CA School of Business
Module One Student Overview
May 2011
Copyright 2011 – CA School of Business (CASB)
All contents are restricted for authorized CASB candidates, contractors and employees
Not to be released without the expressed written consent of CASB
Module 1
Student Overview
May 2011
Introduction
This overview introduces the content and unique challenges in Module 1.
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 1 course
site and also on the CASB web site.
Unique Challenges in Module 1
The storyboard for Module 1 is shown on page 4.
Module 1 introduces students to CASB’s competency-based learning model. In this module (and
future modules), students will develop the pervasive skills, professional qualities and specified
technical competencies that form the core of a successful CA.
Module 1 is the student's initial experience with CASB. Many will find that it is very different from
university. In university, the courses are quite structured. In addition, students may be working
full-time in their articling positions. University course delivery was generally in the form of
lectures and tutorials that students attended in-person. The professor or teaching assistant was
personally available for consultation. In CASB, students obtain their tasks and assignments online through the Blackboard Learning System. Instruction comes from a facilitator that is only
accessible on-line. The time requirements and need for effective time management as well as
the discipline required for self-study become apparent very quickly. If one is not prepared, the
process can be very intimidating. Students can avoid the difficulties and common pitfalls many
CASB students have encountered by adequately preparing ahead.
Module 1 (and all of the other core modules) is integrated. Students are provided with more and
more information in each of Weeks 1- 4 and asked to complete various tasks in relation to Hans
and Vision. Some information and tasks from one week will “feed into” subsequent weeks. For
example, in Week 3 students are required to calculate taxable income for Vision. In order to
complete this task, students must use revised financial statements they prepared in Week 1. As
well, in Week 4, students are required to determine the causes of Vision's cash flow issues.
Before they can complete this task, they must first prepare the cash flow statement in Week 3.
Due to the integrative nature of some weeks and tasks in the module, the results from a specific
task may affect a task in a subsequent week. For example, in Week 3 students must prepare
divisional income statements that must reconcile and agree to income statements they prepared
in Week 1. If there are revisions required for the task in Week 1 that are not corrected when
Week 3 is submitted, these same revisions will be required for Week 3. It is highly
recommended that students clear their revisions on a timely basis
See page 3 for the module storyboard and page 4 for a summary of the major roles students will
play. Pages 5 to 7 lists the weekly recommended resources and page 8 summarizes the
evolution of Vision Windows Ltd.
Page 2 of 9
Copyright 2011 – CA School of Business (CASB)
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Not to be released without the expressed written consent of CASB
Module 1
Student Overview
May 2011
Module 1 Storyboard – May 2011
Week 2
Week 1
Prepare and explain adjusting
journal entries- revenue
recognition, inventory cutoff,
capitalization of fixed assets,
accrued liabilities- and
prepare revised financial
statements. PM
Apply definition of an asset to
advertising costs- HB. S1000.
PM
Factors to consider in
switching from a Review to an
Audit engagement.
Assurance, Pervasive
(Critical Thinking)
Reflect on critical thinking
and communication.
Pervasive (Professionalism)
Apply the Rules of
Professional Conduct.
Assurance, Pervasive
(Ethics)
Week 5
Identify T4 filing deadline
and explain tax treatment of
shareholder loans and
shareholder bonuses.
Taxation
Recommend whether to
purchase a car personally or
through a corporation,
including calculation of
automobile standby
charges. Taxation
Explain guidelines CRA
uses to determine
employees vs. contractors.
Taxation, Pervasive
(Critical Thinking)
Identify deficiencies in IT
policies and internal
controls and provide
recommendations.
Assurance (IT), Mgmt DM
Determine whether Vision
1) can continue to use the
taxes payable method for
accounting for income taxes
as previously allowed under
Differential Reporting; 2)
must disclose the fair value
of the long-term debt. PM
Calculate fair value of longterm debt for disclosure.
PM
Week 6
Identify and explain client
acceptance considerations.
Assurance, Pervasive
(Critical Thinking)
Explain measures to
safeguard independence
when preparing accounting
entries for client. Assurance,
Pervasive (Ethics)
Determine review
engagement materiality.
Assurance
Analyze financial statements
and identify accounts needing
further investigation.
Assurance
Explain effects on the
Review engagement report
–valuation of AR balance
and concerns about
reasonableness of inventory
opening balance.
Assurance, Pervasive
(Critical Thinking)
Compare and contrast
Compilation versus Review
engagements. Assurance,
Pervasive (Critical
Thinking)
Prepare and explain
adjusting journal entries,
and calculate revised net
Week 3
Prepare a cash flow
statement. PM, Mgmt DM
Reconcile corporate
accounting net income to
taxable income. Taxation
Recommend method for
allocating expenses
amongst divisions. Prepare
divisional income
statements. PM, Mgmt DM
Explain benefits of
recommended policies and
procedures for purchasing,
disbursements and
payables. Assurance
Calculate gross employment
income for tax purposes.
Taxation
Analyze information for buy
or lease decision. Finance
Week 7
Prepare cash flow
projection. PM, Mgmt DM
Calculate net and taxable
income for personal income
tax returns. Explain various
personal tax issues.
Taxation
Explain tax implications of
gifting to children. Taxation
Explain planning
considerations for wills and
the transfer of assets upon
the death of a taxpayer.
Taxation, Pervasive,
Pervasive (Critical
Thinking)
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Week 4
Analyze and explain cash
flow and debt problems.
Finance, Mgmt DM,
Pervasive (Critical
Thinking)
Calculate corporate taxes
payable. Taxation
Identify weaknesses in
credit granting process and
provide recommendations.
Assurance
Calculate a Break Even
Price. Mgmt DM
Week 8
Review “rights and things”
for tax purposes. Calculate
net and taxable income for
a deceased individual.
Taxation
Explain tax administrative
matters- deadlines, interest,
penalties, retention of
records. Taxation
Analyze the f/s and identify
accounts needing further
investigation on a new
review engagement.
Assurance
Assess and explain value
added to Vision as an
Module 1
Student Overview
May 2011
Identify financial statement
assertions related to review
procedures. Assurance,
Pervasive (Critical Thinking)
income. PM
Reconcile accounting net
income to net income for
income tax purposes.
Taxation
Note: Communication competence is required for most tasks, so communication is not listed separately.
Page 4 of 9
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assistant controller.
Pervasive (Critical
Thinking)
Module 1
Student Overview
May 2011
Roles
Students will play two roles during Module 1. During weeks 1 to 4 students will portray the role
of Assistant Controller for Vision Windows Ltd. (Vision). During weeks 5 to 8 they will portray the
role of an associate at the public accounting firm of Parkhurst & Loewen (P&L).
Assistant Controller for Vision Windows
During the first 4 weeks in Module 1 students portray the role of assistant controller, where they
will be performing research and writing memos to Vision’s owner (Hans Supeene) and Vision's
Controller (Denise Charron) on various issues. These issues include accounting adjustments,
accounting treatment of various transactions, choosing between assurance engagements, cost
allocations, cash management, internal controls, leasing versus buying assets, and income tax
issues.
Associate for Parkhurst & Loewen
Over the course of the last 4 weeks in Module 1 students portray the role of an associate at P&L
(approved CA training office). Students will work on the review engagement for Vision and
assist Leslee Supeene (Hans' spouse) with her home-based business.
Page 5 of 9
Copyright 2011 – CA School of Business (CASB)
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Module 1
Student Overview
May 2011
Useful Resources and Readings
Below is a list of required readings for this module. This list also outlines some
additional resources that may help students in the more technically challenging tasks.
Week 1:
CICA Handbook – Accounting -- Part II – Accounting Standards for Private
Enterprises (ASPE) references:
o Issue 1 – Sections 1000 Financial Statement Concepts and 3400
Revenue
o Issue 2 – Section 1000 Financial Statement Concepts and Section
3031 Inventories
o Issue 3 – Section 3061 Property, Plant and Equipment
o Issue 4 – Section 3290 Contingencies
o Issue 5 – Sections 3400 Revenue and 3831 Non-monetary
Transactions
ASPE Guide – Sections 1000, 3061, 3290, 3400 and 3831
CICA Handbook – Assurance – Part II references:
o Canadian Auditing Standard 200: Overall Objectives of the
Independent Auditor and the Conduct of an Audit in Accordance with
Canadian Auditing Standards
o Section 8100: General Review Standards
CAS Guide – CAS 200
Comparison of Audits, Reviews, and Compilations
Week 2:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4/rtrn/menu-eng.html
ITA 15(2), ITA 15(2.6), ITA 5(1)
ITA 78(4)
ITR 119R4
Canadian Tax Principles/Taxable Income and Taxes Payable for Individuals
Canadian Tax Principles/Corporate Taxation and Management Decisions
ITA (6)(1)(e)
ITA (6)(1)(k)
IT 63R5
CRA publication RC 4110 Employee or Self-employed?
Ernst & Young's Guide to Preparing Personal Tax Returns/Total
Income/Business and Professional Income/Classification of Income by
Source/Business Income vs Employment Income
Page 6 of 9
Copyright 2011 – CA School of Business (CASB)
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Not to be released without the expressed written consent of CASB
Module 1
Student Overview
May 2011
Week 3:
CICA Handbook – Accounting – Part II - Section 1540: Classification of cash
flows: Paragraphs 1540.12-.19; Example after 1540.48
ASPE Guide – Section 1540
Capital classes: FITAC>>Income tax regulations>>Schedule XI
IT – 518R Food, Beverages, and Entertainment Expenses
Interest & penalties: FITAC>>ITA 18(1)(t)
Net Capital loss: FITAC>>ITA 111
CRA publication RC 4120 Employers’ Guide Filing the T4 Slip and SummaryGross salary
CRA publication T4130 Employers’ Guide – Taxable Benefits and Allowances
Management Decision-Making Library/Activity Based Costing
Finance Library/Lease vs. Buy Decisions
Activity from FFIS (The Catering Company)
Canadian Tax Principles/Taxable Income and Taxes Payable for Individuals
E&Y’s Guide to Preparing Personal Tax Returns/Total Income/Employment
Income
Week 4:
Capital classes: VPL>>FITAC>>Income tax regulations>>Schedule XI
CRA Website/T4012/T2 Corporation-Income Tax Guide
IT518R Food, Beverages, and Entertainment Expenses
Interest & penalties: FITAC>>ITA 18(1)(t)
Net Capital loss: FITAC>>ITA 111
Week 5:
Canadian Professional Engagement Manual (CPEM) references:
o Audit Engagements Phase I – Risk Assessment/Engagement
Acceptance and Continuance
o Review Engagements/Engagement Acceptance and Continuance
o Practice Aids/Sample Engagement Forms and Worksheets/Audits/400499-Planning/Form 405: New Engagement Acceptance
o Core Concepts: Review Engagements
CICA Handbook – Assurance – Part I references:
o CAS 320: Materiality in Planning and Performing an Audit
o CAS 520: Analytical Procedures
o Section 8200: Public Accountant's Review of Financial Statements
o CAS Guide – CAS 320 & CAS 520
Rules of Professional Conduct
Week 6:
CICA Handbook – Assurance – Part I references:
o CAS 705: Modifications to the Opinion in the Independent Auditor’s
Report
Page 7 of 9
Copyright 2011 – CA School of Business (CASB)
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Module 1
Student Overview
May 2011
o Section 8100 – General Review Standards
o Section 8200 - Public Accountants Review of Financial Statements
CAS Guide – CAS 705
CPEM references:
o Review Engagements/Reporting
o Compilations
IT Bulletin 514 - Work Space in Home and ITA Section 18(12)
Canadian Tax Principles/Capital gains and losses/Provisions for Special
Assets/Principle Residence
Canadian Tax Principles/Income or Loss from a Business
Ernst & Young’s Guide to Preparing Personal Income Tax Returns/Total
Income/ Business and Professional Income
Week 7:
Superficial Loss: ITA 53, ITA 54, ITA 40(2)(g)
Child Care Expenses: ITA 63, IT-495R3
Medical Expenses: ITA 118.2, IT 519R2
Donations: IT 110R3
Employment Expenses: CRA Guide T4044
Canadian Tax Principles
Ernst & Young’s Guide to Preparing Personal Income Tax Returns
The Canadian Business Compliance Manual
Week 8:
Canadian Tax Principles references:
o Procedures and Administration
o Supplementary Readings No. 7 – Final Returns for Deceased
Taxpayers
IT Regulations 5800
ITA 150
CRA website
Page 8 of 9
Copyright 2011 – CA School of Business (CASB)
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Not to be released without the expressed written consent of CASB
Module 1
Student Overview
May 2011
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 has received a number of
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. Hans
is approached by two of his
managers (Elmer Hughes and
Arnie Chan) who 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. A third shareholder
who has experience in strategy
is added, and a potential
acquisition, Western Homes
Centres Inc. (Western), is
identified. 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. With
an expanded accounting
department, more attention is
being paid to variance analysis,
the need to acquire new
software, and the adequacy of
the company's disaster
recovery plan. With a larger
employee and management
group, management is
considering the potential tax
consequences of issuing stock
options.
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
are experiencing 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 is
considering a number of new
investment opportunities. As
Vision is unable to secure
financing with its bankers, it
focuses attention on short-term
cashflow 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.
Page 9 of 9
Copyright 2011 – CA School of Business (CASB)
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Not to be released without the expressed written consent of CASB