KASNEB CPA Financial Reporting and Analysis Notes

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CPA INTERMEDIATE LEVEL NOTES

UNIT DESCRIPTION

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to account for more complex financial transactions and to prepare as well as analyse financial statements in the private and public sectors.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

• Account for various assets and liabilities
• Prepare financial statements including published financial statements for various types of organisations
• Account for specialised transactions
• Prepare group financial statements
• Analyse and interpret financial statements
• Apply International Financial Reporting Standards (IFRSs) and International Public Sector Accounting Standards (IPSASs) in preparing non-complex financial statements.

CONTENT

Accounting for Assets and Liabilities [Assets and liabilities as covered in Financial Accounting (Foundation Level) are also relevant here]

• Investment Property
• Assets used in exploring for and evaluation of mineral resources
• Non-current assets held for sale
• Financial Assets and Financial Liabilities (Recognition, Classification, Initial measurement, subsequent measurement, reclassifications and de-recognition)
• Leases (Exclude Sale and Leaseback and dealers in leasing assets)
• Current and Deferred tax
• Government grants
• Provisions, contingent liabilities and assets

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Accounting for Specialized Transactions

• Revenue recognition (Basic application of revenue recognition principles to Hire Purchase, Consignment sales, construction contracts and joint arrangements)
• Effects of changes in exchange rates (Only foreign currency denominated transactions)
• Borrowing Costs

Preparation of Financial Statements for different entities/Transactions

• Conversion of a partnership into a company
• Professional firms (Accountants, Lawyers, doctors, engineers)
• Agricultural activities and farming
• Pension plans
• Cooperative Societies

Preparation of Published Financial Statements

• Presentation of Financial Statements (Statement of Profit or Loss, other comprehensive incomes, Statement of Financial Position and Statement of cash flows)
• Accounting Policies, Changes in Accounting Estimates and Errors
• Events after the Reporting Period
• Discontinued Operations

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Accounting and Financial Statements for Interests in Other Entities

• Subsidiaries (Basic Consolidated Financial Statements with one subsidiary -excluding disposals and statement of cash flows)
• Associates and Joint ventures
• Accounting treatment of investments in subsidiaries, associates and jointly controlled entities in the financial statement of the investor (Separate financial statements)
• Branches (Only autonomous and local branches)

Public Sector Accounting Standards

• Presentation of Financial Statements
• Accounting Policies, Changes in Accounting Estimates and Errors
• Effects of Changes in Foreign Exchange Rates
• Revenue from exchange transactions and revenue from non-exchange transactions
• Property, plant and equipment, investment property and intangible assets
• Provisions, contingent liabilities and contingent assets
• Presentation of budget information in Financial Statements

Analysing Financial Statements

• Analysing financial statements using ratios covered in Financial Accounting
• Analysing Financial Statements using common size approach for the statement of profit or loss and statement of financial position

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