CAP-II Syllabus PDF

8/10/2019 CAP-II Syllabus PDF

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Enlightened International Academy/CA Classes/ICAN/CAP-II Syllabus 2012 1

EIA CA Classees Pokhara-8 Srijanachowk; Email/FB: [email protected]; web: www.eiapokhara.com 1

Detailed Syllabus of Chartered Accountancy Professional (CAP-II)

Paper 1: Advanced Accounting (One paper- Three hours-100 Marks)

1. Accounting Standards- Framework for the preparation and presentation of financial

statements as promulgated by Nepal Accounting Standards Board. Nepal Accounting Standardissued by Nepal Accounting Standards board (made mandatory as well voluntary compliance

but not the exposure drafts). Historical cost concept vs. Realization concept for preparation and

presentation of financial statements. Effect of changes in price levels.

2.

Accounting for Special Transactions ( higher level Practical problems for each of them)- lease,

hire purchase and installment transactions; goods on sale of return; contract accounts

investment accounts, branch ( including foreign branch ) and department accounts.

Computation of insurance claims for loss of stock and profit.

3.

Preparation and presentation of financial statements for company

a.

Accounting for share capital and reserve funds-n types of shares, issue of fresh shares,

bonus shares, right issue, redemption of redeemable preference shares , issue, redemption

and conversion of debenture and underwriting of shares and debentures.

b.

Preparation of financial statements as per provision in Company Act, format and contentsas per the Act/Rules, interpretation of items in balance sheet and income statements.

c.

Winding up of companies and accounting treatment arisen therefore- Statement of Affairs

and Liquidator's account. Additional disclosures and comment on going concern concept in

relations to winding up.

d. Concept of acquisition, absorptions, amalgamation, merger and reconstruction- Simple

practical problems.

e.

Cash flow statements- objectives, preparation methods (direct and indirect) and

interpretations.

f.

Application of Nepal Accounting Standards in the preparation of financial statements for

general purpose.

4.

Partnership Accounts- Treatment of goodwill and profit sharing, admission, retirement anddeath of partner (including annuity and policies method). Conversion of partnerships to a

limited company and merger of firms.

5.

Preparation and presentation of financial statements of special organization

a.

Financial Institution, including banks, finance companies and cooperatives- types of

financial instruments as per Banking and Financial Institutions Act, formats and contents

as prescribed by loan provisioning, capital adequacy and cash reserve requirement. Simple

practical problems.

b.

Electricity companies- nature of operation ( generation, transmission and distribution),

transfer pricing and requirements as per Nepal Electricity Act. Simple practical problems.

c. Insurance Companies- nature of operation( life and general), formats and contents of

financial statements prescribed by Insurance Board, accounting and disclosurerequirements, premium income recognition, liability recognition and treatment of re-

insurance. Simple practical problems.

d.

Agriculture farm accounting- concept and peculiarity of inventory casting and valuation

system.

6.

Incomplete Accounts- concept of incomplete records and generation of need for financial

information from other records, preparation of final financial statements from incomplete

records.

7.

Government Accounting- concept and salient features of government and business accounting.

Simple practical problems. Framework of NPSAS.


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8.

Analysis and interpretation of financial statements

a.

Evaluation of financial statements under Nepal Accounting Standards and other applicable

International financial Reporting Standards.

b.

Segmental information analysis.

c.

Analysis of performance and position through cash flow, ratios and trend.

d.

Related party transactions disclosure and treatment.

Reference Books:

1.

Nepal Accounting Standards (NAS)/ Nepal Public Sector Accounting Standards (NPSAS)

2.

International Financial Reporting Standards( IFRS)

3.

Advanced Accounting, R. L. Gupta & M. Radhaswamy, S. Chand & Son, New Delhi

4.

Advance Accounting, H. Chakraborty, Oxford University press, Calcutta


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Paper 2: Audit & Assurance (One Paper- Three hours-100 Marks)

Detailed Course Contents

1.

Nature and Concept of Assurance

a.

Principles of assurance

Concept of assurance

i.

Benefits of assurance

ii.

Purposes and characteristics of different forms of assurance

iii.

Objectives of assurance; expression of opinion, detection and prevention of fraud and error

iv.Basic principals governing and assurance

v. Relationship of assurance with other subjects; internal audit and External audit; Auditing

and Investigation.

b.

Regulatory and ethical issues

i.

Scope and terms of an assurance engagement

ii.

Scope and authority of professional pronouncements; code of ethics issued by Institute of

Chartered Accountants of Nepal, Code of ethics issued by IFAC and Nepal Standards on

Auditing develop and issued by Auditing Standards Board.

iii.

Ethical and professional issues; integrity, objectivity, independence, confidentiality,

professional competence an due care and professional behavior.

iv.

Quality control

v.

Regularity framework: Companies Act, Bank and Finance Companies Related Act and

International Financial Reporting Standards and interpretations.

2.

Planning an assurance engagementi.

Importance of knowledge and understanding of a business

ii.

Application of analytical procedures

iii.

Risk assessments

iv.Materiality, tolerable error, and sample sizes

v.

Design and documentation of plan and program

vi.

Co-ordinance and monitoring of the work

vii.

Evaluation of internal control system.

viii.

Transaction cycles (revenue, purchases, payroll, inventory expenditure)

ix.

Communication with management and those charged with corporate governance.

x. Evaluation of financial statements assertions: assets, liabilities, income and expenditure,

including accounting estimates.

3.

Gathering evidence during an assurance engagement

i.

Different methods of obtaining evidence

ii.

Identification and use of the methods for different business situation

iii. Reliability of different types of assurance evidence

iv.

Identification of situation where analytical procedures, test of control and substantive

procedures are to be implied.

v.

Evidence from analytical procedures, test of control and substantive procedures

vi.

Quantity and quality of evidence needed for reports.

vii.

Written confirmation of representation from management.


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viii.

Audit of payment: General considerations, wages, capital expenditure, other payments and

expenses, petty cash, cash payments, audit of payments into and out of the bank,

reconciliation of banks statements with cash book

ix.

Audit of receipts: General consideration, cash sales, receipt from debtors, other receipts

x.

Audit of purchases, vouching cash and credit purchases, forward purchases, purchases

returns.

xi.

Audit of sales, cash and credit sales, goods on consignment, sale on approval basis, salesunder hire purchase agreement, returnable containers, various types of allowances given to

customers, sales return, sales ledger, sales ledger.

xii.

Audit of suppliers ledger and debtors ledger: Self balancing and the sectional balancing

system, total or control accounts, loose leaf and card ledger, confirmatory statements from

credit customers and suppliers, provision for bad and doubtful debts, writing off of bad

debts.

xiii.

Audit of impersonal ledger: Capital expenditure, deferred revenue expenditure and

revenue expenditure, outstanding expenses and income

xiv.

Audit of assets and liabilities

xv.

Audit of share capital and transfer of shares

xvi.

Audit of incomplete records.

xvii.

Audit of limited companies: Appointment of auditors, powers and duties of auditors.xviii.

Special points in audit of different types of undertakings i.e. educational institutions.

hotels, clubs, hospitals, hire purchase and leasing companies 9 excluding banks, electricity

companies, cooperative societies and insurance companies)

xix.

Features and basis principles of government audit , local bodies and non governmental

organizations.

4.

Completing and reporting on an assurance engagement

i. Subsequent events leading to adjustment or disclosure

ii. Evaluation of results of assurance tests and procedures

iii.

Reports on assurance engagements consistent with results of assurance procedures

iv.

Elements of assurance reports

v.

Elements of auditor's reports and recommendations on the nature of an audit opinionvi.

Extracts for assurance reports

Reference Books:

1.

Nepal Accounting Standards (NAS)

2.

Nepal Standards on Auditing Standards (IFRS)

3.

International Financial Reporting Standards (IFRS)

4.

Contemporary Auditing, Kamal Gupta- Tata McGraw Hill Publishing Co


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Banking Offence and Penalties

Relevant Provision of banking Acts (NRB Act 2058 and BAFIA 2063)

3.

Industrial Laws

Meaning, Concept and types of Industries

General Concept of industry Promotion Board, Licensing, Registration of the

Industry, Offences of Penalties.Meaning and Concept of Foreign Investment and Technology Transfer

General Concept of Incentive for Foreign Investor and Dispute Settlement

Relevant Provisions of Nepalese Industrial Enterprises Act, 2049 and Foreign

Investment and Technology Transfer Act, 2049

4.

Labor and Bonus Laws

Concept of Labor? capital Relations

Types labor

Various Aspects of the labor, Code of Conduct and the punishment, disputes

Settlement

Meaning and Concept of Bonus

Bonus Distribution and Dispute SettlementRelevant Provision of Nepalese Bonus Act 2030 and Labor Act, 2048

5.

Law of Contract

Meaning , concept, types and Elements of valid contract

Breach of Contract and its Remedies

Performance of Contractual liability

Relevant provision of Nepalese Contract Act,2056

6. Insurance law

Meaning, Concept and types of insurance

Fundamentals Principles of Insurance

Premium and PolicyInsurance offence and Penalties

Relevant Provision of Nepalese Insurance Act 2049

7.

Audit Law

Meaning and Concept of Audit

Basis of the Audit

Government Audit and Office of the Auditor General

Qualification of the Auditor

Relevant Provision of Nepalese Audit Act, 2048

8.

Laws relating to the Negotiable Instruments

Meaning and Concept of Negotiable Instruments

Classification of Instruments

Difference between promissory Note, Bill of Exchange and Cheque

Negotiation, negotiability, assign ability

Rights and obligations of parties to an instrument obtained illegally

Notice of Dishonor

Noting and protesting

Presentation of Instrument

Payment of interest

Other Relevant Provisions of Nepalese Negotiable Instrument Act

9.

Nepal Chartered Accountant Act & Regulations


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Paper 4: Financial management (One paper-Three hours-100 Marks)


1.

Introduction and Fundamental Concepts of Financial Management

An overview of financial management; objectives of financial management, the financial

environment markets, institutions, and interest rated; risk and return the basics, portfolio

theory and asset pricing models, time value of money.

2. Analysis of financial statements

Overview, analysis of financial statements, precaution in statements analysis, horizontal analysis,vertical analysis, ratio analysis, cash flow analysis, reporting fundamentals.

3.

Valuation of Securities

Fixed income securities- characteristics and valuation, common stock , characteristics, valuation

and issuance.

4. Capital Investment Decision

Concepts of cost of capital budgeting, evaluating cash flow estimation, investment

evaluation and capital rationing.

5.

Strategic Financial Decision

Basics of Capital structure, Capital structure management, Dividend policies.

6.

Working Capital Management and financial Forecasting

Financial forecasting and working capital policy, management of cash and marketable

securities, management of accounts receivables, short term and long term funding alternatives.

7.

Strategic finance and policy

Short term finance: how companies raise finance, shareholders' funds, methods of raising

equity finance, long term debt finance, dividend decision: the strategic and legal dimensions of

dividend, theory of dividend policy, capital structure: introduction, operating and financial

gearing, gearing and the required return, cost of debt capital, overall cost of capita, financial

distress, signaling and agency costs.

Reference Books:

1.

Brigham, Eugene F; Ehrhardt Michael C; Financial Management- Theory and Practice,

Thomson South Western.

2. Moyer, Charles R; Mcguigan James R; Kretlow, William J; Contemporary Financial

Management Thomson South Western.

3.

Shapiro,Alan C; Balbirer Sheldon D; Modern Corporate Finance, Pearson Education


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Paper 5-Cost and management accounting (one paper-three hours-100 Marks)


1.

Course Concept and costing methods

Evolution of cost accounting

Definitions

Objectives of cost accounting

Importance of cost accounting

Cost accounting systemCost concept

Elements of costs

Types and methods of costing

2. Material control

Purchasing of materials

Receiving of materials

Inspection of materials

Storage of materials

Issuing of materials

Maintenance of inventory records

Technique of material ControlPricing methods

Stock valuation

Materials losses

3. Labour Control

Direct and indirect labour

Control over labour costs

Attendance and Payoff system

Treatment of Holiday pay, idle time, overtime etc.

Labour turnover

Methods of wages payment

Incentive SystemAccounting for labours

4.

Overhead control

Classification of overheads

Manufacturing overhead

office and administrative overhead

Selling and distribution overhead

Distribution of overheads

Absorption of overhead

Treatment of under absorbed and over absorbed overhead

Treatment of certain items in costing


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5.

Cost Account System, Control Accounts ( integrated and non integrated Accounting system)

Non integrated Accounting system

Integrated Accounting System

Reconciliation of Cost and financial Accounts

6.

Methods of costingJob Costing system

Batch Costing system

Control Costing System

Meaning

Recording of contract cost

Specific aspects of Contract Costing

Profit on incomplete Contracts

Process Costing System

General principles

Treatment of process loss and gains

Working progressBy products and joint products

Inter process profits

Operating Costing System

Introduction Scope

Collection, classification and ascertainment of cost

7. Cost concept for decision making

Cost Behaviour

methods of separating fixed and variable costs

Cost volume profit analysis

Profit volume ratioBreak even point

Margin of Safety

Targeted profit

Limiting factor

Marginal cost and differential costing

Marginal costing and Absorption

Others

8.

Costing for planning and control- budgets

Budgets and budgetary Control system

Steps in Budgetary Control

Types of budget

Fixed and Flexible Budgeting

Implementation of budgets

Control Ratios

9.

Uniform Costing and inter firm comparison

Meaning

Application of uniform costing

objectives of uniform costing

Advantages of uniform costing

Limitations of uniform costing

Inter firm Comparison


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10.

Cost Control And Cost Reduction

Introduction

Distinction between Cost Control and Cost Reduction

Advantages of Cost Reduction

Cost Reduction Plan & Program

Scope of Cost Reduction

11.Cost Audit

Important aspects of Cost Audit

Purpose of cost Audit

Types of Cost Audit

Advantages of Cost Audit

Functions of Cost auditor

Reference Books:

1.

Cost Accounting- S.K. Saxena & C.D Vashist

2.

Management & Cost Accounting- Colin Dury


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Paper 6-Business Communication & marketing (One paper- Two section-

Three hours-100 Marks)

Section A Business Communication

A. Introduction Communicating at Work

1. Succeeding in the new workplace

2. Examining the process of communication

3. Overcoming interpersonal barriers

4. Communicating in organization

5. Ethics in business communication

6. Strengthening your communication skills

B. Working in Groups

1. Listening skills

2. Group interactions

3. Determining group goals

4. Individual roles in groups

5. Conflict resolution

6. Effective meetings

7. Writings notification, agenda and minutes

8. Giving and receiving feedback in groups

C. Communicating Across Cultures

1. Importance of International business

2. Diversity in today's workplace

3. Ways to look at culture

4. Values, beliefs, and practices

5. Nonverbal communication

6.Writing to an International audience

7. Learning more about international business communication

D. Employment Communication

1. Preparing for employment

2. The persuasive resume

3. Preparing for computer scanning

4. Faxing or emailing your resume

5. The persuasive letter of application

6. Follow up letters

7. Interviewing for employment

E. Analyzing Information and Writing reports and Proposals

1. An Inside Perspective: Analyzing Data and Writing reports

2. A timetable for writing reports


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3. Choosing information foe reports

4. Analyzing data and information for reports

5. Organizing information in reports

6. Presenting information effectively

7. Report types informational and analytical

8. Formal and informal reports proposals

Reference Books:

1. Guffey, Mary Ellen, Business communication: Process and product. 3rd Ed. Singapore:

Thomas Asia Ptv ltd, 2004.

2.

Bovee, Courtland L., John V. Thill, and Barbara E. Schatzman. Business Communication

Today. 7th Ed. New Delhi: Pearson, 2003

3.

Lesikar, Reymond V., John D. Pettit, Jr. and Marie E. Flatley, Lesikar's Basic Business

Communication. 8th Ed. New Delhi, Tata McGraw Hill, 2001.

Section B Marketing

1.

Meaning of Marketing and Marketing mix

Marketing: meaning and importance

Marketing mix: meaning and components

2.

Evaluation of marketing concepts

Production, product, selling, marketing, customer and societal concepts

3.

Environmental context of Marketing

Marketing environment: meaning & importance

Micro environment forces in marketing

Macro environment forces in marketing

Marketing environment in Nepal

4.

Market Segment and Targeting

Market segmentation : meaning , benefits and requirementsProcess of market segmentation

Segmentation variables for consumer and industrial markets

Market targeting

Market segmentation in Nepal

5.

Market Information System

Meaning and importance of market information system

Components of marketing information system

Marketing research process

6.

Buyer Behavior Analysis

Meaning and importance of buyer behavior

Stages of consumer buying process

Factors affecting consumer buying process

Features of organizational buying behavior

Factors affecting organizational buying behavior

7.

Product Decisions

Product : Meaning ,levels, types

Product life cycle

Process of new product development

Product line and mix

Service product


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Paper 7: Income tax & VatDetail Course Content

Part A: Income Tax (60 marks)

a.

Income Tax Regulation of Nepal

1.

Basic concepts

a.

Definitions of;

i.

Terms defined in section @ of the Act.ii.

Terms defined in Rule 2 of the Rules

iii.

Terms defined in various other Sections and Rules of the Act and rules

iv.

Meanings and use of various terms used in Act and Rules.

b. Basis of taxation:

i. Imposition of tax on persons

ii.

Calculation of tax and rate of tax including schedule 1 of the Act.

c.

Taxable income:

i. Assessable income

ii.

Taxable income

iii.

Various heads of income

d.

Tax exemption and tax concessions

i.

Income which are exempted from tax

ii.

Income for which tax concessions are allowed.

e.

Quantification , allocation and characterization of amounts:

i.

Quantification

ii.

Characterization of payments under annuities, installments and leases.

iii.

Transfer pricing and other arrangements between associates

iv.

income splitting

v. General and anti- avoidance rules

2.

Computation of taxable income

a.

Calculation of income from business:

i.

Components of income from business

ii. Incomes which do not form part on income from business

iii. Deductions allowed from income from business

iv.

Limitations and conditions for a particulars deduction

v.

Schedule @ of the Act.

b.

Calculation of income from employments

i. Components of income from employment


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ii.

Income which are excluded from income from employment

c.

Calculation of income from investment

i.

Components of income from investment

ii.

Income which do not form part of income from investment

iii.

Limitation and conditions for a particular deduction

d.

Deductions allowed from taxable income:i.

Deduction for donation and gifts

ii. Deduction for contributions of retirement funds.

iii.

Deduction for life insurance premium paid

iv.

Deduction for losses from income from business or investment

v.

Carry forward and carry back of losses for setoff.

e.

Tax Credits:

i. Medical tax credits

ii.

International taxations

3.

Other relevant matters regarding taxable income

a.

Tax accounting and timingsi.

Method of tax accounting

ii.

Cash basis of accounting

iii.

Accrued basis of accounting

iv.

Reserve of amounts including bad debts

v.

Averaging inclusions and deductions under long term contracts.

b.

Calculation of net gains from disposal of assets and liabilities

i. Classification of assets

ii. Net gains from assets and liabilities

iii.

Outgoings and incomings from asserts and liabilities

iv.

Disposals and deemed disposals of assets and liabilities

4.

payment of tax and tax returns

a. Form, place and time for payment of tax

b. Withholding by employers

i.

Withholding by employees

ii.

Withholding from investment returns and service fees

iii.

With holding from insurance premiums and contract payments.

iv.

Final withholding payments

c.

Advance payment of tax

d.

Tax returns

i.

Return for advance tax

ii.

Annual tax return

5. Assessments, appeals and penalties

a.

Tax Assessment

i.

Self assessments

ii.

Jeopardy assessments

iii.

Amended assessments

b. Appeals

i. Departmental review

ii.

Appeal to revenue tribunal

c.

Interest and fines


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Interest and fines as per section 117 to 122

b.

Income Tax Regulation of India

Basic concepts

1.

Gaining knowledge about:

i.

Assessment year

ii.

Previous yeariii.

Person and Assesses

iv. Definition of income under the income Tax Act

v.

Gross total income

vi.

Total income and its computation

vii.

Agricultural income

viii.

Casual income

ix.

Capital and revenue receipts

x. Capital and revenue expenditures

xi.

Method of accounting relevant to computation of income

2.

Residential status and its effect on tax incidents:

i.

Classification of persons as per residential statusii.

Factors to decide residential status of an individual

iii.

Factors to decide residential status of a Hindu undivided family

iv.

Factors to decide residential status of a firm and association of persons

v.

Factors to decide residential status of a company

vi.

Relationship between residential status and incidence of tax

vii.

Connotation of receipt of income

viii.

Connotation of accrual income

ix. Connotation of income deemed to accrue or arise in India.

3.

Income that is exempted from tax

i.

Income exempted from tax under section

ii.

Special provision in respect of newly established undertakings in free trade zone, electronic/software/ hardware technology park and software technology park.

iii.Special provision in respect of newly established hundred percent export oriented

undertakings.

iv.

Deductions available to export of handmade wooden articles

v.

Exemption in respect of income from property held for charity

vi.

Exemptions on income of a political party

Part B: Value Added Tax of Nepal ( 40 Marks)

1.

Basic concepts

a.

Definitions of:

i.

Terms defined in Section 2 of the Act

ii.

Terms defined in Rule 2 of the Rules

iii.

Terms defined in various other sections and rules of the Act and Rules.

iv.Meaning and use of various terms used in Act and Rules

b.

Appointment of tax officer and his/her jurisdiction

c.

Imposition of VAT

i.

Transaction covered by VAT

ii. Goods and services exempted from tax

iii. Place and time of supply

iv. Rate of tax

v.

Conditions for zero rate of tax

vi.

Assessment and collection of tax


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2.

Registration and cancellation

a.

Registration

i.

Conditions for compulsory

ii.

Threshold for small vendors

iii.

Proxy conditions for compulsory registration

iv.

Voluntary registrationv.

Registration not available

b.

Cancellation of registration

Conditions and procedures for cancellation of registration

3.

Taxable value, tax collections and offsets, refund of tax

a.

Factors determining taxable value

i.

General conditions

ii. Extra ordinary conditions

iii.

Taxable value for dealers in used goods

b.

Market value concept ant its applicability

c.

Tax collectioni.

Registered person has to collect tax

ii.

Tax collection by custom authorities

iii.

Bank guarantees facility available for payment tax.

iv.

Restriction on unregistered persons to collect tax.

d.Offset of tax

i.

Partial tax offset

ii.Proportionate tax offset

iii.Tax offset not available

iv.

Conditions of tax offset

e.

Refund of tax:i.

Under regulation condition

ii. Under export conditions

iii. Refund by some specific institutions as per section 25.

iv.

Limitations on refund

4.

Accounts and records

a.

Invoices

i. Conditions for unregistered person to issue invoices and its content

ii.

Conditions for issue of different kinds of tax invoices and their contents

iii.

Conditions for issue of tax invoices for dealers in used goods.

b.Accounts and records

i.

Taxpayers duty to keep up to date accounts of its transactions

ii.Types of accounts and records to be kept by a taxpayer and their contents

iii.

Certification of the accounts and records

iv.

preservation of the accounts and records.

Reference Books & Acts:

1. Income tax; Theory and Practice, Jagdish Agrawal

2. Students Guide to Income Tax- Dr. Vinod K. Singhnia and Monica Singhania.

3. Income tax Act 2058 & Rules 2059

4.

Value Added Tax 2052 & Rules 2053

5.

Relevant Finance Act


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Best of luck to Our Dear Students

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