukherjee, Notes & Hand-outs.
Accounting entries for bad and doubtful debts, increase and decrease in allowances for doubtful
debts, presentation in financial statements.
Week 4.
Accounting entries for bad and doubtful debts, increase and decrease in allowances for doubtful
debts, presentation in financial statements.
Week 5.
Posting process from the sales daybook and purchase daybook into the subsidiary ledgers and the
main ledger. Reconciliation of receivable ledger control account balance with the list balance of
sales ledger. Reconciliation of payable ledger control account balance with the list balance of
purchase ledger.
Calculation of depreciation charge for the year under different methods, accounting entries,
change in methods, change in useful life and presentation in financial statements.
Accounting for disposal of fixed asset, proportionate depreciation on the asset purchased or sold
during the year. Loss on disposal of asset covered by insurance company and trade in allowance
in case of part exchange.
Calculation of cost (FIFO & W.Avg) and net realizable value of inventory. Accounting policy
for inventory measurement as per IAS 2. Write-down and reversal of write-down of inventory.
Periodic and perpetual system of accounting. Impact of delayed inventory count on SOFP and
SOPL.
Impact of errors on SOPL and Working Capital. Difference between rectifying entries, adjusting
entries and closing entries. Impact of year-end adjustments and rectification of errors on trial
balance, creating adjusted trial balance.
Preparation of SOPL and SOFP from the adjusted trial balance for partnership entities.
Week 6.
Week 7.
Week 8.
Week 9.
Week 10
Week 11
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Week 12
Week 13
Reasons of difference between cash book balance and bank statement balance. Adjusting entries
in the adjusted cash book. Preparing bank reconciliation statement.
Preparing bank reconciliation statement.
Cost elements their characteristics and behavior. Cost of goods manufactured and sold statement
and SOPL.
Week 15 Cost of goods manufactured and sold statement and SOPL.
Week 16 Pre final Exams and course revision
Reading list/Recommended Books
1. Anthony, R. N., Hawkins, D. F., & Merchant, K. A. (2011). Accounting-Texts and
Cases (11th ed.).
2. Mukherjee, A., & Hanif, M. (n.d.). Modern Accountancy-Volume-I.
3. Williams, J. R., Haka, S. F., & Bettner, M. S. (2014). Financial and Managerial
Accounting-The Basis for Business Decisions-International Edition (14th ed.).
4. Practical Illustrations provided by the concerned Teacher (n.d.).
5. Shukla, M. C. (n.d.). Advance Accounting.
6. Gupta, R. L. (n.d.). Advance Accounting.
Week 14
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Assessment Policy
The assessment of this module shall have following evaluation components:
Quizzes, Assignments, Attendance
30%
Mid Term Test
20%
Final Examination
50%
The minimum pass marks for each course are
50%.
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Assessment Schedule
Practice questions as Assignment.
a. IASB conceptual framework and Application of accrual basis of accounting (due
in week 2)
b. Accounting for bad and doubtful debts (due in week 4)
c. Accounting for depreciation and disposal of fixed assets (due in week 6)
d. Inventory measurement and impact of delayed inventory count (due in week 8)
e. Impact of errors on profit/loss and working capital and adjusted trial balance and
financial statements of sole proprietor (due in week 11)
f. Statement of cash flows of sole proprietor.
g. Profit distribution statement and current accounts of partnership firm (due in
week 13)
30%
Mid Term Test (8th week)
20%
Final Semester Exam (20% theory 80% numerical) 50%
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Attendance Policy
● Attendance must be at least 80 percent to be eligible to appear in the final semester exams.
● In live lectures, attendance will be marked by the teacher.
● For students with limited or no internet connectivity, attendance will be assignment based. On
weekly basis, such students will submit a review/report related to all theory and practical questions to
be discussed in that week.
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Internal Control System and Constituents.
General and Special Auditing Techniques i.e., Performing Audit.
Key International Standards on Auditing.
Legal and Regulatory Framework for Auditing in Pakistan.
Understanding and Developing Audit Reports; and
Terminologies developed by International Auditing and Assurance Standard Board
Course Contents
This course covers on the following course contents:
 Introduction to Auditing.
 Internal Control System and its Constituents.
 Objectives of Internal Auditing and Techniques.
 Legal and Professional Considerations.
 Audit Planning and Control.
 Audit Procedures and Techniques.
 Audit Documentation and Evidence.
 Performance of Audit, Audit Risk and Management.
 Audit Completion and Audit Reporting;
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Week 1
&2
Outline of Weekly Lectures & Reading List
GOAL 1: INTRODUCTION TO AUDITING
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Week 3
Nature, Definition, Scope, Objective and Principles of an Audit
Classification (kinds/types) of an Audit
Need for, and usefulness of an Audit.
Distinction and Relationship between Accounting and Auditing
Concepts of reasonable assurance, audit risk and materiality, true and fair view,
recurring Audit
Management Responsibility for Preparation and Presentation of Financial
Statements
Legal and Regulatory Framework for Auditing in Pakistan
Responsibility of an Auditor, and his Role as a detector of
Error/Mistake/Fraud/Misrepresentation
Postulates of Auditing
Glossary of Terms for Auditing attached with ISAs issued by IAASB/IFAC
GOAL 2: UNDERSTANDING THE INTERNAL CONTROL SYSTEM
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Definition/Meaning, Objectives, Types, Principles and Techniques of
Key Components and/or Essential Elements of Internal Control
Features of an Effective Internal Control System
Limitations on the Effectiveness of Internal Control/Audit
Internal Control in an EDP Environment
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Week 4
GOAL 3 : INTERNAL AUDIT
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Scope, Limitations and Types of Internal Audit
Responsibilities of Internal Auditor
Impact of Internal Controls and Audit Work, and Issuance of Management Letter
Internal Audit VS External Audit
Audit Working Papers
Functions of Chief Internal Auditor
Week 5 &
GOAL 4 : LEGAL AND PROFESSIONAL CONSIDERATIONS
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i. Appointment, Remuneration, Resignation, Removal, Rights, Powers, Duties,
Liabilities,
Qualification and Disqualification of an Auditor
ii. procedure for appointment of first and subsequent auditors under Companies Act 2017
iii. International Standards on Auditing (ISAs) and guidelines, Standard Accounting and
Auditing Practices and Technical Releases by Local Professional Institutes of
Pakistan
iv. ‘Code of Conduct for Professional Accountants’ issued by IFAC and
Week 7 GOAL 5: AUDIT PLANNING AND CONTROL
i. Concept & Benefits of, and the Need for Audit Planning
ii. Planning Procedure: overall Audit Strategy, Review of the Client’s Business,
Accounting System, Financial Procedures etc.
iii. Audit Risk, Audit Plans, Programs and Procedures
iv. Documentation of Audit Plan, Audit Timeliness, and Changes in Audit Plans
Week 8
Week 9
Mid-Term Exams
GOAL 6: AUDIT ENGAGEMENT, PROCEDURES AND TECHNIQUES
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Terms of audit engagement, engagement letter and its contents
Types of Audit Procedures and Techniques
Management Representation, and Reliance on it, and Judgment by Auditor
Vouching and Verification of Assets and Liabilities
Financial Statements Analysis
Use of Computer Assisted Audit Techniques (CAATs) i.e., IT Auditing
Week 10 GOAL 7: AUDIT DOCUMENTATION AND EVIDENCE
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Terms of audit engagement, engagement letter and its contents
Types of Audit Procedures and Techniques
Management Representation, and Reliance on it, and Judgment by Auditor
Vouching and Verification of Assets and Liabilities
Financial Statements Analysis
Use of Computer Assisted Audit Techniques (CAATs) i.e., IT Auditing
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Week 11 GOAL 8: PERFORMING AUDIT, AND AUDIT RISK CONSIDERATIONS
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i. Precautions, Assumptions and Judgment by the Auditor
ii. Analysis of Internal Control System, People, IT Infrastructure, Procedures etc.
iii. Developing a suitable Audit Program, and ensuring its implementation in a
professional way
iv. Identifying the applicable risks, and classifying the same for Audit Purposes
v. Materiality Assessment, and Audit Sampling
vi. Applying applicable ISA’s provisions in dealing with the organizational risks
vii. Preparing risk management documentation and reports thereupon.
viii. IT based risks, their influence and dealing with them.
Week 13 GOAL 9: COMPLETION OF AN AUDIT
i. Audit Completion/Closing Procedures, and Filing
ii. Informing Management about completion, flaws/loopholes and areas of internal control
requiring improvement
iii. Letter of representation to the Management
iv. Attending the upcoming AGM
v. fulfilling the applicable legal and professional formalities
Week 14 GOAL 10: AUDIT OPINION & ITS FORMS, AND AUDIT REPORT & ITS
COMPONENTS
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Audit Report, its Template and Components
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Types of Audit Opinion as per ISAs
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Statement of Compliance with the Code of Corporate Governance
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Date and Signatories of the Auditors’ Report
v. Audit Report of a Listed Company
Week 15 GOALs 1-10: Revision / Overview of the whole
Course, and Q&As Reading List:
Week 16
Final-Term Exams
Reading
List/Rec
ommend
ed Books
1. International Auditing and Assurance Standards Board. (2018). Handbook of
International Quality Control, Auditing, Review, Other Assurance, and Related Services
Pronouncements.
Retrieved
April
3,
2023,
from
https://www.iaasb.org/publications/2018-handbook-international-quality-controlauditing-review-other-assurance-and-related-services-26
2. Millichamp, A. H. (2002). Auditing. Cengage Learning Emea.
3. Ainapure, V., & Ainapure, M. (2009). Auditing and assurance. PHI Learning Pvt. Ltd..
4. Gomez, C. (2012). Auditing and assurance: Theory and practice. PHI Learning Pvt. Ltd.
5. Graham, L. (2015). Internal control audit and compliance: Documentation and testing
under the new COSO framework. John Wiley & Sons.
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6. Coderre, D. (2009). Internal audit: Efficiency through automation (Vol. 11). John Wiley
& Sons.
7. https://www.secp.gov.pk/document/companies-act2017/?wpdmdl=28472&refresh=5ed02a6ae274f1590700650
8. Hayes, R., Wallage, P., & Gortemaker, H. (2014). Principles of auditing: An introduction
to international standards on auditing. Pearson Higher Ed.
9. Davis, C., & Schiller, M. (2011). IT Auditing: Using Controls to Protect Information
Assets. McGraw Hill, 2nd Edition.
10. Hayes, R., Wallage, P., & Gortemaker, H. (2014). Principles of Auditing: An
Introduction to International Standards on Auditing. Pearson Higher Ed.
11. Chambers, A., & Rand, G. (2011). The Operational Auditing Handbook: Auditing
Business and IT Processes. John Wiley & Sons.
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Assessment Policy
The assessment of this module shall have following evaluation components:
Response Papers (Semester Work)
30%
Mid Term Test
20%
Final Examination
50%
The minimum passing marks for each course are
50%.
Assessment Schedule
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Research Project will require some Original Written Material on Auditing Practices, Procedures, Codes
and Professional Requirements - 30%
Note: Give proper references and comparative aspects of the topic.
Mid Term Test (8 Week) - 20%
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Final Semester Exams: 16 Week Project submission: 10 July 2020)
Write 3000-word review of the course.
Give proper references, and comparative aspects of the topic. (50% weightage)
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14. Attendance Policy
Attendance must be at least 80 percent in order to be eligible to appear in the semester’s final
exams.
 In live lectures, attendance will be marked by the teacher.
Note:
 For students with limited or no internet connectivity, attendance will be assignment based. On
weekly basis, such students will submit a 3000-word review of the readings to be discussed in
that week.
E-Office Hours:
Wednesday 2pm-4pm.
Kindly confirm your meeting slot by email first. E-meeting can be facilitated through any online
platform including zoom, MS teams and WhatsApp.
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