FINANCIAL ACCOUNTING AND REPORTING This subject tests the examinee's ability to understand and apply accounting principles and standards relating to: nature and composition of accounts, initial recognition, measurement and valuation, subsequent events and transactions, subsequent measurement and recognition of losses due to impairment and other causes, related party transactions, financial statement presentation and disclosures. New standards and other issuances are included in the exam if these are in effect for at least 6 months at the date of the exam. Financial Assets at Amortized Cost Investments in Associates (equity method of accounting) Basic Derivatives (excluding Hedge Accounting) NON-FINANCIAL ASSETS (10%) Inventories Property, Plant and Equipment Investment Property Intangibles Biological Assets Non-Current Assets Held For Sale LIABILITIES (10%) The FAR exam is a 3-hour exam. It consists of 70 multiple choice questions (Theory and problems) DEVELOPMENT OF FINANCIAL REPORTING FRAMEWORK, STANDARDSETTING BODIES, REGULATION OF THE ACCOUNTANCY PROFESSION, CONCEPTUAL FRAMEWORK OF FINANCIAL STATEMENTS AND ACCOUNTING PROCESS (5.71) Development of Financial Reporting Framework Standard-Setting Bodies (AASC, FRSC,PIC) Regulation of the Accountancy Profession Conceptual Framework Accounting Process (Adjusting Entries and Accounting Cycle) PRESENTATION OF FINANCIAL STATEMENTS (14.29%) Statement of Financial Position (SFP) Statement of Comprehensive Income Statement of Cash Flows Statement of Changes in Equity Notes to the Financial Statements ASSETS FINANCIAL ASSETS (14.29%) Cash & Cash Equivalents Loans and Receivables (Financial Assets at Amortized Cost) Investments in Debt Instruments Financial Assets at Fair Value through Profit or Loss (Except Derivatives) Financial Assets at Fair Value through Other Comprehensive Income FINANCIAL LIABILITIES Accounts Payable and Other Trade Payables Debt Restructuring NON-FINANCIAL LIABILITIES Premiums and warranties Unearned revenues for gift certificates and subscriptions PROVISIONS AND CONTINGENCIES Recognition and measurement criteria EQUITY (14.28%) Share Capital Transactions (PAS 32, PFRS 7) Dividends Retained Earnings Other Comprehensive Income Book Value per share and Earnings per Share OTHER TOPICS (14.29%) Share-based payments (PFRS 2) Borrowing Costs (PAS 23) Leases (PAS 17/ PFRS 16) Income Tax (PAS 12, PFRS 14) Employee Benefits (PAS 19, PAS 26) Interim Reporting (PAS 34, PAS 24) Segment Reporting (PFRS 8) Cash to Accrual SMALL AND MEDIUM SIZED ENTITIES/ MICRO ENTERPRISES (5.71%) Small and Medium Sized Entities (Reporting Requirements, Peculiarities, Principles for reporting Investments in Debt and Equity Securities) Micro Enterprises ADVANCED FINANCIAL ACCOUNTING AND REPORTING (AFAR) This section tests the examinee's knowledge of the concepts and principles in advanced financial accounting and reporting as well as the application of these concepts, techniques and methodology to problems encountered in practice. o New standards and other issuances are included in the exam if these are in effect for at least six 6 months at the date of the exam. The exam consists of 70 multiple choice questions (Theory and problem) PARTNERSHIP ACCOUNTING (14.29%) Formation, Operations, Dissolution (Admission, Withdrawal, Incorporation of a partnership), Liquidation (Lump-sum method and Installment Method) CORPORATE LIQUIDATION (5.71%) Statement of Affairs, Statement of Deficiency, Statement of Realization and Liquidation, Determination of the order of priority of claimants of company assets subject to liquidation JOINT ARRANGEMENTS - PFRS 11 (5.71%) Joint Operations Joint Venture (equity method) Accounting for SME REVENUE RECOGNITION - PFRS 15 (14.29%) Installment Sales (PAS 18/ PFRS 15) Long-term Construction Contracts (PAS 11/ PFRS 15) Franchise Operations – Franchisor's point of view (PAS 18/ PFRS 15) Consignment Sales (PAS 18/ PFRS 15) ACCOUNTING FOR HOME OFFICE, BRANCH AND AGENCY TRANSACTIONS (5.71%) ACCOUNTING FOR BUSINESS COMBINATION -PFRS 3 (8.57%) Acquisition of assets and liabilities (acquisition method); o Determination of Consideration Transferred; Recognition of Acquired Assets and Liabilities; Recognition and Measurement of Goodwill and Gain from a Bargain Purchase; Journal Entries; Financial Statement Presentation; Accounting for SME SEPARATE FINANCIAL STATEMENTS PAS 27 (5.71%) Accounting for Investment in Subsidiary o at cost, equity method, and in accordance with PAS 39/PFRS 9 Accounting for SME CONSOLIDATED FINANCIAL STATEMENTS - PFRS 10 (7.14%) Consolidated Financial Statement in Subsidiary Date of acquisition Subsequent to date of acquisition Determination of: Net Income/Total Comprehensive Income/Equity Attribution to Equity Holders of Parent/Controlling or Parent’s Interest, Non-controlling Interest, Consolidated/ Group, o Retained Earnings/ Common Share / Dividends Attributable to Equity Holders of Parent /Controlling or Parent’s Interest/, Consolidated / Group, o Accounting for SME FOREIGN CURRENCY TRANSACTIONS (5.71%) Without hedging activities (import, export, lending, and borrowing transactions) Hedging Activities: Hedging Foreign Currency Exposures, Foreign Currency Forward Contacts o Hedges that not requires a Hedge Accounting (undesignated hedges) o Hedges that requires a Hedge Accounting (Fair value hedge, Hedge of a Firm Commitment, Cash flow hedge, Hedge of a Forecasted Transaction (purchase or sale transaction) o Hedge of a net investment in foreign entity o Accounting for SME TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS - PAS 21/ PAS 29 (4.29%) Translation from the functional currency to the presentation currency (Closing/ Current Rate Method) Remeasurement from a foreign currency to the functional currency (Temporal Method) Restatement of Financial Statements NOT-FOR-PROFIT ORGANIZATIONS (2.86%) Voluntary health and welfare organizations (VHWO) Hospitals and other health care organizations Colleges and universities Other not-for-profit organizations such as churches, museums, fraternity association, etc. GOVERNMENT ACCOUNTING – GENERAL FUND (2.86%) Basic Concepts, Budget Process, Journal Entries – Books of National Government Agency OTHER SPECIAL TOPICS (2.86%) Insurance Accounting (Insurer) Build, Operate, and Transfer (PFRIC 12) IFRS for SMEs COST ACCOUNTING (14.29%) System of cost Accumulation or Costing System Job-order costing system Process costing system Backflush costing system (JIT system) Service Cost Allocation Activity-based costing system (ABC costing) Accounting for joint and by – products Standard Costing (two-way variance excluding mix and yield variances) Service Cost Allocation TAXATION This subject tests the examinee's knowledge of the principles and concepts of taxation and the practical application of these principles and concepts. New laws, IRRs, jurisprudences, and other issuances are included in the exam if these are in effect for at least 6 months at the date of the exam. Tax rates are provided in the examination. The exam consists of 70 multiple choice questions. 1. Principles of taxation (11.43%) Nature, scope, classification, and essential characteristics Principles of sound tax system Limitations on the power of taxation Tax evasion vs. tax avoidance Situs / place of taxation Double taxation Legislation of tax laws Impact of taxes in nation building Ethical tax compliance and administration Organization of the BIR, BOC, BOI, PEZA, and Local Government Tax Collecting units 2. Tax remedies (11.43%) Remedies of the taxpayer Remedies of the Government Expanded jurisdiction of the Court of Tax Appeals 3. Income taxation (20%) Taxpayer and tax base o Individuals, Corporations, Partnershi ps, Joint ventures, Estates and trusts, Co-ownerships, Tax exempt individuals and organizations Gross income o Inclusions in the gross income o Exclusions/exemptions from gross income o Compensation Income o Business Income o Passive income subject to final withholding tax o Capital gain Deductions from gross income o Itemized deductions o Items not deductible o Optional standard deduction o Deductions allowed under special laws Accounting periods Accounting methods o Reconciliation of income under PFRS and income under Tax Accounting Tax return preparation and filing and tax payments o Manual filing o Electronic filing and E-submission o Large taxpayers and non-large taxpayers o Income tax credits o Venue and time of filing of tax returns o Venue and time of payment o Modes of payment o Use of tax tables o Accomplishing of various income tax returns and forms Withholding taxes (at source, expanded or creditable withholding tax, final withholding taxes and withholding tax on government payments) o Time of withholding o Income payments subject to withholding o Year end withholding of tax and requirements o Venue and time of filing of withholding tax returns o Venue and time of payment o Modes of payment o Time of payment o Use of tax tables and rates o Use of various withholding tax returns and forms Compliance Requirements o Administrative requirements (registration, issuance of receipts, printing of receipts) o Attachments to the income tax return o Keeping of books of accounts and records, including report of inventories o Prescriptive period of maintain books of accounts and other accounting records 4. Transfer taxes (17.14%) Estate Tax Donor's Tax 5. Value added tax and percentage tax (17.14%) Value Added Tax Percentage Tax 6. Documentary stamp tax (2.85%) Describe, Analyze and Compute Documentary Stamp Tax (Definition, Coverage and Exemptions, Tax Base Rates, and Time and Manner of Payment) 7. Excise tax (2.85%) Describe, Analyze and Compute Excise Tax (Concept, Applicability, Classification of Excisable Materials and Rates, Specific Tax, Ad Valorem Tax, Coverage, Time of Payment) 8. Taxation under the local government code (5.73%) Scope and different types of local taxes, Tax base and tax rates, Venue and time of filing of tax returns and payment). Limited to Real Property Tax and Local Business Tax 9. Preferential taxation (11.43%) Senior Citizens Law Magna Carta for Disabled Persons Special Economic Zone Act (PEZA) Omnibus Investments Code (E.O. 226, Book 1) Barangay Micro Business Enterprises Act (BMBE) Double Taxation Agreements (DTA) Tarrifs and Customs Code and Updates on special concerns have been removed. AUDITING The auditing exam tests the examinee's knowledge of the auditing principles and concepts and the practical application of these principles and concepts. New auditing standards and other issuance are included in the exam if these are in effect for at least 6 months at the date of the exam. The Auditing exam is a 3-hour exam. It consists of 70 multiple choice questions. The exam is divided into two sections: Auditing Theory and Auditing problems AUDITING THEORY (50%) This section covers the candidates' conceptual knowledge and understanding of assurance and related services performed by professional accountants. The Philippine Standards on Auditing (PSA) and other regulatory laws and regulations in effect at the time of examination are applied in all areas of the exam. Fundamentals of Auditing and Assurance Services o APPLICABLE STANDARDS Glossary of Terms (December 2002) IAASB – Interim Terms of Reference (August 2004); Philippine Framework for Assurance Engagement Preface to International Standards and Philippine Standards PSA 120 - Framework of Philippine Standards on Auditing The Financial Statements Audit - Client Acceptance, Audit Planning, Supervision and Monitoring o APPLICABLE STANDARDS: PSA 200 (Revised and Redrafted) PSA 210 (Redrafted) PSA 300 (Redrafted) PSA 240 (Redrafted) PSA 250 (Redrafted) PSA 260 (Redrafted) PSA 610 (Redrafted) PSA 620 (Revised and Redrafted) Understanding the Entity and its Environment Including its Internal Control and Assessing the Risks of Material Misstatement o APPLICABLE STANDARDS: PSA 260 (Revised and Redrafted) PSA 265 (New) PSA 315 (Redrafted) PSA 320 (Revised and Redrafted) Audit Objectives, Procedures, Evidences and Documentation o APPLICABLE STANDARDS: PSA 230 (Redrafted) PSA 330 (Redrafted) PSA 500 (Redrafted) PSA 501 (Redrafted) PSA 505 (Revised and Redrafted) PSA 510 (Redrafted) PSA 520 (Redrafted) PSA 530 (Redrafted) PSA 540 (Revised and Redrafted) PSA 550 (Revised and Redrafted) Completing the Audit/ Post-Audit Responsibilities o APPLICABLE STANDARDS: PSA 560 (Redrafted) PSA 570 (Redrafted) PSA 580 (Revised and Redrafted) Reports on Audited Financial Statements o APPLICABLE STANDARDS: PSA 700 (Redrafted) PSA 705 (Revised and Redrafted) PSA 706 (Revised and Redrafted) PSA 710 (Redrafted) PSA 720 (Redrafted) PSA 800 (Revised and Redrafted) PSA 805 (Revised and Redrafted) PSA 810 (Revised and Redrafted) Auditing in a Computerized Information Systems (CIS) Environment o APPLICABLE STANDARDS: PSA 402 (Revised and Redrafted) Other Assurance and Non-assurance Services o APPLICABLE STANDARDS: PSA 220 (Revised and Redrafted) AUDITING PROBLEM (50%) This section tests the examinee's proficiency in applying auditing standards, techniques, and procedures to a typical independent audit of a medium-sized service, trading or manufacturing concern. The examinee must be able to plan and perform an audit, analyze data for possible errors and irregularities, formulate adjusting entries, resolve audit issues, prepare audit working papers and complete the audit including the preparation of the audit report. Evidence Accumulation and Evaluation – Substantive Tests of Transactions and Balances Audit of the revenue and receipt cycle Audit of sales and revenue transactions Audit of receivable balances Audit of expenditure and disbursement cycle Audit of acquisitions and purchases Audit of payroll transactions Audit of inventory balances Audit of trade payable balances Audit of prepaid expenses and accrued liabilities Audit of production cycle Audit of conversion activities Audit of inventory balances: work-inprocess and finished goods Audit of cost of goods sold balance Audit of the financing cycle Audit of financing cycle transactions Audit of non-trade liability balances Audit of interest expense and finance cost balances Audit of equity accounts Audit of investing cycle Audit of the financing cycle Audit of investing transactions Audit of investment account balances Audit of property, plant and equipment account balances Audit of intangible account balances Audit of cash balances Audit of cash receipt transactions balance Audit of cash disbursement transactions balance MANAGEMENT ADVISORY SERVICES This exam tests the examinee's knowledge of the concepts, methodology and techniques in management accounting, financial management and management consultancy. The MAS exam is a three-hour exam. It consists of 70 multiple choice questions. (Theory and Problems) MANAGEMENT ACCOUNTING (50%) Objectives, role and scope of management accounting Management accounting concepts & techniques for planning and control o Cost Terms, Concepts, and Behaviour o Cost Accumulation Methods (Job Order, Process, ABC) o CVP Analysis o Standard costing and variance analysis o Variable costing and absorption costing o o Financial Planning and Budget Activity-based costing (ABC) and activity-based management (ABM) o Strategic cost managements Management Accounting Concepts & Techniques for Performance Measurement o Responsibility Accounting and Transfer Pricing o Balanced Scorecard Management Accounting Concepts & Techniques for Decision Making o Quantitative Techniques o Relevant Costing and Differential Analysis FINANCIAL MANAGEMENT (40%) Objective and Scope of Financial Management Financial Management Concepts and Techniques for Planning, Control and Decision Making o Financial Statement Analysis o Working Capital Finance o o Capital Budgeting Investment Risks, and Rates of Returns o Types and measurement of risks and returns, risk measurement models o Capital structure and long-term financing decision MANAGEMENT CONSULTANCY (4.3%) Management Consultancy practice by CPAs Project Feasibility Studies ECONOMIC CONCEPTS (5.7%) Macroeconomics Microeconomics REGULATORY FRAMEWORK FROM BUSINESS TRANSACTIONS (RFBT) This section tests the examinee's knowledge of the regulatory framework governing business transactions and business organizations/ associations, and of business laws including their legal implications. The RFBT exam is a three-hour exam. It consists of 100 multiple choice questions. LAW ON BUSINESS TRANSACTIONS Obligations (10%) Contracts (10%) Sales (7%) LAW ON CREDIT TRANSACTIONS Pledge, Real Mortgage, and Chattel Mortgage (4%) NEGOTIABLE INSTRUMENTS AND BOUNCING CHECKS LAW Negotiable Instruments (4%) Bouncing Checks (2%) LAWS ON BUSINESS ORGANIZATIONS Partnership (10%) Corporations (28%) o Including: Securities Regulations Code, Code of Corporate Governance, and SEC Circulars and Ordinances on Filling, Fines and Penalties. Cooperatives (10%) LAWS ON OTHER BUSINESS TRANSACTIONS Philippine Deposit Insurance Corporation (PDIC) (2%) Secrecy of Bank Deposits and Unclaimed Balances Law (2%) Anti-Money Laundering Act (AMLA) (5%) Intellectual Property Law (2%) EXCEPT PART 1 OF R.A. 8293 Data Privacy Act (2%) Electronic Commerce Act (1%) Ease of Doing Business Law (1%) NEW General Banking Laws (GBL), Financial Rehabilitation and Insolvency Act (FRIA), Updates on special concern have been removed. Ease of Doing Business Law (RA 11032) has been added.
