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Accountancy & Auditing (200 Marks)

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CSS Accounting & Auditing Syllabus

Paper-I — 100 Marks

A. Financial Accounting — 50 Marks

I. Fundamental Accounting Principles, Concepts, Assumptions and Conventions

Nature and Scope of Accounting
Accrual/Matching Concept
Consistency of Presentation and Comparability
True and Fair View
Neutrality
Materiality
Prudence
Completeness
Understandability and Usefulness
Going Concern
Substance over Form

II. Accounting Cycle/Process and Financial Statements

Transactions and/or Events
General Journal
General Ledger
Trial Balance (Unadjusted)
Adjusting Entries and Adjusted Trial Balance
Work Sheet
Financial Statements, including:
- Income Statement
- Statement of Financial Position (Balance Sheet)
- Statement of Cash Flows
- Statement of Changes in Equity
Financial Reporting Framework as specified by the International Accounting Standards Board (IASB) through IFRSs/IASs and by the Securities and Exchange Commission of Pakistan through Companies Ordinance 1984
Closing and Reversing Entries

III. Attributes and Significance of Accounting Information

Attributes of Accounting Information
Information and Reporting Requirements of various Users/Stakeholders of Financial Statements

External Stakeholders:

Investors/Shareholders
Creditors
Suppliers
Lenders/Financiers
Government Agencies

Internal Stakeholders:

Board of Directors
Partners
Managers
Employees

IV. Accounting for Common Legal Forms of a Business

Accounting Principles and Financial Statements of:
- Sole Proprietorships
- Partnerships
- Joint Stock Companies
- Banking Companies
Excluding advanced topics such as:
- Amalgamation
- Capital Reduction
- Consolidation

V. Accounting for Associations Not-for-Profit and Public Sector

Accounting Principles and Financial Statements of Associations Not-for-Profit
Accounting Principles and Financial Statements of Public Sector Entities
Standardized Financial Reporting Framework provided by the International Public Sector Accounting Standards (IPSAS) Board
Practices being followed in Pakistan

VI. Accounting for Non-Current Tangible Assets

Fundamental Concepts and Principles concerning Non-Current Assets:

Cost
Depreciable Amount
Depreciation
Fair Value
Property, Plant and Equipment
Residual Value
Useful Life

Depreciation Methods and Their Application:

Straight-Line Method
Reducing Balance Method
Number of Units Produced
Basic know-how of other methods/techniques commonly used by the industry

VII. Fundamental and Technical Analysis of Various Forms of Organizations

Financial Statements Analysis:

Horizontal Analysis (Measuring Change)
Vertical Analysis (Ratio Analysis)

Types of Ratios:

Liquidity Ratios
Activity Ratios
Debt Ratios
Profitability Ratios
Market Ratios

Other Areas:

Technical Analysis
Industry Analysis

B. Cost and Managerial Accounting — 50 Marks

VIII. Fundamental Cost Accounting Principles and Concepts

Nature and Scope of Cost and Managerial Accounting
Cost Concepts
Elements of Cost
Cost Classification
Differences among:
- Financial Accounting
- Cost Accounting
- Management Accounting

IX. Accounting for Material, Labour and Factory Overheads (FOH)

Material:

Recognition and Valuation Principles for Material Inventory
Methods to Control Material Inventory

Labour:

Calculation/Measurement and Accounting for Payroll for all Forms of Labour
Time Rate System
Piece Rate System
Commonly Used Group Incentive Schemes

Factory Overheads:

Factory Overhead Costs
Factory Overhead Rate
Departmentalization of Factory Overhead Costs
Allocation
Apportionment
Reapportionment
Primary Distribution
Secondary Distribution
Repeated Apportionment/Distribution
Algebraic Method

X. Costing for Specific Jobs and Process Costing

Job-Order Costing:

Nature of a Specific Job
Job-Order Costing

Process Costing:

Process Flow
Process Costing
Cost of Production Report (CPR)

XI. Management Accounting for Planning, Decision-Making and Control

Budgeting and Its Use

Meaning and Nature of a Budget
Major Forms of Budget:
- Production Budget
- Sales Budget
- Cash Budget
- Flexible Budgets
- Zero-Based Budget
- Master Budget

Break-Even Analysis

Difference between Marginal and Absorption Costing Techniques
Concept of Relevant Cost
Contribution Margin
Application and Use of Contribution Margin and Related Concepts for Planning and Decision-Making
Break-Even Analysis

Variance Analysis

Meaning and Use of Standards and Variances
Major Classification of Variances:
- Material Variances
- Labour Variances
- Factory Overhead Variances
Computation of Variances

Paper-II — 100 Marks

A. Auditing — 40 Marks

I. Fundamental Auditing Principles and Concepts

Audit and Auditing
True and Fair View
Audit Assertions
Reasonable Assurance
Documentation and Audit Evidence
Audit Program
Audit Risks
Computer Information Systems (EDP Systems)
Computer-Assisted Audit Techniques (CAAT)
Inspection
Fraud
Going Concern
Audit Materiality
Misstatement
Governance and Premise
Tests of Control
Substantive Procedures

II. Audit Considerations, Dimensions and Conduct

Internal Control System
Internal Audit
Internal vs. External Audit
Responsibility for Financial Statements
Audit Planning
Scope of an Audit
Objectives of an Audit
Inherent Limitations of an Audit
Risk Assessment and Management
Internal Audit and Corporate Governance
Classification of Audit
Qualities of an Auditor
Auditing in Computer Information Systems (EDP Systems)
Computer-Assisted Audit Techniques (CAAT)
General Auditing Principles and Techniques commonly applicable to various types of undertakings, including:
- Merchandising
- Manufacturing
- Banking
- Insurance
- Investment Entities
Audit Performance
Audit Completion

III. Role and Responsibilities of an Auditor

Auditor’s Professional and Legal Rights
Auditor’s Responsibilities and Duties
Auditor’s Liabilities
Auditor’s Opinion and Report
Classification and Types of Auditor’s Opinions and Reports
Requirements specified under the Companies Ordinance 1984
Requirements contained in the Handbook of IFAC

B. Business Taxation — 30 Marks

IV. Tax Structure and Fundamental Concepts vis-à-vis Income Tax in Pakistan

Tax Structure in Pakistan
Fundamental Definitions and Terminologies defined under Section 2 of the Income Tax Ordinance 2001

V. Income Tax and Sales Tax Principles and Their Application

Income Tax

Selected provisions from the Income Tax Ordinance:

Income for Tax Purposes — Sections 4, 9 & 10
Heads of Income — Section 11
Tax Payable on Taxable Income — First Schedule to the Ordinance
Salary Income and Taxation — Sections 12 to 14
Income from Property — Sections 15 & 16
Income from Business — Sections 18 to 20
Capital Gains — Sections 37 to 38
Income from Other Sources — Sections 39, 40, 89, 101(6) & 111
Tax Credits — Sections 61 to 65
Taxation of Individuals, AOPs and Companies — Sections 86, 92 & 94
Due Date for Payment of Tax — Section 137
Deduction of Tax at Source/Withholding Tax — Sections 147, 149, 153 & 155
Related Income Tax Rules 2002

Sales Tax

Selected definitions and provisions from the Sales Tax Act:

Scope of Tax — Section 3
Exempt Supply — Section 2(11)
Goods — Section 2(12)
Input Tax — Section 2(14)
Registered Person — Section 2(25)
Supply — Section 2(33)
Tax — Section 2(34)
Retail Price and Retailer — Sections 2(27) & 2(28)
Taxable Activity — Section 2(35)
Taxable Supply — Section 2(41)
Tax Fraction — Section 2(36)
Tax Period — Section 2(43)
Time of Supply — Section 2(44)
Determination of Tax Liability — Section 7

C. Business Studies and Finance — 30 Marks

VI. Business Studies

Nature and Scope of a Business Entity
Contemporary Challenges Posed to a Business
Common Legal Forms of a Business Entity:
- Sole Proprietorship
- Partnership
- Joint Stock Company
Features, Formation and Management of Business Entities
Business Combinations and Their Scope
Business Cycle and Its Implications
Role of Information Technology in Business

VII. Finance

Meaning, Nature and Scope of Finance
Financial Management
Common Modes/Types of Business Finance:
- Short-Term Financing
- Medium-Term Financing
- Long-Term Financing
Nature and Scope of Financial Markets and Institutions
Features and Classification of Financial Markets
Financial Management Techniques for Decision-Making:
- Time Value of Money
- Cost of Capital
- Capital Budgeting Techniques