ACCA paper f 7 financial reoirting F7FR session00 j08

SESSION 00 – CONTENTS CONTENTS 2 Framework for the Preparation and Presentation of Financial Statements 0201 5 IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors 05

INTERNATIONAL

ACCA

PAPER F7 FINANCIAL REPORTING (INTERNATIONAL)

STUDY SYSTEM

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SESSION 00 – CONTENTS

CONTENTS

2 Framework for the Preparation and Presentation of Financial Statements 0201

5 IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors 0501

9 IAS 20 – Accounting for Government Grants &

16 IAS 37 – Provisions, Contingent Liabilities and Contingent Assets 1601

20 Basic principles – Consolidated Statement of Financial Positions 2001

21 Consolidated Statement of Financial Positions – Cosmetic adjustments 2101

22 Consolidated Statement of Financial Position – Further adjustments 2201

28 IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations 2801

SESSION 00 – CONTENTS

SESSION 00 – INTRODUCTION

INTRODUCTION

This Study System has been specifically written for the Association of Chartered Certified

Accountants fundamentals level examination, Paper F7 Financial Reporting

It provides comprehensive coverage of the core syllabus areas and is designed to be used both as a reference text and interactively with the ATC Learning System to provide you with the knowledge, skill and confidence to succeed in your ACCA studies

SYLLABUS

CR (P2)

FR (F7)

FA (F3)

BA (P3)

Aim

To develop knowledge and skills in understanding and applying accounting standards and the theoretical framework in the preparation of financial statements of entities, including groups and how to analyse and interpret those financial statements

Main capabilities

On successful completion of this paper, candidates should be able to:

A Discuss and apply a conceptual framework for financial reporting

B Discuss a regulatory framework for financial reporting

C Prepare and present financial statements which conform with International accounting standards

D Account for business combinations in accordance with International accounting

standards

E Analyse and interpret financial statements

SESSION 00 – SYLLABUS

RELATIONAL DIAGRAM OF MAIN CAPABILITIES

A conceptual

framework for

financial reporting

(A)

interpreting financial statements

(E)

A regulatory framework for financial reporting

(B)

Business combinations (D)

RATIONALE

The financial reporting syllabus assumes knowledge acquired in Paper F3, Financial

Accounting, and develops and applies this further and in greater depth

The syllabus begins with the conceptual framework of accounting with reference to the qualitative characteristics of useful information and the fundamental bases of accounting introduced in the Paper F3 syllabus within the Knowledge module It then moves into a detailed examination of the regulatory framework of accounting and how this informs the standard setting process

The main areas of the syllabus cover the reporting of financial information for single

companies and for groups in accordance with generally accepted accounting principles and relevant accounting standards

Finally, the syllabus covers the analysis and interpretation of information from financial reports

Detailed syllabus

A A conceptual framework for financial reporting

1 The need for a conceptual framework

2 Understandability, relevance, reliability and comparability

3 Recognition and measurement

4 The legal versus the commercial view of accounting

5 Alternative models and practices

SESSION 00 – SYLLABUS

6 The concept of ‘faithful representation’ (‘true and fair view’)

B A regulatory framework for financial reporting

1 Reasons for the existence of a regulatory framework

2 The standard setting process

3 Specialised, not-for-profit, and public sector entities

C Financial statements

1 Statements of cash flows

2 Tangible non-current assets

3 Intangible assets

4 Inventory

5 Financial assets and financial liabilities

6 Leases

7 Provisions, contingent liabilities, and contingent assets

8 Impairment of assets

9 Taxation

10 Regulatory requirements relating to the preparation of financial statements

11 Reporting financial performance

D Business combinations

1 The concept and principles of a group

2 The concept of consolidated financial statements

3 Preparation of consolidated financial statements including an associate

E Analysing and interpreting financial statements

1 Limitations of financial statements

2 Calculation and interpretation of accounting ratios and trends to address users’ and stakeholders’ needs

3 Limitations of interpretation techniques

4 Specialised, not-for-profit, and public sector entities

SESSION 00 – SYLLABUS

Approach to examining the syllabus

The syllabus is assessed by a three-hour paper-based examination

All questions are compulsory It will contain both computational and discursive elements Some questions will adopt a scenario/case study approach

Question 1 will be a 25 mark question on the preparation of group financial statements and/or extracts thereof, and may include a small discussion element Computations will be designed to test an understanding of principles

Question 2, for 25 marks, will test the reporting of non-group financial statements This may

be from information in a trial balance or by restating draft financial statements

Question 3, for 25 marks, is likely to be an appraisal of an entity’s performance and may involve statements of cash flow

Questions 4 and 5 will cover the remainder of the syllabus and will be worth 15 and 10 marks respectively

An individual question may often involve elements that relate to different subject areas of the syllabus For example the preparation of an entity’s financial statements could include matters relating to several accounting standards

Questions may ask candidates to comment on the appropriateness or acceptability of

management’s opinion or chosen accounting treatment An understanding of accounting principles and concepts and how these are applied to practical examples will be tested Questions on topic areas that are also included in Paper F3 will be examined at an

appropriately greater depth in this paper

Candidates will be expected to have an appreciation of the need for specified accounting standards and why they have been issued For detailed or complex standards, candidates need to be aware of their principles and key elements

SESSION 00 – EXAM TECHNIQUE

EXAMINATION TECHNIQUE

Time allocation

Ü Divide your time in proportion to the marks on offer To allocate your time

multiply the marks for each question by 1.7 minutes If you allocate 1.8

minutes per mark you will find that at the end of the exam you need a

couple more minutes!

e.g 25 mark question should take you 25 × 1.7 = 43 minutes

Ü Stick to this time allocation

Ü The first marks are the easiest to gain in each question, so don’t be tempted

to overstep the time allocation on one question to tidy up a complicated

answer, start the next question instead

Numerical questions

Before starting a computation, picture your route Do this by jotting down the steps you are going to take and imagining the layout of your answer

Ü Set up a pro-forma structure to your answer before working the numbers

Ü Use a columnar layout if appropriate This helps to avoid mistakes and is

easier for the marker to follow

Ü Include all your workings and cross-reference them to the face of your

answer

Ü A clear approach and workings will help earn marks even if you make an

arithmetic mistake

Ü If you do spot a mistake in your answer, it is not worthwhile spending time

amending the consequent effects of it The marker of your script will not

punish you for errors caused by an earlier mistake

Ü Don’t ignore marks for written recommendations or comments based upon

your computation These are easy marks to gain

Ü If you could not complete the calculations required for comment then

assume an answer to the calculations As long as your comments are

consistent with your assumed answer you can still pick up all the marks for

the comments

SESSION 00 – EXAM TECHNIQUE

Case Study/Scenario based questions

Ü Read the requirements carefully to identify

Instruction e.g “outline, discuss ”

Content eg “the factors, the advantages ”

Vehicle/Format eg “report, memo, letter ”

Addressee eg “the board, the accountant ”

Ü Read the scenario quickly to identify

Company name, dates, nature of business, performance

Ü Recall the technical knowledge you have learned relating to the content from the requirements and your quick read of the scenario

Ü Read the scenario again slowly and actively

highlighting key points, or

noting implications in the margin, and

noting points on a plan of your answer

Ü Draw together your technical knowledge and the points from the scenario

Do this by thinking and rearranging your plan, before you write up your answer

Written questions

Planning

Ü Read the requirements carefully at least twice to identify exactly how many points you are being asked to address

Ü Jot down relevant thoughts on your plan

Ü Give your plan a structure which you will follow when you write up the answer

Presentation

Ü Use headings, indentation and bullet points to give your answer structure and to make it more digestible for the marker

Ü Use short paragraphs for each point that you are making

Ü Use “bullet points” where this seems appropriate

Ü Separate paragraphs by leaving at least one line of space between each one

SESSION 00 – EXAM TECHNIQUE

Style

Ü Long philosophical debate does not impress markers Concise, easily

understood language scores marks

Ü Lots of points briefly explained tends to score higher marks than one or two

points elaborately explained

Ü Imagine that you are a marker, you would like to see a short, concise answer

which clearly addresses the requirement

SESSION 00 – EXAM TECHNIQUE