Syllabus of CA

CA - Final

Group I

Paper 1 : Financial Reporting[100 marks]

Accounting Standards, Accounting Standards Interpretations and Guidance Notes on various accounting aspects issued by the ICAI and their applications.
Overview of International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS), Interpretations by International Financial Reporting Interpretation Committee (IFRIC), Significant difference vis-a-vis Indian Accounting Standards.Understanding of US GAAP,Applications of IFRS and US GAAP.
Corporate Financial Reporting - Issues and problems with special reference to published financial statements.
Accounting for Corporate Restructuring (including inter-company holdings).
Consolidated Financial Statements of Group Companies Concept of a Group, purposes of consolidated financial statements minority interest, Goodwill, Consolidation procedures – Minority interests, Goodwill, Treatment of pre- acquisition and post-acquisition profit.Consolidation with two or more subsidiaries, consolidation with foreign subsidiaries.Consolidated profit and loss account, balance sheet and cash flow statement.Treatment of investment in associates in consolidated financial statements.Treatment of investments in joint ventures in consolidated financial statements.
Accounting and Reporting of Financial Instruments
Share based payments
Financial Reporting by Mutual funds, Non-banking finance companies, Merchant bankers, Stock and commodity market intermediaries
.Valuation

(a) Concept of Valuation
(b) Valuation of Tangible Fixed Assets
(c) Valuation of Intangibles including Brand Valuation and Valuation of Goodwill
(d) Valuation of Liabilities
(e) Valuation of Shares
(f) Valuation of Business

10. Developments in Financial Reporting

(a) Value Added Statement
(b) Economic Value Added, Market Value Added, Shareholders’ Value Added
(c) Human Resource Reporting
(d) Inflation Accounting

Note: If either old Accounting Standards (ASs), Accounting Standards Interpretations (ASIs), Guidance Notes (GNs), Announcements and Limited Revisions to ASs are withdrawn or new ASs, GNs, Announcements and Limited Revisions to AS are issued by the Institute of Chartered Accountants of India in place of existing ASs, ASIs, GNs, Announcements and Limited Revisions to AS, the syllabus will accordingly include/exclude such new developments in the place of the existing ones with effect from the date to be notified by the Institute.

Paper 2: Strategic Financial Management [100 marks]

1. Financial Policy and Corporate Strategy
Strategic decision making framework
Interface of Financial Policy and strategic management
Balancing financial goals vis-à-vis sustainable growth.

2. Project Planning and Capital Budgeting
Feasibility study
Cash flow Projections – Impact of taxation, depreciation, inflation and working capital
Capital Budgeting Decisions - Certainty Equivalent approach, Evaluation of Risky
Investment Proposals, Risk and Return analysis, Simulation and decision tree analysis,
Sensitivity analysis, Capital Rationing, Adjusted Net Present Value, Replacement
decisions, Application of Real Options in capital budgeting, Impact of inflation on capital
budgeting decisions
Preparation of Project Report
Social cost benefit analysis.

3. Leasing decision including cross border leasing

4. Dividend Decisions
Dividend theories, Determinants of dividend policies.

5.
(a) Indian Capital Market including role of various primary and secondary market
institutions
(b) Capital Market Instruments
Financial derivatives – stock futures, stock options, index futures, index options
Option valuation techniques : Binomial model, Black Scholes Option Pricing Model,
Greeks
Delta, Gamma, Theta, Rho and Vega
Pricing of Futures – Cost of carry model
Imbedded derivatives Page 5 of 17
(c) Commodity derivatives
(d) OTC derivatives -Swaps, Swaptions, Forward Rate Agreements (FRAs), Caps,
Floors and Collors.

6. Security Analysis
Fundamental analysis - Economic analysis, Industry analysis and Company Analysis
Bond valuation, Price Yield relationship, Bond Price forecasting – application of duration
and convexity, Yield curve strategies
Technical Analysis – market cycle model and basic trend identification, different types of
charting, support and resistance, price patterns, moving averages, Bollinger Bands,
momentum analysis.

7. Portfolio Theory and Asset Pricing
Efficient Market Theory – Random walk theory ; Markowitz model of risk return
optimization
Capital Asset Pricing Model (CAPM)
Arbitrage Pricing Theory (APT)
Sharpe Index Model
Portfolio Management - Formulation, Monitoring and Evaluation
Equity Style Management
Principles and Management of Hedge Funds
International Portfolio Management.

8. Financial Services in India
Investment Banking
Retail Banking
On Line Share Trading
Depository Service.

9.
(a) Mutual Funds: Regulatory framework, formulation, monitoring and
evaluation of various schemes of Mutual funds, Money market mutual funds.
(b) Exchange Traded Funds.

10. Money Market operations

11.
(a) Foreign Direct Investment, Foreign Institutional Investment.
(b) International Financial Management
Raising of capital abroad - American Depository Receipts, Global Depository Receipts,
External Commercial Borrowings and Foreign Currency Convertible BondsPage 6 of 17
International Capital Budgeting
International Working Capital Management.

12. Foreign Exchange Exposure and Risk Management
Exchange rate determination, Exchange rate forecasting
Foreign currency market
Foreign exchange derivatives – Forward, futures, options and swaps
Management of transaction, translation and economic exposures
Hedging currency risk.

13. Mergers, Acquisitions and Restructuring
Meaning of mergers and acquisition, categories, purposes
Process of mergers and acquisition – Identification and valuation of the target, acquisition
through negotiation, due diligence, post – merger integration
Legal and regulatory requirements
Merger and Acquisition agreement
Reverse merger
Potential adverse competitive effects of mergers
Corporate Takeovers: Motivations, Co-insurance effect, Cross-border takeovers, Forms of
takeovers, Takeover defenses
Going Private and Other Control Transactions: Leveraged Buyouts (LBOs), Management
Buyouts (MBOs), Spin Offs and Asset Divestitures
Corporate Restructuring : Refinancing and rescue financing, reorganizations of debtors and
creditors, Sale of assets, targeted stock offerings, downsizing and layoff programmes,
negotiated wage give-backs, employee buyouts.

Paper 3: Advanced Auditing and Professional Ethics[100marks]

1. Auditing Standards, Statements and Guidance Notes

Auditing and Assurance Standards (AASs); Statements and Guidance Notes on Auditing issued by the ICAI; Significant differences between Auditing and Assurance Standards and International Standards on Auditing.

2. Audit strategy, planning and programming

Planning the flow of audit work; audit strategy, planning programme and importance of supervision: review of audit notes and working papers; drafting of reports; principal’s ultimate responsibility; extent of delegation; control over quality of audit work; reliance on the work of other auditor, internal auditor or an expert.

3. Risk Assessment and Internal Control

Evaluation of internal control procedures; techniques including questionnaire, flowchart; internal audit and external audit, coordination between the two.

4. Audit under computerized information system (CIS) environment

Special aspects of CIS Audit Environment, need for review of internal control especially procedure controls and facility controls. Approach to audit in CIS Environment, use of computers for internal and management audit purposes: audit tools, test packs, computerized audit programmes; Special Aspects in Audit of E-Commerce Transaction.

5. Special audit techniques

(a) Selective verification; statistical sampling: Special audit procedures;
physical verification of assets,
direct confirmation of debtors and creditors

(b) Analytical review procedures

6 Audit of limited companies

Statutory requirements under the Companies Act 1956; Audit of branches: joint audits; Dividends and divisible profits % financial, legal, and policy considerations.

7. Rights, duties, and liabilities of auditors; third party liability.

8. Audit reports; qualifications, notes on accounts, distinction between notes and qualifications,

detailed observations by the statutory auditor to the management vis-a-vis obligations of reporting to the members.

9. Audit Committee and Corporate Governance

10. Audit of Consolidated Financial Statements, Audit Reports and Certificates for Special Purpose engagements; Certificates under the Payment of Bonus Act, import/export control authorities, etc.; Specific services to non-audit clients; Certificate on Corporate Governance.

11. Special features of audit of banks, insurance companies, co-operative societies and non-banking financial companies.

12. Audit under Fiscal Laws, viz, Direct and Indirect Tax Laws.

13. Cost audit

14. Special audit assignments like audit of bank borrowers, audit of stock and commodity exchange intermediaries and depositories; inspection of special entities like banks, financial institutions, mutual funds, stock brokers.

15. Special features in audit of public sector companies. Directions of Comptroller and Auditor General of India under Section 619; Concepts of propriety and efficiency audit.

16. Internal audit, management and operational audit Nature and purpose, organisation, audit programme, behavioural problems; Internal Audit Standards issued by the ICAI; Specific areas of management and operational audit involving review of internal control, purchasing operations, manufacturing operations, selling and distribution, personnel policies, systems and procedures. Aspects relating to concurrent audit.

17. Investigation and Due Diligence.

18. Concept of peer review

19. Salient features of Sarbanes – Oxley Act, 2002 with special reference to reporting on internal control.

20. Professional Ethics

Code of Ethics with special reference to the relevant provisions of The Chartered Accountants Act, 1949 and the Regulations there under.

Paper 4: Corporate and Allied Laws [100 marks]

Section A: Company Law (70 Marks)

1. The Companies Act, 1956, Rules and Regulations thereunder in its entirety with
specific reference to

Accounts and audit
Dividend
Directors - powers, managerial remuneration
Meetings, powers of the Board and related party transactions
Inspection and Investigation
Compromises, Arrangements and Reconstructions
Prevention of Oppression and Mismanagement
Revival and Rehabilitation of Sick Industrial Companies
Corporate Winding up and Dissolution
Producer Companies
Companies incorporated outside India
Offences and Penalties
E-governance

2. Corporate Secretarial Practice – Drafting of Resolution, Minutes, Notices and
Reports

Section B: Allied Laws (30 Marks)

3. An overview of the following laws –

The Securities and Exchange Board of India Act,1992
The Securities Contracts (Regulation) Act, 1956
The Foreign Exchange Management Act, 1999
The Competition Act, 2002
The Banking Regulation Act, 1949, The Insurance Act, 1938. The Insurance Regulatory and Development Authority Act, 1999. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
The Prevention of Money Laundering Act, 2002

4. Interpretation of Statutes, Deeds and Documents

Group - II

Paper 5: Advanced Management Accounting [100 marks]

1. Cost Management

(a) Developments in the business environment; just in time; manufacturing resources

planning; (MRP); automated manufacturing; synchronous manufacturing and back flush

systems to reflect the importance of accurate bills of material and routings; world class

manufacturing; total quality management.

(b) Activity based approaches to management and cost analysis

(d) Techniques for profit improvement, cost reduction, and value analysis

(e) Throughput accounting

( f) Target costing; cost ascertainment and pricing of products and services

(g) Life cycle costing

(h) Shut down and divestment.

2. Cost Volume Profit Analysis

(a) Relevant cost

(b) Product sales pricing and mix

(d) Multiple scarce resource problems

(e) Decisions about alternatives such as make or buy, selection of products, etc.

3. Pricing Decisions

(a) Pricing of a finished product

(b) Theory of price

(d) Principles of product pricing

(e) New product pricingPage 12 of 17

(f) Pricing strategies

(g) Pricing of services

(h) Pareto analysis

4. Budgets and Budgetary Control

The budget manual, Preparation and monitoring procedures, Budget variances, Flexible

budgets, Preparation of functional budget for operating and non-operating functions, Cash

budgets, Capital expenditure budget, Master budget, Principal budget factors.

5. Standard Costing and Variance Analysis

Types of standards and sources of standard cost information; evolution of standards,

continuous -improvement; keeping standards meaningful and relevant; variance analysis;

disposal of variances.

(a) Investigation and interpretation of variances and their inter relationship

(b) Behavioural considerations.

6. Transfer pricing

(a) Objectives of transfer pricing

(b) Methods of transfer pricing

(d) Multi-national transfer pricing.

7. Cost Management in Service Sector

8. Uniform Costing and Inter firm comparison

9. Profitability analysis - Product wise / segment wise / customer wise

10. Financial Decision Modeling

(a) Linear Programming

(b) Network analysis - PERT/CPM, resource allocation and resource leveling

(d) Assignment problems

(e) Simulation

(f) Learning Curve Theory

Paper 6: Information Systems Control and Audit [100 marks]

1. Information Systems Concepts

2. Systems Development Life Cycle Methodology

3. Control objectives

(a) Information Systems Controls

(b) Information Systems Control Techniques

(d) Controls over system implementation

(e) Control over System and program changes

(f) Control over Data integrity, privacy and security

4. Audit Tests of General and Automated Controls

(a) Introduction to basics of testing (reasons for testing);

(b) Various levels/types of testing such as:

(i) Performance testing,

(ii) Parallel testing,

(iii) Concurrent Audit modules/Embedded audit modules, etc.

5. Risk assessment methodologies and applications:

(a) Meaning of Vulnerabilities, Threats, Risks, Controls,

(b) Fraud, error, vandalism, excessive costs, competitive disadvantage, business, interruption, social costs, statutory sanctions, etc.

(d) Preventive/detective/corrective strategies

6. Business Continuity Planning and Disaster recovery planning:

(a) Fundamentals of BCP/DRP,

(b) Threat and risk management,

(d) Alternative processing facility arrangements,

(e) Disaster recovery procedural plan,

(f) Integration with departmental plans, testing and documentation,

(g) Insurance

7. An over view of Enterprise Resource Planning (ERP)

8. Information Systems Auditing Standards, guidelines, best practices
(BS7799, HIPPA, CMM etc.)

9. Drafting of IS Security Policy, Audit Policy, IS Audit Reporting - a practical

perspective

10. Information Technology Act, 2000

Paper 7: Direct Tax Laws [100 marks]

I. The Income-tax Act, 1961 and Rules thereunder (90 marks)

II. The Wealth-tax Act, 1957 and Rules thereunder (10 marks)

While covering the direct tax laws, students should familiarise themselves with

considerations relevant to tax management. These may include tax considerations with

regard to specific management decisions, foreign collaboration agreements, international

taxation, amalgamations, tax incentives, personnel compensation plans, inter-relationship

of taxation and accounting, with special reference to relevant accounting standards and

other precautions to be observed to maximise tax relief. Further, they should have a basic

understanding about the ethical considerations in tax management and compliance with

taxation laws.

Note – If new legislations are enacted in place of the existing legislations relating to
income tax and wealth tax, the syllabus will accordingly include such new legislations in
the place of the existing legislations with effect from the date to be notified by the Institute.

Paper 8: Indirect Tax Laws [100 marks]

Section A: Central Excise (40 marks)

Central Excise Act, 1944 and the related Rules, Circulars and Notifications; Central Excise

Tariff Act, 1985 and the related Rules.

Section B: Service tax & VAT (40 marks)

Law relating to service tax as contained in the Finance Act, 1994 as amended from time to

time and the related Rules, Circulars and Notifications.

Issues related to Value Added Tax:

1. Backdrop for State-Level VAT in India

2. Taxonomy of VAT

3. Input tax credit, tax invoices

4. Small dealers and composition scheme

5. VAT procedures

6. VAT in relation to incentive schemes, works contract, lease transactions and hire

purchase transactions.

7. VAT and Central Sales Tax

Section C: Customs (20 marks)

Customs Act, 1962 and the related Rules, Circulars and Notifications; Customs Tariff Act,

1975 and the related Rules.

While covering the above laws, students should familiarize themselves with the interrelationship of accounting with excise, customs and service tax and also the ethical

considerations involved in the compliance of these laws.

Note – If new legislations are enacted in place of the existing legislations relating to
central excise, customs and service tax, the syllabus will accordingly include such new
legislations in place of the existing legislations with effect from the date to be notified by
the Institute. Students shall not be examined with reference to any particular State VAT
Law.

Syllabus of CA - Final