Financial Reporting (Basic)

A. Conceptual and regulatory frameworks for financial reporting 10% 1. Conceptual Framework (a) Explain the meaning and purpose of conceptual framework. (b) Explain the objectives, qualitative characteristics and limitations of financial statements. (c) Discuss the underlying assumptions in preparing financial statements. (d) Identify users of financial statements and their information needs. (e) Identify and discuss the elements of financial statements. (f) Explain the concept of capital maintenance. (g) Differentiate between principle-based and rule-based financial reporting frameworks. (h) Discuss accrual and cash bases of accounting. (i) Discuss financial statements in relation to reporting entities under the conceptual framework Explain accounting and reporting concepts, frameworks and practice Analyse and interpret financial statements Account for transactions in financial statements of public and private sector entities Understand recent developments in financial Prepare financial statements reporting of private and public entities Ethical considerations in financial reporting REGULATIONS AND EXAMINATIONS SYLLABUS FOR ICAN 54 2. Regulatory framework (a) Discuss the need for a regulatory framework in financial reporting. (b) Identify and discuss laws, regulations, accounting standards and other requirements that govern the preparation of financial statements. (c) Identify and discuss relevant provisions of Companies and Allied Matters Act 2020, and special pronouncements by regulatory authorities (CBN, NDIC, FRCN, NAICOM, NSE, SEC, PENCOM, etc.). (d) Explain the standard setting process of International Accounting Standards Board (IASB) and the relationship with national standard setters. (e) Discuss the process for revision of standards. (f) Discuss the process of adoption of IFRSs and application of local standards. (g) Explain the peculiar nature and relevant frameworks of specialized, not-forprofit and public sector entities including IFRS, national standards and International Public Sector Accounting Standards (IPSAS). B. Accounting standards and policies relating to specific transactions in financial statements 20% 1. Tangible non-current assets Calculate, where necessary, discuss and account for tangible non-current assets in accordance with the provisions of relevant accounting standards (IAS 16, IAS 20, IAS 23, IAS 40, IFRS 5, and IFRS 16). 2. Intangible non-current assets (IAS 38) Calculate, where necessary, discuss and account for intangible non-current assets in accordance with the provisions of IAS 38. 3. Impairment of tangible and non-intangible assets (IAS 36) Calculate, where necessary, discuss and account for impairment of tangible and intangible non-current assets (excluding financial assets and liabilities) in accordance with the provisions of IAS 36. 4 Fair value measurement, financial assets and liabilities (a) Differentiate between debt and equity financial instruments. (b) Calculate, where necessary, discuss and account for financial instruments using amortised cost or fair value measurement in accordance with the provisions of relevant accounting standards (IAS 32, IFRS 7, IFRS 9 and IFRS 13) with respect to measurement (including fair value and amortised cost), recognition, de-recognition and disclosures, excluding hedging but including simple impairment cases. REGULATIONS AND EXAMINATIONS SYLLABUS FOR ICAN 55 5. Inventories and revenue from contracts (IAS 2, IFRS 15) Calculate, where necessary, discuss and account for inventories and revenue from contracts in accordance with the provisions of relevant accounting standards (IAS 2 and IFRS 15). 6. Provisions, contingent liabilities and assets, and events after the reporting period (IAS 10, IAS 37) Calculate, where necessary, discuss and account for provisions, contingent liabilities and assets as well as events after the reporting period in accordance with the provisions of relevant accounting standards (IAS 10, IAS 37). 7. Income taxes (IAS 12) Calculate, where necessary, discuss and account for income tax including current and deferred tax in accordance with the provisions of IAS 12. 8. Earnings per share (IAS 33) Calculate, discuss and account for earnings per share (EPS) in accordance with provisions of IAS 33. C. Preparation and presentation of general purpose financial statements 20% Preparation of financial statements 1. Discuss accounting policies and changes in accounting policies in accordance with the provisions of IAS 8, where necessary. 2. Prepare and present general purpose financial statements including statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity and relevant notes in accordance with IAS 1. 3. Prepare and present statement of cash flows for single entities in accordance with IAS 7, using direct and indirect methods. 4. Prepare value added statement and five year financial summary in accordance with Companies and Allied Matters Act 2020. D. Preparing and presenting financial statements of simple group (parent, one subsidiary and an associate) 25% 1. Understanding a simple group (a) Explain the concept of group especially a simple group and the objectives of preparing group financial statements. (b) Discuss the provisions of the relevant accounting standards for the preparation and presentation of financial statements of simple group – (IAS 27, IAS 28, IFRS 3 and IFRS 10), including the use of fair value for non-controlling interest. REGULATIONS AND EXAMINATIONS SYLLABUS FOR ICAN 56 (c) Calculate non-controlling interest using alternative methods and effect necessary adjustments required to prepare the financial statements of simple group. 2. Preparation and presentation (a) Prepare and present statement of financial position of a simple group (one subsidiary and an associate in accordance with the provisions of relevant standards (IAS 1, IAS 27, IAS 28, IFRS 3 and IFRS 10). (b) Prepare and present statement of profit or loss and other comprehensive income of a simple group (one subsidiary and an associate), in accordance with the provisions of relevant standards (IAS 1, IAS 27, IAS 28, IFRS 3 and IFRS 10). (c) Prepare and present statement of cash flows of a simple group (one subsidiary and an associate), in accordance with the provisions of IAS 7. (d) Discuss management disclosures, analysis and commentaries on financial statements. E. Analyses and interpretation financial statements 20% 1. Analyses of financial statements (a) Identify and discuss types of analyses and interpretation of financial statements. (b) Discuss various aspects of financial position and performance that may be assessed (profitability, liquidity/solvency, gearing, investors’ returns) through the analyses and interpretation of financial statements. (c) Define ratio, identify and calculate various types of ratios used in the assessment of financial position and performance of a business entity. (d) Analyse and interpret computed ratios and assess the current period financial position and performance of a business entity in comparison to: (i) Its prior period; (ii) Another given entity for the same period; and (iii) Industry average for the same period. (e) Analyse and interpret computed ratios and assess the current period financial position and performance of a simple group (one subsidiary and associate) in comparison to: (i) Its prior period; (ii) Another given simple group entity for the same period; and (iii) Industry average for the same period. (f) Discuss the use of statement of cash flows in assessing liquidity and compare its usefulness with that of a statement of profit or loss and other comprehensive income when assessing liquidity and going concern of a business entity. REGULATIONS AND EXAMINATIONS SYLLABUS FOR ICAN 57 (g) Explain the use of earnings per share (EPS) in assessing the performance of corporate entities in the capital market, especially capital market reaction to earnings announcement. (h) Where necessary, write reports as may be required when analysing and interpreting the financial position and performance of a business entity and simple group, drawing conclusions, making recommendations and giving advice from the perspectives of different stakeholders. 2. Limitations of analyses and interpretation of financial statements (a) Discuss the limitations of historic financial information in the analyses and interpretation of financial statements. (b) Explain how financial statements may be manipulated and discuss the impact of window dressing and creative accounting on calculated ratios and how they can distort analyses and interpretation of financial statements. (c) Explain how analyses and interpretation of financial statements of specialized and not-for-profit organizations differ from those of profitoriented organizations. (d) Explain why earnings per share (EPS) trend may be a better indicator of performance when compared with a company’s profit trend and discuss the limitations of using EPS as a performance measure. (e) Explain why and how the use of consolidated financial statements might limit analyses and the use of interpretation techniques. (f) Discuss the use of other information, including non-financial information relevant to the assessment of an entity’s performance. F. Ethics and current developments in financial reporting 5% 1. Discuss and apply ethical issues in financial reporting. 2. Discuss developments around the inclusion of non-financial information in financial reporting. 3. Discuss new accounting standards in issue as may be specified from time to time. 4. Discuss the application of block chains and related technologies REGULATIONS AND EXAMINATIONS SYLLABUS FOR ICAN 5