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Published by the Zambia Institute of Chartered Accountants (ZICA) 24 Joseph Mwilwa Road RhodesPark P.o Box 32005 Lusaka Zambia 2007

Acknowledgements We are grateful to the Zambian Government through the Ministry of Finance and National Planning under PEMFA project for funding the printing of these books. Furthermore we are grateful to the Professionals and specialists for undertaking the process of writing these study materials. Finally, we also acknowledge the Association of Chartered Certified Accountants, the Chartered Institute of Management Accountants, and the Institute of Chartered Accountants of England & Wales and Other Accountant Professional bodies for permission to reproduce some of the past Examination questions. All rights reserved. No past of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the Zambia Institute of Chartered Accountants (ZICA).





This paper will give the student the opportunity to acquire knowledge in advanced aspects of financial accounting and corporate reporting. It will also help the student to prepare and interpret the financial statements of groups or undertakings of local or international setting.

General Learning Objectives

On completion of this paper the student should be able to: 1. Prepare financial statements for groups of undertakings, for publication in accordance with the International Financial Reporting Standards and International Accounting Standards.


2. 3. 4.

Analyse and interpret financial statements in accordance with International Accounting Standards. Evaluate accounting practice with particular reference to capital maintenance theory, asset valuation and disclosure and the expression of economic substance over legal form. Evaluate recent development to improve the regulation of financial reporting.

1. 2. 3. 4. 5. 6. 7. 8. Group Financial Statements (25%) The Measurement of Income and Capital (25%) Developments in Financial Reporting (10%) Analysis of Financial Statements (15%) Public Sector Accounting (10%) Regulatory Framework (5%) Accounting under the Insurance Industry (5%) Accounting under the Banking Industry (5%)

UNIT 1.0 GROUP FINANCIAL STATEMENTS (25%) Element 1.1 Relationships between investors and investees Element 1.2 Preparation of Income Statement and Balance Sheet for Complex Groups, IAS 28: Investments in Associates Element 1.3 Changes in Group Structure including disposal, deemed disposal, demerger and reorganizations Element 1.4 Consolidation of Foreign Subsidiaries Element 1.5 Associates and Joint Ventures, IAS 31: Interests in Joint Ventures Element 1.6 Group Cash Flow Statement, IAS 7: Cash Flow Statements

UNIT 2.0


Element 2.1 Problems of profit measurement and the effect of alternative approaches to asset valuation and income measurement. Element 2.2 Accounting for price level changes Current Cost Accounting (CCA), Current Purchasing Power (CPP) and Real Terms Accounting (RTA). Element 2.3 Substance over form Element 2.4 Intangible non-current assets and impairment, IAS 38: Intangible Assets, IAS 36: Impairment of Assets; Element 2.5 Tangible non-current assets, IAS 16: Property, Plant and Equipment; Element 2.6 Treatment of taxation including deferred taxation, IAS 12: Income Taxes; Element 2.7 Provisions, Contingent Assets and Liabilities, Events after Balance Sheet Date. IAS 37: Provisions, Contingent Liabilities and Contingent Assets;


Element 2.8 Financial Instruments, IAS 32: Financial Instruments: Disclosure and Presentation; IAS 29: Financial Reporting in Hyperinflationary Economies; Element 2.9 Leasing contracts including sale and leaseback Element 2.10 Reporting Financial Performance, IFRS 5: Non Current Assets Held for Sale and Discontinued Operations; IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors; Element 2.11 Employee Benefits including pension schemes. UNIT 3.0 Element 3.1 Element 3.2 Element 3.3 Element 3.4 Element 3.4 DEVELOPMENTS IN FINANCIAL REPORTING (10%) Environmental, social and ethical reporting issues. Corporate Governance Related Party Transactions, IAS 24: Related Party Disclosure; Major differences between IASs, UK GAAP and US GAPP Current Issues and developments including Exposure Drafts, Discussion Papers, Standing Interpretations Committee and International Financial Reporting Interpretations Committee pronouncements. ANALYSIS OF FINANCIAL STATEMENTS (15%)

UNIT 4.0

Element 4.1 Advanced aspects of the interpretation of financial statements with the help of liquidity, profitability, gearing, efficiency and investor ratios. Element 4.2 Segmental Analysis, IAS 14: Segment Reporting; Element 4.3 Corporate Failure Prediction Element 4.4 Inter-firm and International Comparisons. UNIT 5.0 Element 5.1 Element 5.2 Element 5.3 Element 5.4 Element 5.5 Element 5.6 Element 5.7 Element 5.8 Element 5.9 UNIT 6.0 Element 6.1 Element 6.2 Element 6.3 Element 6.3 Element 6.4 PUBLIC SECTOR ACCOUNTING (10%) Documents used Accounting books used Accounting for Imprest Receipts and Payments Accounts Income and Expenditure Accounts Balance Sheet Cash flow statement Analysis of Financial Statements Departmental Budget preparation REGULATORY FRAMEWORK (5%) IASB Regulatory Framework The Zambia Companies Act Securities and Exchange Commission (SEC) The Lusaka Stock Exchange Regulations Zambia Institute of Certified Accountants (ZICA)

UNIT 7.0 Element 7.1 Element 7.2 Element 7.3 Element 7.4 UNIT 8.0 Element 8.1 Element 8.2 Element 8.3 Element 8.4 Element 8.5

ACCOUNTING UNDER THE INSURANCE INDUSTRY (5%) Introduction to Accounting under the Insurance industry Ledger Account under the Insurance industry Accounting for Final Statements of Insurance industry Accounting for NAPSA funds under the Insurance industry ACCOUNTING UNDER THE BANKING INDUSTRY (5%) Introduction to legal framework of Bank Accounting Double Entry Book keeping under Banking industry Accounting for Investment Management for Banks Preparation of Financial Statements Performance Evaluation under the Banking industry

STRUCTURE OF THE EXAMINATION The paper will be a three (3) hour examination consisting of five (5) questions. Candidates will be required to attempt any four (4) questions.