FINANCIAL ACCOUNTING AND REPORTING

 1.0 Development of Financial Reporting Framework, Standard-Setting Bodies, Regulation of the Accountancy
Profession, Conceptual Framework of Financial Statements and Accounting Process (10%)
o 1.1 Development of Financial Reporting Framework
 1.1.1 Financial Reporting Framework
 1.1.2 Components of the Framework
o 1.2 Standard-Setting Bodies
 1.2.1 AASC
 1.2.2 FRSC
 1.2.3 PIC
o 1.3 Regulation of the Accountancy Profession
 1.3.1 Regulators of the Profession
 1.3.2 Developments in the Accountancy Profession
 1.3.3 Compilation Services
 1.3.4 Accreditation of CPA Professionals
o 1.4 Conceptual Framework
 1.4.1 Basic Objectives of Financial Statements
 1.4.2 Qualitative Characteristics of Financial Statements
 1.4.3 Elements of Financial Statements
 1.4.4 Financial Capital and Physical Capital
o 1.5 Accounting Process
 1.5.1 Adjusting Entries
 1.5.2 Accounting Cycle
 2.0 Presentation of Financial Statements (PAS 1, PAS 8, PAS 10, PAS 7, PFRS 5, PAS 33, PAS 18 / PFRS 15)
(11.43%)
o 2.1 Statement of Financial Position
o 2.2 Statement of Comprehensive Income
o 2.3 Statement of Cash Flows
o 2.4 Statement of Changes in Equity
o 2.5 Notes to the Financial Statements
 3.0 Assets (34.29%)
o 3.1 Financial Assets (PAS 7, PAS 32 & PAS 39 / PFRS 9, PFRS 7, PAS 28)
 3.1.1 Cash & Cash Equivalents
 3.1.2 Loans and Receivables (Financial Assets at Amortized Cost)
 3.1.3 Investments in Debt Instruments
 3.1.3.1 Financial Assets at Fair Value through Profit or Loss (Except Derivatives)
 3.1.3.2 Financial Assets at Fair Value through Other Comprehensive Income
 3.1.3.3 Financial Assets at Amortized Cost
 3.1.4 Investments in Associates (equity method of accounting)
 3.1.5 Basic Derivatives (excluding Hedge Accounting)
 3.1.5.1 Forwards
 3.1.5.2 Futures
 3.1.5.3 Interest Rate Swap
 3.1.5.4 Call and Put Options
o 3.2 Non-Financial Assets (PAS 2, PAS 16, PAS 38, PAS 40, PAS 23, PAS 41, PAS 20, PAS 36, PFRS 5, PFRS 6,
PFRS 13)
 3.2.1 Inventories
 3.2.1.1 Cost, Lower of cost or Net realizable value
 3.2.1.2 Estimating procedures
 3.2.2 Property, Plant and Equipment
 3.2.2.1 Nature
 3.2.2.2 Recognition principle
 3.2.2.3 Initial recognition basis
 3.2.2.4 Depreciation methods
 3.2.2.5 Impairment
 3.2.3 Investment Property
 3.2.3.1 Nature and measurement principle
 3.2.4 Intangibles
  3.2.4.1 Nature and recognition principle
 3.2.4.2 Research and development expenditures
 3.2.4.3 Subsequent expenditures
 3.2.4.4 Amortization
 3.2.5 Biological Assets
 3.2.5.1 Nature and recognition principle
 3.2.5.2 After initial recognition
 3.2.6 Non-Current Assets Held for Sale
 3.2.6.1 Classification criteria
 3.2.6.2 Initial and subsequent measurement principles
 4.0 Liabilities (IFRIC 1, PAS 32, PAS 39/ PFRS 9, PFRS 7, PAS 37) (10%)
o 4.1 Financial Liabilities
 4.1.1 Accounts Payable and Other Trade Payables
 4.1.1.1 Initial recognition
 4.1.1.2 Subsequent measurement
 4.1.2 Debt Restructuring
 4.1.2.1 Nature and forms
 4.1.2.2 Principles of derecognition
o 4.2 Non-Financial Liabilities
 4.2.1 Premiums and warranties
 4.2.2 Unearned revenues for gift certificates and subscriptions
o 4.3 Provisions and Contingencies
 4.3.1 Recognition and measurement criteria
 5.0 Equity (11.43%)
o 5.1 Share Capital Transactions (PAS 32, PFRS 7)
 5.1.1 Share Capital (nature, recognition, and measurement)
 5.1.2 Issuance and retirement of preference and ordinary shares
 5.1.3 Share split, treasury shares and other equity transactions
 5.1.4 Recapitalization and quasi-reorganization
o 5.2 Dividends (IFRIC 17)
o 5.3 Retained Earnings
o 5.4 Other Comprehensive Income
o 5.5 Book Value per share and Earnings per Share
 6.0 Other Topics (15.71%)
o 6.1 Share-based payments (PFRS 2)
o 6.2 Borrowing Costs (PAS 23)
 6.2.1 Nature
 6.2.2 Criteria for capitalizing borrowing costs
 6.3 Leases (PFRS 17/ PFRS 16)
 6.3.1 Operating lease
 6.3.2 Finance lease
 6.4 Income Tax (PAS 12, PFRS 14)
 6.4.1 Accounting profit
 6.4.2 Taxable profit
 6.5 Employee Benefits (PAS 19, PAS 26)
 6.5.1 Defined benefit plan
 6.5.2 Defined benefit liability (asset)
 6.6 Interim Reporting (PAS 34, PAS 24)
 6.6.1 Purpose
 6.6.2 Principles for Recognition
 6.7 Segment Reporting (PFRS 8)
 6.7.1 Identification of segments
 6.7.2 Measurement of segment information
 6.7.3 Disclosure
 6.8 Cash to Accrual
 6.8.1 Purpose
 6.8.2 Single-entry computation of profit
 6.8.3 Reconciling profit using the transaction approach
  6.8.4 Convert cash basis revenues and expenses to accrual basis revenues and expenses
 6.9 PFRS for Small and Medium Sized Entities
 6.9.1 Reporting Requirements
 6.9.2 Peculiarities
 6.9.3 Principles for reporting investments in equity and debt securities
 6.10 PFRS on Micro Enterprises
 7.0 Updates on Special Concerns (10% or the percentage that result in a minimum of 5 questions)
o 7.1 Globalization
o 7.2 Digital and Information Technology
o 7.3 Governance and Ethics
o 7.4 Effective Business Communication
o 7.5 BoA regulatory and compliance requirements and considerations
ADVANCED FINANCIAL ACCOUNTING AND REPORTING

 1.0 Partnership Accounting

o 1.1 Formation
o 1.2 Operations
o 1.3 Dissolution / changes in ownership interest
 1.3.1 Admission of a new partner
 1.3.1.1 By purchase of interest
 1.3.1.2 By investment
 1.3.2 Withdrawal, retirement or death of a partner
 1.3.3 Incorporation of a partnership
o 1.4 Liquidation
 1.4.1 Lump-sum method
 1.4.2 Installment method
 2.0 Corporate Liquidation
o 2.1 Statement of Affairs
o 2.2 Statement of Deficiency
o 2.3 Statement of Realization and Liquidation
o 2.4 Determination of the order of priority of claimants of company assets subject to liquidation
 3.0 Joint Arrangements (PFRS 11)
o 3.1 Joint Operations
o 3.2 Joint Venture (equity method)
o 3.3 Accounting for SME
 4.0 Revenue Recognition (PFRS 15)
o 4.1 Revenue from Contracts with Customers
 4.1.1 Five-Steps Model Framework
 4.1.1.1 Step 1: Identify the contract with the customer
 4.1.1.2 Step 2: Identify the performance obligations in the contract
 4.1.1.3 Step 3: Determine the transaction price
 4.1.1.4 Step 4: Allocate the transaction price to the performance obligations in the
contracts
 4.1.1.5 Step 5: Recognize revenue when (or as) the entity satisfies a performance
obligation
 4.1.2 Other Revenue Recognition Issues
 4.1.2.1 Sale with a right of return
 4.1.2.2 Warranties
 4.1.2.3 Principal versus agent considerations
 4.1.2.4 Non-refundable upfront fees
 4.1.2.5 Licensing
 4.1.2.6 Repurchase arrangements
 4.1.2.7 Consignment arrangements
 4.1.2.8 Bill-and-hold arrangements
 4.1.3 Financial Statement Presentation
 4.1.4 Accounting for SMEs
o 4.2 Long-term Construction Contracts
 4.2.1 Journal entries and determination of revenue, costs and gross profit
 4.2.1.1 Over Time
o 4.2.1.1.1 Input Method
o 4.2.1.1.2 Output Method
 4.2.1.2 Point in Time
 4.2.2 Gross amount due from / to customers
 4.2.3 Financial Statement Presentation
 4.2.4 Accounting for SME
o 4.3 Franchise Operations – Franchisor’s point of view
 4.3.1 Journal entries and determination of revenue, costs and gross profit
 4.3.1.1 Initial Franchise Fee
 4.3.1.2 Continuing Franchise Fee, Bargain Purchase Option, and Commingled Revenue
 4.3.1.3 Repossessed Franchise
  4.3.1.4 Option to Purchase the Franchise Outlet
 4.3.2 Financial Statement Presentation
 4.3.3 Accounting for SME
o 4.4 Consignment Sales
 5.0 Accounting for Home Office, Branch and Agency Transactions
o 5.1 Transactions on the books of the home office and the branch
o 5.2 Reconciliation of reciprocal accounts
o 5.3 Preparation of individual and combined financial statements
o 5.4 Special procedures in home office and branch transactions (inter-branch transfer of cash and
merchandise at cost or at billed price)
o 5.5 Accounting for agency transactions
 6.0 Business Combination (PFRS 3)
o 6.1 Acquisition of assets and liabilities (acquisition method)
 6.1.1 Determination of Consideration Transferred
 6.1.2 Recognition of Acquired Assets and Liabilities
 6.1.3 Recognition and Measurement of Goodwill and Gain from a Bargain Purchase
 6.1.4 Journal Entries
o 6.2 Financial Statement Presentation
o 6.3 Accounting for SME
 7.0 Separate Financial Statements (PAS 27)
o 7.1 Accounting for Investment in Subsidiary (at cost, in accordance with PFRS 9, and equity method)
o 7.2 Financial Statement Presentation
o 7.3 Accounting for SME
 8.0 Consolidated Financial Statements (PFRS 10)
o 8.1 Consolidated Financial Statement in Subsidiary
 8.1.1 Date of acquisition
 8.1.2 Subsequent to date of acquisition (at cost, in accordance with PFRS 9, and equity method)
 8.1.2.1 Net income, dividends, amortization and impairment of goodwill
 8.1.2.2 With intercompany transactions (inventories, land and depreciable assets)
 8.1.3 Determination of:
 8.1.3.1 Net Income/ Other Comprehensive Income/ Equity
o 8.1.3.1.1 Attribution to Equity Holders of Parent/ Controlling or Parent’s Interest
o 8.1.3.1.2 Non-controlling Interest
o 8.1.3.1.3 Consolidated/ Group
 8.1.3.2 Retained Earnings/ Common Share / Dividends
o 8.1.3.2.1 Attributable to Equity Holders of Parent / Controlling or
o Parent’s Interest/ Consolidated / Group
o 8.2 Accounting for SME
 9.0 Foreign Currency Transactions
o 9.1 Without hedging activities (import, export, lending, and borrowing transactions)
o 9.2 Hedging Activities: Hedging Foreign Currency Exposures
 9.2.1 Foreign Currency Forward Contacts
 9.2.1.1 Hedges that not requires a Hedge Accounting (undesignated hedges)
o 9.2.1.1.1 Exposed Asset (import) or Liability (export) Position
o 9.2.1.1.2 Speculation
 9.2.1.2 Hedges that requires a Hedge Accounting:
o 9.2.1.2.1 Fair value hedge
 9.2.1.2.1.1 Hedge of a Firm Commitment (purchase or sale transaction)
o 9.2.1.2.2 Cash flow hedge
 9.2.1.2.2.1 Hedge of a Firm Commitment (purchase or sale transaction)
 9.2.1.2.2.2 Hedge of a Forecasted Transaction (purchase or sale
transaction)
o 9.2.1.2.3 Hedge of a net investment in foreign entity
o 9.3 Accounting for SME
 10.0 Translation of Foreign Currency Financial Statements (PAS 21/ PAS 29)
o 10.1 Translation from the Functional Currency to the Presentation Currency (Closing/ Current Rate
Method)
o 10.2 Remeasurement from a Foreign Currency to the Functional Currency (Temporal Method)
 o 10.3 Restatement of Financial Statements
 11.0 Not-for-profit organizations
o 11.1 Voluntary health and welfare organizations (VHWO)
o 11.2 Hospitals and other health care organizations
o 11.3 Colleges and universities
o 11.4 Other not- for- profit organizations such as churches, museums, fraternity association, etc.
 12.0 Government Accounting – General Fund
o 12.1 Basic Concepts in Government Accounting
o 12.2 Budget Process
o 12.3 Journal Entries – Books of National Government Agency
 13.0 Other special Topics (basic knowledge)
o 13.1 Accounting for insurance contracts by insurers (PFRS 4/ PFRS 17)
o 13.2 Accounting for build, operate & transfer (PFRIC 12)
 14.0 Cost Accounting
o 14.1 System of cost Accumulation or Costing System
 14.1.1 Comparison between Actual Costing, Normal Costing and Standard Costing
o 14.2 Job-order costing system
 14.2.1 Cost accumulation procedures – materials, labor and overhead
 14.2.2 Journal entries
 14.2.3 Preparation of statement of goods manufactured and sold
 14.2.4 Accounting for scrap, waste, spoilage and rework
o 14.3 Process costing system
 14.3.1 Cost accumulation procedures – materials, labor and overhead
 14.3.2 Journal entries
 14.3.3 Preparation of cost of production report
 14.3.3.1 First- in, first-out (FIFO) method
 14.3.3.2 Average method
 14.3.4 Accounting for lost units
 14.3.4.1 Normal lost units
 14.3.4.2 Abnormal lost unit
o 14.4 Backflush costing system (JIT system)
 14.4.1 Cost Accumulation procedures – materials, labor and overhead
 14.4.2 Journal entries
o 14.5 Service Cost Allocation
 14.5.1 Direct method
 14.5.2 Step-down
 14.5.3 Reciprocal method
o 14.6 Activity-based costing system (ABC costing)
 14.6.1 Allocation of costs: Traditional Costing versus ABC Costing
 14.6.2 Determination of Total Product Costs: Traditional Costing versus ABC costing
o 14.7 Accounting for joint and by-products
 14.7.1 Methods of allocating joint cost to products
 14.7.1.1 Market (sales) value method:
o 14.7.1.1.1 Market value at split-off point approach
o 14.7.1.1.2 Hypothetical Market Value Approach or Approximated Net Realizable
Value Approach or Net Realizable Value Method
o 14.7.1.1.3 Average unit (production output) method
o 14.7.1.1.4 Weight average method
 14.7.1.2 Methods of allocating Joint Cost to By-products
o 14.7.1.2.1 No joint cost allocated to by-product
o 14.7.1.2.2 With joint costs allocated to by-product
 14.7.1.3 Treatment of by-products
o 14.8 Standard Costing (two-way variance excluding mix and yield variances)
 14.8.1 Computation of Variances
 14.8.2 Journal Entries and reporting
 15.0 Updates on Special Concerns
o 15.1 Globalization
o 15.2 Digital and Information Technology
 o 15.3 Governance and Ethics
o 15.4 Regulatory Requirements and Considerations
o 15.5 Effective Business Communication

MANAGEMENT ADVISORY SERVICES

 1.0 Management Accounting

o 1.1 Objectives, role and scope of management accounting
 1.1.1 Basic management functions and concepts
 1.1.2 Distinction among management accounting, cost accounting and financial accounting
 1.1.3 Role and activities of controller and treasurer
 1.1.4 International certifications in management accounting
o 1.2 Management Accounting Concepts and Techniques for Planning & Control
 1.2.1 Cost terms, concepts and behavior
 1.2.1.1 Nature and classification of costs
 1.2.1.2 Analysis of cost behavior (variable, fixed, semi-variable/mixed, step-cost)
 1.2.1.3 Splitting mixed cost (high-low, scatter graph, least-squares regressions)
 1.2.2 Cost-volume-profit (CVP) analysis
 1.2.2.1 Uses, assumptions and limitations of CVP analysis
 1.2.2.2 Factors affecting profit
 1.2.2.3 Breakeven point in unit sales and peso sales
 1.2.2.4 Required selling price, unit sales and peso sales to achieve a target profit
 1.2.2.5 Sensitivity analysis (including indifference point in unit sales and peso sales)
 1.2.2.6 Use of sales mix in multi-product companies
 1.2.2.7 Concepts of margin of safety and degree of operating leverage
 1.2.3 Standard costing and variance analysis
 1.2.3.1 Direct material variance (quantity, price usage, purchase price, mix and yield)
 1.2.3.2 Direct labor variance (efficiency, rate, mix and yield)
 1.2.3.3 Factory overhead variance – two-way method (controllable and volume); three-
way method (spending, variable efficiency and volume); four-way method (variable
spending, fixed spending, variable efficiency and volume)
 1.2.4 Variable costing and absorption costing
 1.2.4.1 Nature and treatment of fixed factory overhead costs
 1.2.4.2 Distinction between product cost and period cost
 1.2.4.3 Inventory costs between variable costing and absorption costing
 1.2.4.4 Reconciliation of operating income under variable costing and absorption costing
 1.2.5 Financial planning and budgets
 1.2.5.1 Definition and coverage of the budgeting process
 1.2.5.2 Master budget and its components (operating and financial budgets)
 1.2.5.3 Types of budgets (static, flexible, zero-based, continuous)
 1.2.5.4 Budget variance analysis (static and flexible)
 1.2.6 Activity-based costing (ABC) and activity-based management (ABM)
 1.2.6.1 Activity levels (unit-level, batch-level, product-level and facility level), cost pools
and activity drivers
 1.2.6.2 Determination of cost pool rates and application of overhead costs
 1.2.6.3 Traditional costing versus activity-based costing
 1.2.6.4 Process value analysis (value-added activities and non-value added activities)
 1.2.7 Strategic cost management
 1.2.7.1 Total quality management
 1.2.7.2 Just-in-time production system
 1.2.7.3 Continuous improvement
 1.2.7.4 Business process reengineering
 1.2.7.5 Kaizen costing
 1.2.7.6 Product life cycle costing
 1.2.7.7 Target costing
o 1.3 Management Accounting Concepts and Techniques for Performance Measurement
 1.3.1 Responsibility accounting and transfer pricing
 1.3.1.1 Type of responsibility centers (cost, revenue, profit and investment centers)
 1.3.1.2 Concepts of decentralization and segment reporting
  1.3.1.3 Controllable and non-controllable costs, direct and common costs
 1.3.1.4 Performance margin (manager versus segment performance)
 1.3.1.5 Preparation of ‘segmented’ income statement
 1.3.1.6 Return on investment (RoI), residual income and economic value added (EVA)
 1.3.1.7 Rational and need for transfer price
 1.3.1.8 Transfer pricing schemes (minimum transfer price, market based transfer price,
cost-based transfer price and negotiated price)
 1.3.2 Balanced scorecard
 1.3.2.1 Nature and perspectives of balanced scorecard
 1.3.2.2 Financial and non-financial performance measures
o 1.4 Management Accounting Concepts and Techniques for Decision Making
 1.4.1 Quantitative techniques
 1.4.1.1 Regression and correlation analysis
 1.4.1.2 Gantt chart
 1.4.1.3 Program evaluation review technique (PERT) – Critical Path Method (CPM)
 1.4.1.4 Probability analysis (expected value concept)
 1.4.1.5 Decision tree diagram
 1.4.1.6 Learning curve
 1.4.1.7 Inventory models (carrying and ordering costs, EOQ model, safety stock, reorder
point)
 1.4.1.8 Linear programming (graphic method; algebraic method)
 1.4.2 Relevant costing and differential analysis
 1.4.2.1 Definition and identification of relevant costs
 1.4.2.2 Concept of opportunity costs
 1.4.2.3 Approaches in analyzing alternatives in non-routing decisions (total and
differential)
 1.4.2.4 Types of decisions (make or buy, accept or reject special order, continue or
drop/shutdown, sell or process further, best product combination, pricing decisions)
 2.0 Financial Management
o 2.1 Objectives and Scope of Financial Management
 2.1.1 Nature, purpose and scope of financial management
 2.1.2 Role of financial managers in investment, operating and financing decisions
o 2.2 Financial Management Concepts and Techniques for Planning, Control & Decision Making
 2.2.1 Financial statement analysis
 2.2.1.1 Vertical analysis (common-size financial statements)
 2.2.1.2 Horizontal analysis (trend percentages and index analysis)
 2.2.1.3 Cash flow analysis (interpretation of cash flows including free cash flow concept)
 2.2.1.4 Gross profit variance analysis (price, cost and volume factors)
 2.2.1.5 Financial ratios (liquidity, solvency, activity, profitability, growth and other ratios;
Du Pont model)
 2.2.1.6 Financial forecasting using additional funds needed (AFN)
 2.2.2 Working capital finance
 2.2.2.1 Concepts and significance of working capital management
 2.2.2.2 Working capital investment and financing policies (conservative vs. aggressive)
 2.2.2.3 Cash and marketable securities management (cash conversion cycle, optimal
cash balance, collection and disbursement float, cash management system)
 2.2.2.4 Receivables management (average balance of and investment in accounts
receivable, incremental analysis and evaluation of discount, collection and credit
policies)
 2.2.2.5 Inventory management (carrying, ordering and stock-out costs, inventory control
system including EOQ model, safety stock, reorder point)
 2.2.2.6 Sources of short-term funds (trade credit, bank loans, commercial papers,
receivable factoring)
 2.2.2.7 Estimating cost of short-term funds (annual cost of trade credit, effective and
nominal annual rate of short-term funds)
 2.2.3 Capital budgeting
 2.2.3.1 Capital investment decision factors (net investment for decision making, cost of
capital, cash and accrual net returns)
  2.2.3.2 Non-discounted capital budgeting techniques (payback period, accounting rate
of return on original and average investment, bail-out payback and payback reciprocal)
 2.2.3.3 Discounted capital budgeting techniques (net present value, internal rate of
return, profitability index, equivalent annual annuity, fisher rate/ NPV point of
indifference)
 2.2.3.4 Project screening, project ranking and capital rationing (independent and
mutually exclusive capital investment projects)
 2.2.3.5 Sensitivity analysis (effects of changes in project cash flow, tax rates and other
assumptions)
 2.2.4 Investments, risks and rates of returns
 2.2.4.1 Types of risks (business/ operating, financing)
 2.2.4.2 Measures of risks (coefficient of variation and standard deviation)
 2.2.4.3 Degree of operating, financial and total leverage
 2.2.4.4 Derivatives (forwards, futures, swaps and options)
 2.2.4.5 Investment models (Black Sholes, CAPM)
 2.2.4.6 Capital markets, the Philippine Stock Exchange and other foreign bourses
 2.2.4.7 Types of investment products and their characteristics
 2.2.5 Capital structure and long-term financing decision
 2.2.5.1 Basic concepts and tools of capital structure management
 2.2.5.2 Sources of intermediate and long-term financing (including hybrid financing)
 2.2.5.3 Cost of capital (cost of long-term debt, cost of preferred shares, cost of equity,
weighted average cost of capital, marginal cost of capital)
 3.0 Management Consultancy and Effective Communications to Stakeholders
o 3.1 Management Consultancy Practice by Certified Public Accounting (CPAs)
 3.1.1 Nature of management consultancy engagements
 3.1.2 Professional attributes of management consultants
 3.1.3 Areas, stages and management of management consultancy engagements
 3.1.4 IFAC & Philippine Code of Ethics for the Accountancy profession
 3.1.5 NOCLAR provisions and implications
o 3.2 Project Feasibility Studies
 3.2.1 Nature, purpose and components (economic/ marketing, technical and financial)
 3.2.2 Analysis of project revenue and costs under specific assumptions
 3.2.3 Preparation of projected financial statements
 3.2.4 Analysis of financial projections
 4.0 Economic Concepts essential to obtaining an understanding of entity’s business and industry
o 4.1 Macroeconomics (national economic issues and measures of economic performance such as GDP;
unemployment and inflation; fiscal and monetary policies; international trade and foreign exchange
rates)
o 4.2 Microeconomics (concept of and factors affecting supply; concept of and factors affecting demand;
market equilibrium; price elasticity of demand; market structure; production and cost functions)
 5.0 Updates on Special Consideration
o 5.1 Globalization
o 5.2 Digital and Information Technology
o 5.3 Governance and Ethics
o 5.4 Regulatory Requirements and Considerations
o 5.5 Effective Business Communication
AUDITING

AUDITING THEORY

 1.0 Fundamentals of Auditing and Assurance Services

o 1.1 Introduction to assurance engagements – Phil. Framework for Assurance Engagements, Preface to
IS and PS
 1.1.1 Nature, objective and elements
 1.1.2 Types of assurance engagements (audits, reviews, other assurance engagements)
 1.1.3 Assurance service vis-a-vis attestation services
o 1.2 Introduction to auditing – PSA 120, PSA 200
 1.2.1 Nature, philosophy, and objectives
 1.2.2 Types of audit
 1.2.2.1 According to nature of assertion/ data (financial statements audit, operational
audit, and compliance audit)
 1.2.2.2 According to types of auditor (external independent financial statements audit,
internal audit, and government audit)
 2.0 The Financial Statements Audit -Client Acceptance, Audit Planning, Supervision and Monitoring – PSA 210,
220, 300, 320, PSQC, PSA 610, 620
o 2.1 Overview of the audit process
o 2.2 Pre-engagement procedures
o 2.3 Scope and purposes of audit planning
 2.3.1 Essential planning requirements
 2.3.1.1 Knowledge of the business
 2.3.1.2 Preliminary analytical procedures
 2.3.1.3 Materiality
 2.3.1.4 Assessing and managing audit risks
 2.3.1.5 Overall audit plan and audit program (experts, internal auditor, other
independent auditors)
o 2.4 Direction, supervision and review
 3.0 Understanding the Entity and its Environment Including its Internal Control and Assessing the Risks of
Material Misstatement – PSA 240, 250, 260, 265, 315, 330, 402
o 3.1 Industry, regulatory and other external factors, including the applicable financial reporting
framework
 3.1.1 Nature of the entity
 3.1.2 Objectives and strategies and related business risks
 3.1.3 Measurement and review of the entity's financial performance
o 3.2 Internal control
 3.2.1 Basic concepts and elements of internal control
 3.2.2 Consideration of accounting and internal control systems
 3.2.2.1 Understanding and documentation
 3.2.2.2 Assessment of control risks
o 3.2.2.2.1 Test of controls
o 3.2.2.2.2 Documentation
o 3.3 Assessing the risks of material misstatement
 3.3.1 Fraud and errors
 3.3.2 Risk assessment procedures
 3.3.3 Discussion among the engagement team
 3.3.4 Significant risks that require special audit consideration
 3.3.5 Risks for which substantive procedures alone do not provide sufficient appropriate audit
evidence
 3.3.6 Revision of risk assessment
o 3.4 Communicating with those charged with governance and management
 4.0 Audit Objectives, Procedures, Evidences and Documentation – PSA 230, 500, 501, 505, 510, 520, 530, 540
o 4.1 Nature and significance
o 4.2 Evidential matters
o 4.3 Audit procedures/techniques
o 4.4 Audit working papers
 5.0 Completing the Audit/ Post-Audit Responsibilities – PSA 550, 560, 570, 580, 600
 o 5.1 Completing the audit and audit report preparation
 5.1.1 Analytical procedures for overall review
 5.1.2 Related party transactions
 5.1.3 Subsequent events review
 5.1.4 Assessment of going concern assumption
 5.1.5 Obtaining client's representation letter
 5.1.6 Evaluating findings, formulating an opinion and drafting the audit report
o 5.2 Post-audit responsibilities
 5.2.1 Subsequent discovery of facts
 5.2.2 Subsequent discovery of omitted procedures
 6.0 Reports on Audited Financial Statements – PSA 700, 705, 706, 710, 720
o 6.1 The unqualified auditor's report
o 6.2 Basic elements of the unqualified auditor's report
o 6.3 Modified auditor's report
 6.3.1 Matters that do not affect the auditor's opinion
 6.3.2 Matters that do affect the auditor's opinion
o 6.4 Report on comparatives
 7.0 Auditing in a Computerized Information Systems (CIS) Environment
o 7.1 Internal control in a CIS environment
 7.1.1 Introduction
 7.1.2 Impact of computers on accounting and internal control systems
 7.1.2.1 General controls
 7.1.2.2 Application controls
 7.1.3 Unique characteristics of specific CIS
 7.1.3.1 Stand alone
 7.1.3.2 On-line
 7.1.3.3 Database system
o 7.2 Basic approach to the audit of CIS environment
 7.2.1 Introduction
 7.2.2 Effects of computers on the audit process
 7.2.3 Computer assisted audit techniques
 8.0 Other Assurance and Non-assurance Services – PSA 800, 805, 810, PSAE 3400, PSRE 2400 (including
amendment), PSRS 4400, 4410
o 8.1 Procedures and reports on special purpose audit engagements
 8.1.1 General considerations
 8.1.2 Audit of financial statements prepared in accordance with a comprehensive basis of
accounting other than GAAP in the Philippines
 8.1.3 Audit of a component of financial statements
 8.1.4 Reports on compliance with contractual agreements
 8.1.5 Reports on summarized financial statements
o 8.2 Non-audit engagements: procedures and reports
 8.2.1 Examination of prospective financial information
 8.2.2 Engagements to review financial statements
o 8.3 Non-assurance engagements
 8.3.1 Engagements to perform agreed-upon procedures regarding financial information
 8.3.2 Engagements to compile financial information
 9.0 Updates on Special Concerns
o 9.1 Globalization
o 9.2 Digital and Information Technology
o 9.3 Governance and Ethics
o 9.4 Regulatory Requirements and Considerations
o 9.5 Effective Business Communication

AUDITING PROBLEM

 1.0 Evidence Accumulation and Evaluation – Substantive Tests of Transactions and Balances
o 1.1 Audit of the revenue and receipt cycle
 1.1.1 Audit of sales and revenue transactions
  1.1.2 Audit of receivable balances
o 1.2 Audit of expenditure and disbursement cycle
 1.2.1 Audit of acquisitions and purchases
 1.2.2 Audit of payroll transactions
 1.2.3 Audit of inventory balances
 1.2.4 Audit of trade payable balances
 1.2.5 Audit of prepaid expenses and accrued liabilities
o 1.3 Audit of production cycle
 1.3.1 Audit of conversion activities
 1.3.2 Audit of inventory balances: work-in-process and finished goods
 1.3.3 Audit of cost of goods sold balance
o 1.4 Audit of the financing cycle
 1.4.1 Audit of financing cycle transactions
 1.4.2 Audit of non-trade liability balances
 1.4.3 Audit of interest expense and finance cost balances
 1.4.4 Audit of equity accounts
o 1.5 Audit of investing cycle
 1.5.1 Audit of investing transactions
 1.5.2 Audit of investment account balances
 1.5.3 Audit of property, plant and equipment account balances
 1.5.4 Audit of intangible account balances
o 1.6 Audit of cash balances
 1.6.1 Audit of cash receipt transactions balance
 1.6.2 Audit of cash disbursement transactions balance
TAXATION

 1.0 PRINCIPLES OF TAXATION

o 1.1 Nature, scope, classification, and essential characteristics
o 1.2 Principles of sound tax system
o 1.3 Limitations on the power of taxation
o 1.4 Tax evasion vs. tax avoidance
o 1.5 Situs/place of taxation
o 1.6 Double taxation
o 1.7 Legislation of tax laws
o 1.8 Impact of taxes in nation building
o 1.9 Ethical tax compliance and administration
o 1.10 Organization of the Bureau of Internal Revenue, Bureau of Customs, Local Government Tax
Collecting Units, Board of Investments, Philippine Economic Zone Authority
 2.0 TAX REMEDIES
o 2.1 Remedies of the government
 2.1.1 Definition, scope, prescriptive period
 2.1.2 Administrative remedies
 2.1.3 Judicial actions
 2.1.4 Additions to Tax (surcharge, interest, compromise penalty)
 2.1.5 Other sanctions (criminal penalties, closure of business, collection of delinquent taxes)
 2.1.6 Powers of the Bureau of Internal Revenue
o 2.2 Remedies of the taxpayer
 2.2.1 Definition, scope, prescriptive period
 2.2.2 Taxpayers rights
 2.2.3 Administrative remedies (protesting of assessment, recovery of excess or erroneously paid
taxes, request for the compromise, abatement or refund or credit of taxes, request for rulings)
 2.2.4 Judicial remedies
o 2.3 Expanded jurisdiction of the Court of Tax Appeals
 3.0 INCOME TAX
o 3.1 Taxpayer and tax base
 3.1.1 Individuals
 3.1.2 Corporations
 3.1.3 Partnerships
 3.1.4 Joint ventures
 3.1.5 Estates and trusts
 3.1.6 Co-ownerships
 3.1.7 Tax exempt individuals and organizations
o 3.2 Gross income
 3.2.1 Inclusions in the gross income
 3.2.2 Exclusions/exemptions from gross income
 3.2.3 Income from compensation
 3.2.4 Income from business
 3.2.5 Passive income subject to final withholding tax
 3.2.6 Capital gains
o 3.3 Deductions from gross income
 3.3.1 Itemized deductions
 3.3.2 Items not deductible
 3.3.3 Optional standard deduction
 3.3.4 Deductions allowed under special laws
o 3.4 Accounting periods
o 3.5 Accounting methods
 3.5.1 Reconciliation of income under PFRS and income under Tax Accounting
o 3.6 Tax return preparation and filing and tax payments
 3.6.1 Manual filing
 3.6.2 Electronic filing and E-submission
 3.6.3 Large taxpayers and non-large taxpayers
 3.6.4 Income tax credits
 3.6.5 Venue and time of filing of tax returns
  3.6.6 Venue and time of payment
 3.6.7 Modes of payment
 3.6.8 Use of tax tables
 3.6.9 Accomplishing of various income tax returns and forms
o 3.7 Withholding taxes (at source, expanded or creditable withholding tax, final withholding taxes and
withholding tax on government payments)
 3.7.1 Time of withholding
 3.7.2 Income payments subject to withholding
 3.7.3 Year end withholding of tax and requirements
 3.7.4 Venue and time of filing of withholding tax returns
 3.7.5 Venue and time of payment
 3.7.6 Modes of payment
 3.7.7 Time of payment
 3.7.8 Use of tax tables and rates
 3.7.9 Use of various withholding tax returns and forms
o 3.8 Compliance Requirements
 3.8.1 Administrative requirements (registration, issuance of receipts, printing of receipts)
 3.8.2 Attachments to the income tax return, including CPA certificate, per NIRC requirement
 3.8.3 Keeping of books of accounts and records, including report of inventories
 3.8.4 Prescriptive period of maintain books of accounts and other accounting records
 4.0 TRANSFER TAX
o 4.1 Estate tax
 4.1.1 Gross estate
 4.1.2 Deductions allowed to estate
 4.1.3 Tax credit
 4.1.4 Venue and time of filing of tax returns
 4.1.5 Venue and time of payment
 4.1.6 Modes of payment
 4.1.7 Use of tax tables
 4.1.8 Accomplishing of tax returns and forms
 4.1.9 Attachments to the tax return
 4.1.10 Administrative requirements
o 4.2 Donor’s tax
 4.2.1 Gross gift
 4.2.2 Exemptions
 4.2.3 Tax rates in general and when the donee is a stranger
 4.2.4 Venue and time of filing of tax returns
 4.2.5 Venue and time of payment
 4.2.6 Modes of payment
 4.2.7 Use of tax tables
 4.2.8 Accomplishing of tax returns and forms
 4.2.9 Attachments to the tax return
 4.2.10 Administrative requirements
 5.0 VALUE ADDED TAX (VAT) AND PERCENTAGE TAX
o 5.1 Value added tax
 5.1.1 Output VAT
 5.1.2 Input VAT
 5.1.3 Input VAT tax credits
 5.1.4 Refund of excess input VAT
 5.1.5 Venue and time of filing of donors tax returns
 5.1.6 Venue and time of payment
 5.1.7 Modes of payment
 5.1.8 Accomplishing of tax returns and forms
 5.1.9 Attachments to the tax return
 5.1.10 Invoicing, and Accounting requirements
o 5.2 Percentage tax
 5.2.1 Tax base and tax rates
 5.2.2 Venue and time of filing of tax returns
 5.2.3 Venue and time of payment
  5.2.4 Modes of payment
 5.2.5 Use of tax rates
 5.2.6 Accomplishing of tax returns and forms
 6.0 EXCISE TAX
o 6.1 Describe, Analyze and Compute Excise Tax
 6.1.1 Concept
 6.1.2 Applicability
 6.1.3 Classification of Excisable Materials and Rates
 6.1.4 Specific Tax
 6.1.5 Ad Valorem Tax
 6.1.6 Coverage
 6.1.7 Time of Payment
 7.0 DOCUMENTARY STAMP TAX
o 7.1 Describe, Analyze and Compute Documentary Stamp Tax (Limited to Shares of Stocks, Sales, Debt
Instruments and Deeds of Sale)
 7.1.1 Definition
 7.1.2 Coverage and Exemptions
 7.1.3 Tax Base Rates
 7.1.4 Time and Manner of Payment
 8.0 TAXATION UNDER THE LOCAL GOVERNMENT CODE
o 8.1 Scope and different types of local taxes (limited to real property tax, local business tax)
o 8.2 Tax base and tax rates
o 8.3 Venue and time of filing of tax returns
o 8.4 Venue and time of payment
 9.0 PREFERENTIAL TAXATION
o 9.1 Senior Citizens Law
 9.1.1 Exemption from income tax of qualified senior citizens
 9.1.2 Tax incentives for qualified establishments selling goods and services to senior citizens
o 9.2 Magna Carta for Disabled Persons
 9.2.1 Tax incentives for qualified establishments selling goods and services to disabled persons
o 9.3 Special Economic Zone Act
 9.3.1 Policy and the Philippine Economic Zone Authority (PEZA)
 9.3.2 Registration of investments
 9.3.3 Fiscal incentives to PEZA-registered economic zone enterprises
o 9.4 Omnibus Investments Code (Book 1 of Executive Order 226)
 9.4.1 Policy and the Board of Investment (BOI)
 9.4.2 Preferred areas of investment
 9.4.3 Investments priority plan
 9.4.4 Registration of investments
 9.4.5 Fiscal incentives to BOI registered enterprises
o 9.5 Barangay Micro Business Enterprises (BMBEs) Act
 9.5.1 Registration of BMBEs
 9.5.2 Fiscal Incentives to BMBEs
o 9.6 Double Taxation Agreements (DTA)
 9.6.1 Nature and purpose of DTAs
 9.6.2 Manner of giving relief from double taxation
 9.6.3 Procedure for availment of tax treaty benefits
 10.0 TARIFF AND CUSTOMS CODE
o 10.1 Functions of the Bureau of Customs
o 10.2 Functions of the Tariff Commission
o 10.3 Nature of tariff and customs duties
o 10.4 Basis of assessment of duty
o 10.5 Documents required for importation of goods
o 10.6 Documents required for export of goods
 11.0 UPDATES ON SPECIAL CONCERNS
o 11.1 Globalization
o 11.2 Digital and Information Technology
o 11.3 Governance and Ethics
 o 11.4 Regulatory Requirements and Considerations
o 11.5 Effective Business Communication

REGULATORY FRAMEWORK for BUSINESS TRANSACTIONS

 1.0 LAWS ON BUSINESS TRANSACTIONS

o 1.1 Obligations
 1.1.1 Sources of obligations and their concepts
 1.1.1.1 Law
 1.1.1.2 Contracts
 1.1.1.3 Quasi-contracts
 1.1.1.4 Delicts
 1.1.1.5 Quasi-delicts
 1.1.2 Kinds of obligations in general under the Civil Code
 1.1.3 Specific circumstances affecting obligations in general
 1.1.3.1 Fortuitous events
 1.1.3.2 Fraud
 1.1.3.3 Negligence
 1.1.3.4 Delay
 1.1.3.5 Breach of contract
 1.1.4 Duties of obligor in obligation to do or not to do
 1.1.5 Extinguishment of obligation with special emphasis on
 1.1.5.1 Payment of debts of money
 1.1.5.2 Mercantile documents as means of payment
 1.1.5.3 Special forms or modes of payment
 1.1.5.4 Remission or condonation, confusion, compensation and novation
 1.1.5.5 Effect of insolvency and bankruptcy on extinguishment of obligation
o 1.2 Contracts
 1.2.1 Concepts and classification
 1.2.2 Elements and stages
 1.2.3 Freedom from contract and limitation
 1.2.4 Persons bound
 1.2.5 Consent
 1.2.5.1 Capacitated persons
 1.2.5.2 Requisites
 1.2.5.3 Vices of consent
 1.2.6 Objects of contracts
 1.2.7 Considerations of contracts
 1.2.8 Formalities of contracts
 1.2.9 Interpretation and reformation of contracts
 1.2.10 Defective contracts
 1.2.10.1 Rescissible
 1.2.10.2 Voidable
 1.2.10.3 Unenforceable
 1.2.10.4 Void
o 1.3. Sales
 1.3.1 Nature, forms and requisites
 1.3.2 Earnest money as distinguished from option money
 1.3.3 Rights/obligations of vendor and vendee
 1.3.4 Warranties (in relation to consumer laws)
 1.3.5 Installment sales
 1.3.5.1 Personal property – Recto Law
 1.3.5.2 Real Property – Maceda Law
 1.3.5.3 PD 957 / Condominium Act
 2.0 LAW ON CREDIT TRANSACTIONS
o 2.1 Pledge, Real Mortgage and Chattel Mortgage
 2.1.1 Nature and requisites
 2.1.2 Requirements to bind the parties and third persons
 2.1.3 Obligations and rights of pledgor and pledge
  2.1.4 Obligations and rights of mortgagor and mortgagee
 2.1.5 Effect of pactum commissorium
 2.1.6 Modes of Extinguishment
 3.0 NEGOTIABLE INSTRUMENTS AND BOUNCING CHECKS LAW
o 3.1 Negotiable Instruments
 3.1.1 Negotiability of instrument
 3.1.2 Abnormal negotiable Instruments
 3.1.3 Incomplete but delivered instruments
 3.1.4 Incomplete and undelivered instruments
 3.1.5 Complete but undelivered instruments
 3.1.6 Instruments with forged signature
o 3.2 Bouncing Checks
 3.2.1 Checks without insufficient funds
 3.2.2 Evidence of knowledge of insufficient funds
 3.2.3 Duty of Drawee
 3.2.4. Credit Construed
 4.0 LAWS ON BUSINESS ORGANIZATION
o 4.1 Partnership
 4.1.1 Nature and as distinguished from corporation
 4.1.2 Elements and kinds
 4.1.3 Formalities required
 4.1.4 Rules of management
 4.1.5 Distribution of profits and losses
 4.1.6 Sharing of losses and liabilities
 4.1.7 Modes and retirement requirements
 4.1.8 Limited partnership
o 4.2 Corporations
 4.2.1 Nature and classes of corporation
 4.2.2 Incorporation and organization of Private Corporation
 4.2.3 Powers of a corporation
 4.2.3.1 Expressed
 4.2.3.2 Implied
 4.2.3.3 Incidental
 4.2.4 Board of Directors/Corporate Officers
 4.2.4.1 Qualifications
 4.2.4.2 Election and removal
 4.2.4.3 Powers and fiduciary duties
 4.2.5 Classes of stocks
 4.2.5.1 Concepts
 4.2.5.2 Subscriptions
 4.2.6 Powers, duties, rights and obligations of stockholders
 4.2.7 Majority and minority control
 4.2.8 By Laws
 4.2.9 Meetings
 4.2.10 Corporate reorganization
 4.2.10.1 Mergers
 4.2.10.2 Consolidations
 4.2.10.3 Other business combinations
 4.2.11 Non-stock corporation
 4.2.12 Modes of dissolution and liquidation
 4.2.12.1 Retirement Requirements
 4.2.13 Foreign corporations
 4.2.13.1 License to do business
 4.2.13.1.1 Purpose of the license
 4.2.13.1.2 Requirements for application/issuance of license
 4.2.13.1.3 Consequence of doing business without a license
 4.2.13.2 Definition and rights of foreign corporations
 4.2.13.3 Suspension or revocation of license
  4.2.14 Kinds and availability of corporate books
 4.2.15 Securities Regulation Code
 4.2.15.1 Registration of Securities
 4.2.15.2 Shareholders’ interests
 4.2.15.3 Prohibition on fraud, manipulation, private tender offer and insider trading
 4.2.15.4 Exchanges and other securities trading markets
 4.2.16 Code of Corporate Governance
 4.2.17 Securities and Regulation Code (SRC), Rule 68, as amended
 4.2.18 SEC Circulars and Issuances
 4.2.18.1 Filing of General Information Sheet
 4.2.18.2 Filing of Annual Audited Financial Statements
 4.2.18.3 Filing of Articles of Incorporation, By-laws and its amendments and Secondary
License
 4.2.18.4 Fines and Penalties
o 4.3 Cooperatives
 4.3.1 Organization and Registration of Cooperatives
 4.3.2 Administration
 4.3.3 Responsibilities, Rights and Privileges of Cooperatives
 4.3.4 Membership
 4.3.5 Capital, Property of Funds
 4.3.6 Audit, Inquiry and Members’ Right to Examine
 4.3.7 Allocation and Distribution of Funds
 4.3.8 Types and Categories of Cooperatives
 4.3.9 Merger and Consolidation of Cooperatives
 4.3.10 Dissolution of Cooperatives
 5.0 Laws on other Business Transactions
o 5.1 PDIC Law
 5.1.1 Insurable deposits
 5.1.2 Maximum liability
 5.1.3 Requirements for Claims
o 5.2 Secrecy of Bank Deposits and Unclaimed Balances Law
o 5.3 AMLA Law
 5.3.1 Definition of Terms
 5.3.2 Unlawful Activities
 5.3.3 Covered Institutions/Persons
 5.3.4 Covered Transactions and Suspicious Transactions
 5.3.5 Record Keeping Requirements
 5.3.6 Powers of AMLC
 5.3.7 Reporting requirements
o 5.4 Intellectual Property Law (except provisions under Part 1)
 5.4.1 The Law on Patents
 5.4.2 The Law on Trademark, Service Marks and Trade Names
 5.4.3 The Law on Copyright
o 5.5 Data Privacy Act
 5.5.1 General Provisions and National Privacy Commission
 5.5.2 Processing and Security of Personal Information
 5.5.3 Rights of the data subject
 5.5.4 Accountability for transfer of information
 5.5.5 Security of Sensitive Personal Information in Government
 5.5.6 Penalties
o 5.6. Electronic Commerce Act
 5.6.1 General Provisions
 5.6.2 Legal Recognition and Communication of electronic messages and electronic documents
 5.6.3 Electronic commerce in carriage of goods and electronic transactions in government
 6.0 Updates on Special Concerns
o 6.1 Globalization
o 6.2 Digital and Information Technology
o 6.3 Governance and Ethics
o 6.4 Regulatory Requirements and Considerations
o 6.5 Effective Business Communication