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SYLLABUS FINANCIAL ACCOUNTING 3, ZIMBABWE In Financial Accounting 2, students are required to show familiarity with and competence in certain topics, mostly related to company accounts. With the admission of the Istitute into the Zimbabwe public Accountants and Auditors Board, IAC graduates in Accounting should show that they are par with the graduates of other Institutes represented on the Board. Financial Accounting 3, as the last paper in this specialisation, will require an in-depth knowledge of accounting polices and procedures as outlined in relavant legislation and international accounting standards.Financial Accounting 3 is the Final qualifying examination for those who wish to apply for practising certificates in this field. THIS IS A FOUR HOUR PAPER OBJECTIVES After completing this course, students should be able to: Demonstrate their ability to prepare consolidated financial tatements where subsidiaries are wholly and partially owned Properly interpret the requirements of the Companies Act and Financial Regulations with regard to consolidated financial statements Demonstrate their ability to prepare and interpret financial reportsfor the benefit of the Bord of Directors, management and shareholders Act as advisers in mergers, acquisations, deceased estates and other situations requiring specialist accounting knowledge Show an appreciation of current and emerging issues in Financial Accounting SYLLABUS/COURSE OUTLINE SECTION 1 THE REGULATORY FRAMEWORK (10%) (i) International - The objectives of the international Accounting Standards Board -Framework for the preparation and presentation of finacial statements -The development of international accounting standards -Benchmark and allowed alternative treatments -Interpretation of accounting standards and othr pronouncements (ii) Local -The functions of the Zimbabwe Public Accountants and Auditors Board -The development of local accounting starndards -The status of internationalaccounting accounting standards in Zimbabwe SECTION 2 CORPORATE GOVERNANCE (5%) -Defination and role -Roles of executive and non-executive directors -Responsibilities of audit committees -Responsibilities of mangement, shareholders and other stakeholders -Code of best practice SECTION 3 CONSOLIDATED FINANCIAL STATEMENTS 1 (15%) -Components of consolidated financial statements :the income statement :the balance sheet :the cash flow statement :the statement of changes in equity :accounting polices and notes to the financial statements -Consolidation of partly-owned subsidiaries at and after date of acquisation -Treatment of goodwill in subsidiaries -Intercompany transactions:indebtedness and unrealised profit in stocks SECTION 4 CONSOLIDATED FINANCIAL STATEMENTS 2 (10%) -Accounting for associates -Proposed dividends and dividends paid out of pre-acquisation profits -Preference share capital in the subsidiary -Depreciation of non-current assets -Piecemeal acquisations and decontrol of subsidiaries and associates SECTION 5 MERGERS AND ACQYUISATIONS (IAS 22) (10%) -Characteristics of merger accounting and comparisons with acquisation accounting -Adjustments in respect of share capital, expenses and dividends -Recognition of identifiable assets and liabilities acquired -Determination of fair values of identifiable assets and liabilities acqiured -Recognition and measurement of goodwill and negetive goodwill arising on acquisation of subsidiary SECTION 6 VALUATION OF SHARES AND OTHER BUSINESS INTERESTS (10%) -Rationable for the valuation of company securities -Different approaches to valuation :earnings basis :assets basis :dividend models -Valuation of individual securities :ordinary shares :preference shares :debentures -Valuation from the perspective of an investor without control -Share exchange terms SECTION 7 CAPITAL RE-ORGANISATIONS AND RECONSTRUCTIONS (10%) -Circumstances giving rise to re-organistions and reconstructions - Power of company to purchase own shares -Voluntary and involuntary winding up -Liability of members in respect of reduced shares -Consolidation of share capital, reduction of share capital and conversion of shares into stock -Preparation of consolidated financial statements after re-organisation or reconstruction SECTION 8 NET PROFIT OR LOSS FOR THE PERIOD, FUNDAMENTAL ERRORS AND CHANGES IN ACCOUNTIN POLICES (IAS 8) (5%) -Dertermination of net profit or loss for a specific period -Distinction between ordinary activities, unusual items and extraordinary items -Defination and significance of fundamental errors -Distinction between changes in accounting polices and changes in accounting estimates -Disclosure requirements SECTION 9 ADVANCE INTERPRETATION OF FINANCIAL STATEMENTS (10%) -Revision of earlier material -Common size statemengts -Pyramid of ratios -Investment ratios -Prediction of company faliure SECTION 10 CURRENT AND EMERGING ISSUES IN ACCOUNTING (5%) -Headline earnings -Interim reporting (IAS 34) -Segment reporting (IAS 14) -Value added tax -Deceased estates -Creative accounting -Social responsibility accounting -Forensic accounting SECTION 11 KEY INTERNATIONAL ACCOUNTING STANDARDS (10%) In addition to the standards indicated above, the following standards will be specially examinable: IAS 12 Income Taxes IAS 16 Property, Plant and Equipment IAS 17 Leases IAS 18 Revenue IAS 21 The Effects of Changes in Foreign Exchange rates IAS 28 Accounting for Investments in Associates IAS 29 Financial Reporting in Hyper-inflationary Economies IAS 31 Financial Reporting of Interests in Joint Ventures IAS 32 Financial Instruments: Disclosure and Presantation IAS 33 Earnings per Share IAS 36 Impairment of Assets IAS 37 Provisions, Contigent Liabilities and Contigent Assets IAS 32 Financial Instruments: Recognition and Measurement Questions on these standards will be in form of theory and/or calculations APPENDIX THE ZIMBABWE STOCK EXCHANGE -Responsibilities of listed companies and other requirements PRESCRIBED MATERIAL -IAC Study pack (to be published in the near future) RECOMMENDED MATERIAL (i) Advanced Corporate Reporting ACCA Study Text (Paper 3.6) BPP Publishing 2002 (ii) Accounting Standards - Questions & Solutions by C.S. Binnekade, S.F. Booysen et al. Jutz & Co. Ltd.2001 (iii) Groups Statements (latest edition) by Cilliers, Rossouw and Faul: Butterworth (iv) Carter's Advanced Accounts (latest edition) by Garbutt: Pitman (v) Principles of Consolidated Financial Statements (latest edition ) by Lane: Juta & Co ESSENTIAL REFERENCE MATERIAL (i) International Accounting Standards (Latest edition) IASB (ii) Companies Act (Chapter 24:03) (iii) Companies (Financial Statements) Regulations 1996 ---oooOOOooo---