Module 5
STUDENT OVERVIEW
2013
INTRODUCTION
This overview introduces the content and unique challenges in Module 5.
For information about CASB administrative policies and advice for a successful experience as a CASB
student, see the “Student Resource Guide”, which is available on the Module 5 course site and also on the
CASB web site.
Unique Challenges in Module 5
The storyboard for Module 5 is shown on the next page. Students will work on a variety of assignments that
will expose them to performance measurement, assurance, finance, tax, governance, strategy and risk
management (GSRM), management decision-making and professional skills.
The main case study for weekly tasks continues to be Vision Windows Limited. At the beginning of Module
5, Vision’s managers explore financial reporting, financing, taxation, regulatory and governance issues
associated with a potential initial public offering. Students will address a variety of issues including the
identification and audit of related parties, information technology controls, tax planning, accounting for
pension plans, operating segment requirements, and accounting for financial instruments.
An additional element of Module 5 includes the requirement of students to complete practice UFE prep
course questions. The students’ responses will be submitted to facilitators as part of their weekly task
assignments. Facilitators will provide feedback and request revisions when necessary.
In preparing students for UFE Prep and the Uniform Final Examination, facilitator expectations are elevated
and task requirements are less directed than in earlier modules.
See page 3 for the module storyboard and page 4 for a summary of the major roles students will play. Pages
5 and 6 list the weekly recommended resources, and Page 7 summarizes the evolution of Vision Windows
Limited.
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Module 5 Student Overview
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2013
MODULE 5 STORYBOARD – 2013
Week 1
 Explain issues regarding
going public. Finance,
GSRM, Taxation
 Identify general and
application control
deficiencies for the
receipts / sales/
receivables IT systems,
implications of the
deficiency, and
recommendations to
resolve. Assurance Review
audit-planning memo and
perform analytical review
of financial statements.
Assurance, PM
 Prepare UFE Prep
Question – user strategic
objectives, financing and
tax. Finance, Taxation
Week 2
 Evaluate two production
options using both
qualitative & quantitative
aspects. Quantitative
work requires a
contribution margin
analysis, and
consideration of capacity
constraints and
opportunity costs.
Finance, Mgmt DM,
 Complete review of a
junior staff member’s
audit work as it relates to
AR, inventory, accounts
payable and revenue.
Identify additional work
required to perform, with
reasoning provided.
Percentage of completion
calculations. Assurance,
PM
 Identify related parties,
necessary audit
procedures, and IFRS
disclosures. PM,
Assurance
Week 3
 Prepare AJE for pension
accounting and explain
pension disclosures under
IFRS. Identify and explain
assurance report needed for
pension fund management
of assets. PM, Assurance
 Complete self-review task,
performing an incremental
profitability analysis
including 5-year NPV for
products and division, and
discuss qualitative
considerations. Finance,
Mgmt DM
 Explain auditor’s
responsibilities on using
actuary’s report. Assurance
 Prepare UFE Prep Question
– consideration of the users
and user bias, accounting
policy choices, purchase
price calculation and
engagement options. PM,
Finance,, and Assurance
Week 5
 Explain the timing and
content of interim financial
reports for a public
company. PM
 Explain audit committee
composition and
responsibilities. GSRM
 Explain planning
opportunities for proposed
disposition of shares of
CCPC going public –
election to bump up the
adjusted cost base and the
use of the capital gains
exemption. Taxation
Professional skills (Critical
Thinking)
 Identify and discuss user
Week 6
 Explain accounting for
convertible debentures,
financial instruments,
revenue recognition,
assets, and capital
management. Explain
IFRS reporting options for
PP&E. Explain the tax
consequences of selling a
subsidiary, wind-up of a
subsidiary, or keeping a
subsidiary (with an
acquisition of control).
Loss denial on transfer of
shares and charging of
mgmt fees. Taxation
 Explain the financial
accounting (under IFRS)
Week 7
 Read various handbook
sections that impact public
offering documents. Prepare
a memo regarding P&L
involvement with the public
offering document.
Assurance
 Complete SRT for issuance of
stock options and calculate
both basic and diluted EPS.
PM
 Complete UFE Prep outlining
tutorial found on UFE Prep
website.
Review public company
financial statements on
SEDAR, analyze and discuss
some IFRS presentation and
disclosure issues, identifying
Week 4

Explain the audit and
financial statement
requirements for a
public company;
consider
independence
prohibitions for
auditors of public
companies.
Assurance, GSRM

Explain the
implications of
applying IFRS 8
(operating segments).
PM

Analyze a long-term
investment
opportunity, including
sensitivity analysis.
Finance, Mgmt DM

Prepare UFE Prep
Question – evaluation
of accounting options,
recognition of
management bias,
engagement options.
Evaluation of system
controls. Assurance,
PM, Mgt DM (IT)
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Module 5 Student Overview
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objectives, outstanding
accounting and audit issues
and provide
recommendations –
valuation of tangibles and
intangibles, revenue
recognition, coupon liability,
completion of inventory,
AP. PM, Assurance
 Prepare UFE Prep Question
–prepare preliminary report
on audit of personal and
corporate tax returns.
Assurance, Personal and
Corporate Taxation.
and tax treatment of
share issue costs. PM,
Taxation
 Discuss P&L involvement
with MD&A. Analyze
excerpts of MD&A,
making suggestions as
needed. GSRM,
Assurance
relevant items to Vision, a
first-time adopter. PM
 Explain personal financial
planning issues (budgeting,
RRSP planning) and some
general tax issues (dividend
vs. salary). Taxation
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Module 5 Student Overview
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ROLES
Two primary roles are adopted during Module 5, with the student switching between the roles of associate
for Parkhurst & Loewen and assistant controller for Vision Windows. UFE prep questions are also a key
element of this module, with multiple roles being presented.
Associate for Parkhurst & Loewen
As an associate, the student’s role is to interact with both the audit firm and the client. During Module 5 the
student will perform multiple tasks, including outlining an auditor’s responsibilities on using a specialist’s
work, reviewing a junior staff member’s audit work for deficiencies and preparing a product and divisional
analysis to determine the viability of product lines and divisions. The student will research and learn about
various topics and communicate this information to the firm supervisor or client. If the student believes
there is room for a conclusion or recommendation, this should be provided along with proper support.
Although the associate’s work will be reviewed prior to presentation to the client, the student should
attempt to make the work as complete as possible.
Assistant Controller for Vision Windows
As assistant controller at Vision Windows, the student’s primary interest is achieving the company’s
strategic objectives. The student will assist the controller and company managers with various issues
including such tasks as providing the board of directors advice regarding whether to go public, analyzing
expansion opportunities on both a qualitative and quantitative basis, calculating and preparing journal
entries for a pension plan and preparing an analysis of the accounting changes that will occur if
Vision goes public, including potential IFRS impacts. While the company’s managers have in-depth
knowledge of company operations, they are not as familiar with accounting regulations and terminology.
Therefore the assistant controller must communicate using less technical accounting language.
UFE Preparation Questions
Students will have extensive exposure to UFE prep questions beginning in week one. The UFE will
present many diverse scenarios that will test a student’s skills to identify user needs and respond
to those needs within a limited amount of time. The prep questions included in this module will
provide students with examples of questions that reflect the nature and difficulty of actual
questions that could be part of their actual UFE, and should prepare students to successfully
tackle the exam with confidence. The student will have to perform several tasks, in various roles,
such as:

Preparing a preliminary report on audit on personal and corporate tax returns;

Evaluating accounting options available to a client; and,

Analyzing engagement options available to a client, including a thorough discussion of audit
procedures that could be performed.
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Not to be released without expressed written consent
Module 5 Student Overview
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USEFUL RESOURCES AND READINGS
Below is a list of readings for this module. It also outlines some additional resources that may help students
in the more technically challenging tasks.
Week
Resource
CICA HB 3856 Financial Instruments
ASPE Guide – Section 3856
CAS 200 Overall objectives of the independent auditor and the conduct of an audit in
accordance with Canadian auditing standards
CAS 315 Identifying and assessing the risks of material misstatement through understanding
the entity and its environment, including Appendix I, which focuses on IT aspects.
CAS 320 Materiality in planning and performing an audit
Briefing Notes: IAS 32 Financial Instruments: Presentation
1
CAS guide: CAS 200, CAS 315, CAS 320
PEM - Inherent Risk Checklist
Deciding to Go Public, What CFOs Need to Know http://www.cica.ca/focus-on-practiceareas/governance-strategy-and-risk/cfo-series/item12319.pdf
Trust Services: A Better Way to Evaluate IT Controls
http://www.journalofaccountancy.com/Issues/2005/Mar/TrustServicesABetterWayToEvaluat
eITControls.htm
The top 10 tech issues http://www.camagazine.com/archives/printedition/2010/sep/features/camagazine40987.aspx
UFE simulation: Great Northern Sales
CAS 200 Overall objectives of the independent auditor and the conduct of an audit in
accordance with Canadian auditing standards
CAS 320 Materiality in planning and performing an audit
CAS 550 Related parties and IAS 24: Related party disclosures
CAS guide – CAS 200, CAS 320, CAS 550
2
IAS 19 Employee Benefits
IAS 24 Related Party Disclosures
Briefing Notes: IAS 19, IAS 24
"Using Quantitative Analysis for Financial Decisions on the UFE" guide. Provides you
with ratio and cash flow analysis, showing both qualitative and quantitative support
for financial decision questions.
"Management Decision Making Library" for additional guidance on the expansion
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Module 5 Student Overview
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analysis in week 2
UFE simulation: None
IAS 19 Employee Benefits
Employee Future Benefits Guide – IAS 19
CAS 500 Audit evidence
CAS 620 Using the work of an auditor's expert
CAS Guide – CAS 500, CAS 620
3
CICA HB 5049 Use of specialists in assurance engagements
CSAE 3416 Reporting on Controls at a Service Organization
"Using Quantitative Analysis for Financial Decisions on the UFE" guide. Provides you
with ratio and cash flow analysis, showing both qualitative and quantitative support
for financial decision questions.
UFE simulation: VCL
CAS 200 Overall objectives of the independent auditor and the conduct of an audit in
accordance with Canadian auditing standards
CAS Guide – CAS 200
UFE simulation: ASAP
4
National Instrument 52-108 Auditor Oversight
National Instrument 51-102 Continuous Disclosure Obligations
National Instrument 41-101 General Prospectus Requirements
CPAB, http://www.cpab-ccrc.ca
IAS 34: Interim financial reporting
Briefing Notes: IAS 33, IAS 34
Tutorial: IAS 34
ITA S.48.1 (Canadian Tax Principles, CRA Capital Gains Guide - T4037, T657))
5
NI 51-102: Continuous Disclosure Obligations
Multilateral Instrument 52-110 – Audit committees
CRA Capital Gains guide – T4037, T657
VPL – Canadian Tax Principles
IAS 17 Leases
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SIC 15: Operating Leases - Incentives
Tutorial IAS 17 and SIC 15
IAS 18 Revenue
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
Briefing notes: IAS 17, IAS 18, IAS 36, IAS 37, IAS 38
Tutorial: IAS 36
UFE simulation: CRA Auditor
Briefing Notes: IFRS Framework
IFRS 3 Business Combinations
IFRS 8 Operating Segments
IAS 1 Presentation of Financial Statements (specifically the section discussing
accounting policies, and implications of accounting for an item without specific IFRS
guidance)
IAS 16 Property, Plant and Equipment
6
IAS 18 Revenue
IAS 32 Financial Instruments: Presentation
Briefing notes: IFRS 3, IFRS 8, IAS 1, IAS 16, IAS 18, IAS 32
Tutorial: IFRS 8
Various ITA sections to examine tax rules impacting the non-capital losses and capital
losses of a company in different scenarios. Sections include ITA 88(1.1), ITA 40(3.3),
ITA 40(3.4), ITA 67 and also IT-302R3 and Canadian Tax Principles
ITA(20)(1)(e), note how it applies and what it applies to
National Instrument 51-102 – Continuous Disclosure Obligations
IAS 33 Required to calculate basic and diluted EPS
7
CICA HB 7150 Auditor's consent to the use of a report of the auditor included in an
offering document
CICA HB 7200 Auditor assistance to underwriters and others (Comfort Letters)
CICA HB 7500 Auditor's consent to the use of the auditor's report in connection with
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designated documents
IFRS 1 First-time Adoption of International Financial Reporting Standards
IFRS 1 publication - Chapter 20 from the 2011 version of Financial Reporting in
Canada under IFRS http://www.cica.ca/ifrs/site-utilities/item45469.pdf
Briefing notes: IFRS 1, IAS 1
Tutorial: IAS 36
www.sedar.com
Complete Planning Tutorial 1: Effective Outlining
VPL – Canadian Tax Principles
IT-288-R2 Gifts of Capital Property to a Charity and Others
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EVOLUTION OF VISION WINDOWS LIMITED
Module 1
Module 2
Module 3
Module 4
Module 5
First 10 years
Next 2 years
Next 3 years
Next 3 years
Next 2 years
"The early years"
"Sale of the business
and the transition to
new owners and
management"
"Vision becomes a
multinational
company"
"Time for some
introspection"
"Vision
contemplates an
IPO"
Vision, incorporated
by Hans Supeene,
expands to three
divisions: vinyl-clad
windows, metal
doors, and
greenhouses and
greenhouse
windows. As with
most companies,
cash flow issues
arise, and numerous
personal and
corporate tax
matters require
attention. Company
and external
accountants
prepare and discuss
adjusting journal
entries as well as
the presentation of
selected financial
matters. The
company faces
many decisions
including hiring a
new external
accountant, buying
or leasing assets,
allocating costs to
the three operating
divisions, and
having an audit or
review engagement
performed.
Hans receives
several offers to buy
Vision. He engages a
CA firm to provide
him with a valuation
report and
determine the tax
effects of each offer.
Due to the poor
economy, the
intended purchaser
is unable to
complete the
transaction. Two of
Hans’ managers
(Elmer Hughes and
Arnie Chan) express
interest, and are
successful, in
completing the
purchase of Vision.
Hans and his family
contemplate the tax
consequences of
moving to Belgium.
The new owners of
Vision are eager to
expand the business.
The new owners add
a third shareholder,
who has experience
in strategy, and
identify a potential
acquisition, Western
Homes Centres Inc.
(Western). Parkhurst
and Loewen are
engaged to
complete the audit
of Western.
The audit of Vision is
completed, and the
company acquires
80% of the shares of
Western. Vision
purchases 100% of
Dante Windows
Limited, a U.K.
company. With the
added subsidiaries
there are many
consolidation and
foreign currency
issues requiring
careful attention.
The expanded
accounting
department pays
more attention to
variance analysis, the
need to acquire new
software, and the
adequacy of the
company's disaster
recovery plan.
Management
considers the
potential tax
consequences of
issuing stock options
to its larger
employee and
management group.
Vision’s controller,
Denise Charron,
moves to England to
run Dante Windows
Limited. The new
controller's first job
is finalizing the
financial statements
for the year-end
audit. Both Western
and Vision
experience
operational and
financial challenges,
as evidenced by
Vision's loss. The
three shareholders
realize they will not
achieve their goal of
taking Vision public
unless they focus
more attention on
governance and
strategic planning. In
conjunction with
making
improvements in
governance, Vision
considers two new
investment
opportunities. As
Vision is unable to
secure financing with
its bankers, it
focuses attention on
short-term cash flow
management and
approaches Brennan
Brothers, a venture
capital group, to
provide additional
financing
Vision’s managers
explore financial
reporting, financing,
taxation, regulatory
and governance
issues associated
with a potential
initial public offering
on the Toronto
Stock Exchange. The
company’s internal
and external
accountants address
a variety of issues
including the
identification and
audit of related
parties, information
technology controls,
tax planning,
accounting for
pension plans,
segment reporting
requirements,
accounting for
financial
instruments, and
international
financial reporting
standards.
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Not to be released without expressed written consent
Module 5 Student Overview
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2013