Syllabus for Chartered Accountancy Professional Final [CAP III].

Level: CAP-III

Paper 1 : Advanced Financial Reporting

(One Paper - Three Hours - 100 Marks)

 

 

Level of Knowledge: Expert

 

Course objectives:

    Enable  the candidates to understand the purpose and  context of “Nepal Financial

Reporting Standards”,

    Prepare   financial   statements,  including  consolidated  financial   statements  for limited liabilities companies and other specialized entities applying  standards and to explain their presentations.

     Interpret financial statements and other data for the benefits of users.

 

Course contents

 

1.  Accounting principles and concepts

•           Fundamental accounting concepts and  their relevance  in preparation of financial statements.

•          Conventional cost concept vis a vis fair value concept

2.   Financial Reporting Standards.

•          Nepal  Accounting Standards(NAS)/  Nepal  Financial  Reporting Standards (NFRS) interpretations by  Standing Interpretation  Committee (SICs)  and  International Financial  Reporting Standards Interpretation Committee (IFRICs) and  their application.

•           Conceptual framework, recognition, measurement of elements and  disclosures of financial statements and significant departure from current practices.

•          Issues  and  problems associated in  general  purpose financial  reporting with the convergence of NFRS.

•           Comparative study of  national and  international financial  reporting standards/ GAAPs.

 

3.  Preparation and presentation of financial statements

 

a.          Advanced  problems in  preparation and  presentation of  financial  statements  of limited  liabilities  companies,  bank   and   financial   institutions,  mutual  funds, merchant banker,   insurance  companies,  stock broker   and  power  development companies  in  accordance  with  applicable  Financial   Reporting  Standards  and relevant Acts and Rules.

b.          Valuation of goodwill, shares and business. c.          Disclosure  as per standards including,

•          Accounting policies

•          Segment information

•          Related parties transactions

•        Earnings per Share

•          Current and deferred taxation

•           Other as  per   the  relevant  Acts,  rules   or   directives  from   regulating authorities.

 

d.           Understanding recent development in accounting

•         Interim and group reporting

•        Value added  statement

•        Economic  value added  statement

•          Human resource accounting

•          Corporate social responsibility reporting

•          Integrated Reporting

•          Environmental accounting

•          Corporate governance reporting

 

4.  Preparation of consolidated financial statements

•          Definitions of subsidiary  and controlled companies

•          Financial  issues related to subsidiary  and controlled companies for their inclusion and   exclusion   like  intra-group  transactions,  fair  value   adjustments,  minority interest

•          Preparation of consolidated accounts of holding  and group companies

•          Accounting for associates

 

5.  Accounting for business combinations

•          Acquisition, absorptions, amalgamation, merger,  de-merger and reconstruction.

 

6.  Statement of Cash Flows

•          Preparation (direct and indirect method) and interpretations.

 

7.  Accounting for foreign currency transactions

 

8.  Analysis and interpretation of financial statements and related information

•           Appraisal  of financial  and  related information by vertical and  horizontal analysis, ratio analysis, common size statement.

 

9.  Accounting treatments for specialized transactions

•           Accounting treatment  of  transactions under  lease,  contract,  intangible assets, financial  instruments  including hedge  accounting,  taxes, share  based  payment, employee  benefits plan as per financial reporting standards.

 

10. Public Financial Management and Government Accounting

•   Concept of public financial management;

•   Process of budget formulation and approval; content of the budget;

•   Government accounting system and implementation of NPSAS;

•    Role of financial comptroller general to improve government accounting and public financial management system -treasury single account, PEFA, action plan to improve PFM.

•    Role of office of the auditor general to improve government accounting and public financial management system-implementation of ISA, ISSAI, auditing, audit follow up

•    Role of public accounts committee to improve government accounting and public financial management system

 

Level CAP-III

Paper 2 : Advanced Financial Management

(One Paper - Three Hours - 100 Marks)

 

 

Level of Knowledge: Expert

 

Course objectives:

    To gain  an expert knowledge of the advanced issues  `involved  in financial  management and the features of financial management in the global context.

 

 

Course contents

 

The Financial System

 

•          Introduction, structure of a financial system,

•           Functions of  financial  management,  equilibrium in  financial  markets, financial system and economic development, criteria to evaluate financial sector,

•        Financial    development:  concepts,  the   technology  of   the  financial    system:

delegation, credit substitution, pooling, netting.

 

Financial Intermediaries

 

•           Depository institutions: commercial banks, near banks (including thrifts, finance companies and others), insurance, pension funds and mutual funds; their functions, issues and risks associated with their management;

•          The economics of regulation of financial services, structure of Nepalese financial markets and their regulation.

•           Credit rating agency: introduction, importance, functions, credit rating process, quality and integrity of  rating , code of conduct

 

Capital Markets

 

•          Understanding securities markets; market for government securities;

•        Money market: evolution, growth, money market and the economy;

•           Capital market: evolution, long-term finance and related issues, market for new issues, secondary market;

•          Derivatives market: futures, options and swaps

 

Valuation of Assets, Shares and Companies

 

•          Introduction, the valuation problem, valuing a company  using published accounts,

•           Valuing  shares:  the dividend valuation model,  valuing  the earnings stream, using the DCF approach, shareholder value analysis, valuation of unquoted companies, Bond valuation

 

Investment Decisions and Strategies

 

•          Cost of capital, advanced concepts of capital budgeting,

 

 

•          Cash  flow analysis  using  various  methods, ranking   mutually exclusive  projects, investment evaluation and capital rationing,

•           Applications in  project  appraisal:   incremental  cash  flow  analysis,  replacement decisions,  unequal lives, risk and uncertainty,

•           Effects of inflation,

•        Financial  and operating leverage

International Financial Management

 

•           Financial  management in  a  global  context: the  finance  function and  emerging challenges, the global financial markets;

•           Nature and  management of exposure  and  risk:  exchange  rate and  interest rate volatility,  classification  of  foreign   exchange   exposure   and   risk,   interest  rate exposure   and  risk;  balance   of  payments: basics,  valuation, components;  global financial markets and interest rates: domestic and offshore markets,

•        Overview of money  market instruments; short-term borrowing in global markets;

long-term borrowing in the global markets;

International project appraisal, venture capital financing

 

Portfolio Theory & Assets Pricing

 

•          Efficient market theory, random walk theory,

•          Markowitz model of risk return optimization: CAPM,

•           Arbitrage pricing theory, sharp index model,

•           Portfolio   management,   formulation,   monitoring   and     evaluation,    equity management, principles and management of hedge  funds,   international portfolio management

 

Foreign Exchange Management

•           Introduction-foreign exchange    market,   market   participants,   exchange    rate determination, exchange  rate quotation, exchange  rate forecasting, exchange  rate theories , risk management,

•          Foreign exchange  exposure,  types of exposures, techniques for managing exposure, strategies for exposure  management, hedging  currency risk, provisions  of Foreign Exchange Regulation  Act 2019.

 

Emerging Concept of Financing

 

•          Lease  financing;   hybrid   financing:   preferred  stock,  warrants,  and  convertibles derivatives and risk management;

•          Reorganization, mergers,  leveraged buy-outs,

•           Government finance,    bail-out  packages    and   other  financial    sector  reforms program,

•          Multinational financial institutions

Foreign Direct Investment

 

•          Costs involved and benefits derived,

•        Foreign institutional investment,

•          Instruments of international finance

 

Level: CAP-III

Paper 3 : Advanced Auditing

(One Paper - Three Hours - 100 Marks)

 

Level of Knowledge: Expert

 

Course objectives:

    To develop candidates’ capability in performing and reporting on audit and assurance to increase  reliability of financial and non-financial information.

    To develop candidates’ capability in identifying significant risks and apply risk assessment tools to the engagement

    To develop candidates’ capability to identify, gather and document evidence and assess its sufficiency and appropriateness for an audit engagement.

    To ensure  that candidates' have acquired the competence to provide comprehensive audit and business  assurance services, by testing their ability to integrate and apply their knowledge of auditing to realistic problems.

 

Course contents

1.    General concepts

Auditing

•    Concept of assurance and concept of audit

•    Nepal Standards on Auditing (NSAs),  Nepal Standards on Quality Control (NSQC), Practice Statements issued by the Institute of Chartered Accountants of Nepal

•   Provisions  governing  audit by ICAN Act, Regulations and Circulars/Notices issued by

ICAN

•   Provisions  of appointment, responsibility and reporting by auditors under prevailing  acts

Ethics

•   Code of ethics issued by ICAN and IFAC

•   Provisions  governing  ethics by ICAN Act and Circulars/Notices issued by ICAN

•    Verdict on disciplinary cases

 

Governance

•   OECD principles on corporate governance

•    Audit committee and its role

•    Introduction to Sarbanes  Oxley Act

•   Provisions  of corporate governance set forth under various prevailing  acts of the country

2.   Audit process

Engagement Procedure

•   Legal procedures to comply before acceptance of new assignments

•    Assessment of conflict of interest and threats to independence

•    Communication with previous  auditor

•   Issuance  of engagement letter

 

Planning and Risk Assessment

•    Understanding the entity & its environment

•    Assessment of audit risk and materiality

•   Designing  procedures to mitigate assessed risk

•    Development of audit plan, program and checklist

 

Audit Test

•    Quantum of audit evidence

•    Assertion of account balances

•    Audit sampling

•    Compliance and substantive test

•    Special audit test procedures : o     External confirmation o    Physical verification

o Observation

o Enquiry

o Self computations.

•   Special audit considerations relating to :

o Risk based audit

o Fraud and error

o Applicable laws & regulations

o Using the work of internal auditors and other experts

o Opening balances

o Provisions  and contingencies

o Events after the reporting date

o Related party transactions

o Accounting policies, estimates and comparatives

o Going concern

o Presentation and disclosures of the financial statements.

•    Management representations

•    Audit documentation

 

Audit Reporting

•    Audit conclusion based upon  evidence

•    Management letter

•    Audit report

•    Other reporting responsibilities

•    Subsequent events

 

Audit of specialized enterprises

•    Insurance companies

•   Banking and financial institutions,

•    Stock brokers  and commodity dealers

•    Derivatives and hedging  instruments

•    Government, constitutional bodies, regulatory authorities and autonomous bodies

•    Manufacturing and Trading organizations

•    Mutual funds and investment companies

•    Retirement benefit funds

•    Educational institutions

•    Agricultural farm

•   Hydro power

•    Hotels and hospitality sector

•    Transport and carriers

 

 

•   Real estate agencies and housing  companies

•   Union, club and societies

•    Multinational companies

•    Not for profit organizations

3.   Other services

Assurance and related services

•    Engagement to review financial statements

•     Agreed upon  procedure o   Internal audit o Due diligence o Tax audit

o Cost audit

o Management audit

o Performance audit

•    Engagement to compile financial information

•    Reporting on prospective information

 

Other services

•   Forensic audit and Investigation

•   Insolvency practitioners

•   Fund controller

•   Financial  mediation

 

4.          Audit issues

Audit under computerized environment

•   Concept

•    Impact on controls

•   Specific issues of audit risk

•    Security issues in computerized systems as stated in IFAC guidelines

 

Computer Assisted Auditing Techniques

•    Concept and benefit

•    Impact on audit process using CAAT

•   Available tools of CAAT

 

Fraud and auditors’ liability

•   Concept

•   Law and regulation

•    Professional negligence versus criminal  charges

•    National and international case studies

•   Auditors’ liability with regards  to “Money Laundering Act” and other prevailing  Act

Joint Audit and Branch Audit

•   Concept

•   Managing  audit process

•    Reporting responsibilities

Audit of fair values

•   Concept

•   Principles  and techniques of measurement

 

Level CAP-III

Paper 4 : Corporate Laws

(One Paper - Three Hours - 100 Marks)

 

 

 

Level of Knowledge: Expert

 

Course objectives:

    To gain an expert knowledge of Nepalese corporate laws and their practical application.

 

Course contents

 

Nepal Chartered Accountants Act 2053 & Regulation 2061.

 

•          The Institute of Chartered Accountants of Nepal, laws enactment and establishment

•          Composition, function and duties of the Council

•          Accounting Standards Board and Auditing Standards Board, their functions

•          Examination, qualifications and licensing  of chartered accountants

•          Membership, types and renewal

•        Disciplinary  committee and its functions

•        Punishment

•        Code of ethics

•          Chartered Accountants Act, 2053 and Regulations 2061

 

The Companies Act, 2063 and Rules

 

•        General meeting and board meeting,

•          Accounts and audit,

•          Inspection and investigation to be made by company  registrar office

•          Protection of shareholders

•        Special provision  relating to private company  and one man company

•        Holding,  subsidiaries & foreign companies

•          Audit committee

•        Merger of company

•        Dividend

•        Company  secretary

•          Liability of company  and shareholders

•          Winding up and liquidation of company

•          De-registration of company

•        Company  advisory board

•        Offence, punishment and legal proceedings

•        Some judicial decisions  relating to company

•          Relevant provision  of Companies Act 2063.

 

Securities Act, 2063 and Rules

 

•        Meaning  and concept of securities and stock exchange

•          Functioning of Securities Board,

 

 

•          Registration and issuance  of securities,

•           Securities business  and securities exchange  professionals, security exchange market and transactions of securities,

•          Collective investment scheme,  operation of securities business,

•           Regulation, monitoring, inspection and inquiry,

•        Offences, penalties and legal proceedings and

•           Relevant provisions  of Securities Act & Regulation and guidelines and circulars issued by the Securities Board.

 

Banks and Financial Institutions Act, 2063

 

•          Operation of financial transactions

•          Regulation, inspection and supervision

•        Supply and recovery of credits

•          Account and audit

•        Merger of licensed  institution

•        offense and punishment

•          Relevant provision  on Banks & Financial  Institutions Act, 2063

•          Directives issued by NRB

 

Nepal Rastra Bank Act, 2058

 

•          Relationship of government with central bank

•          Functions and powers of the central bank

•          Monetary functions and operation of open market

•          Monetary management, banknote and coins

•          Regulation, inspection and supervision

•        Offences, penalties and judicial proceedings

•          Relevant provisions  of Nepal Rastra Bank Act, 2058

 

Industrial Enterprises Act, 2049

 

•           Industrialization and concept of industrial environment industrial promotion board

•        Licensing, registration and penalties

•        One window committee

•          Industrial human resource

•          Facilities and concessions

•          Relevant provision  of Industrial Enterprises Act, 2049

 

Foreign Investment and Technology Transfer Act, 2049

 

•        Meaning  and concept of foreign investment and technology transfer

•          Permission for foreign investment

•          Incentives for foreign investor

•        Provision relating to visa

•          Dispute settlement mechanism and procedure

•          Incentives for foreign investor

•           Relevant Provision of Foreign Investment and Technology  Transfer Act, 2049

 

Labor Act, 2048

 

•          Industrial relations

•          Worker's participation in management

•        Trade unions

•          Collective bargaining

•        Wages and wages fixing mechanism

•          Health and safety , welfare

•        Special provisions  to be applicable to special type of establishment

•          Ethical code and industrial relations

•          Industrial conflicts and settlement (conciliation, arbitration and adjudication)

•        Labor dispute settlement mechanism and procedure

•          Relevant provisions  of Labor Act, 2048 and Rules 2049

Insurance Act, 2049 and Rules

 

•        Principles  of insurance

•          Insurer (registration, profession and duties)

•          Insurance Board

•          Insurance agent, surveyor and broker

•        Fund and audit

•        Inquiry and investigation

•          Insurance tariff advisory committee

•        Settlement of liabilities

•          Insurance offence, penalties and legal proceedings

•          Relevant Provision of Insurance Act, 2049, Regulation and Guidelines  issued by

Insurance Board.

International Financial Transactions Act, 2054

 

•          Concept of international financial transactions

•         Process of taking the permission for international financial transactions

•        Types of international financial transactions in Nepal

•           International Financial  Transactions Act, 2054

Co-operative Act, 2048 and Regulation 2049

 

•          Concept of co-operatives

•          Co-operatives and financial transactions

•          Wind-up and liquidation of co-operatives

•          Co-operative offences and penalties

•          Co-operative Act, 2048 and Regulation 2049

Insolvency Act 2063

 

•        Insolvency proceedings

•          Restructuring scheme  of company

•          Liquidation of company

•        Claims of creditors and mode of payment

•        Voidable transaction

•        Insolvency practice, and regulation and administration thereof

 

 

•        Offense and punishment

•          Relevant provision  of Insolvency Act, 2063

Money Laundering Prevention Act, 2063

 

•        Offense

•          Identity, transactions and details of the customers

•          Coordination committee and financial information unit

•          Laundering prevention department

•          Investigation and inquiry

•        Punishment

•          Relevant provision  of Money Laundering Prevention Act, 2063 and Money

Laundering Prevention Rules, 2066

Public Procurement Act, 2063 and Rules 2064

 

•        Definition

•          Responsibilities and methods of procurement

•        Provisions  relating to bids

•        Provisions  relating to consultancy services

•        Review of procurement proceedings

•          Procurement contract and conduct

•          Monitoring of procurement activities

•        Provisions  relating to Public Procurement Act, 2063 & Rules 2064

Audit Act 2048

 

•        Meaning  and concept of audit

•          Method of the audit and matters to be audited

•        Jurisdiction of Auditor General

•          Constitutional provisions  of auditing

•          Governmental audit and office of the auditor general

•          Audit of the government, wholly and partly government owned undertakings.

•        Modes of auditing and reporting

•          Propriety audit

•         Other provisions  of Audit Act, 2048

General provisions of the following Acts

 

•          Arbitration Act, 2055

•        Banking Offence and Punishment Act, 2064

•        Financial  Mediator Act, 2058

•        Foreign Exchange Regulation Act 2019

 

Level: CAP-III

Paper 5 : Management Information and Control System

(One Paper - Three Hours - 100 Marks)

 

 

Level of Knowledge: Expert

 

Course objectives:

    Highlight the role of professional accountant as manager and evaluator of information system.

    Identify information requirement of an organization, distinguish among  the different types of information systems to recommend specific systems for organizational requirements.

    Assist in the analysis, design and implementation of information systems.

    Learn about the management, control and evaluation of  IT infrastructure as well as information systems assets.

 

Course contents

 

1.          Organizational Management and Information System

 

•        Revision of organization system and management level

•           Computer based  management information system: definition and functional model, role of information

•        Business perspective of information system

•        IT and information security

•        Knowledge of business  for developing IT system

•        IT governance

 

2.          Types  of Information System

 

•          Types of information system according to organizational hierarchy: operational level, knowledge level, management level, and            strategic level.

•          Information system to support organization:

•           Transaction processing system: introduction, data entry and validation,     storage and master file update, error prevention and detection, report generation

•         Knowledge work and office system: functions and tools

•          Management information system

•        Decision support system: goals and applications, components and tools

•           Executive support system or executive information system: introduction, sources of ESS, roles and characteristics

•           Expert support system: artificial intelligence, neural  network, fuzzy logic, genetic algorithm

•        Sales and marketing information system: model, inputs and out puts

•          Manufacturing and production information system: model, inputs and out puts

•        Finance and accounting information system: model, inputs and out puts

•           Human resource information system: model, inputs and out puts, challenge  and benefits

 

5.           Information Technology Strategy and Trends

 

•          Enterprise strategy and vision

•           Internal and external business  issues- position and business  focus of the entity, relationship of it strategy and business  strategy

•           Factors influencing it- flexibility of changes  in technology and business,  budget, speed to the market, legal and regulatory body, business  units

•           Assess current and future IT environments- current status of IT: hardware, software, peoples,  procedures and data

•        IT risk and opportunity: trends and issues of current environments

•          Business and IT alignment, compliance with service level agreements,   stake holders  attitude

•          Different type of risks and risk assessment methodologies IT strategy planning:

envision  of future status, aligning future IT strategy with business  strategy

 

4.          System Development Life Cycle-Acquisition, Development, Implementation, Maintenance and support

 

•        Business process design and BPR

•           Definition, stages of system development: requirement, feasibility study, analysis, design, testing, implementation, support, documentation

•          Hardware evaluation and selection

•           Software evaluation and acquisition, RFP, IT proposal evaluation and cost benefit analysis.

•          Underlying principles of system development

•          Computer Aided System Engineering (CASE)

•        Models of system development: water fall model, spiral model

•          System testing

•          System conversion, user manual and training

•           System implementation, post implementation review and system maintenance Project management tools – context diagram,  work breakdown structure, gantt chart, PERT and CPM

 

5.          System Analysis and Design

 

•            Strategies for system analysis and problem solving: modern structured analysis, information engineering, prototyping: joint application development, and rapid application development, object oriented analysis

•           Concept of data and process modeling:  data flow diagram,  entity relationship diagram

•            Strategies for system design: modern structured design, information engineering, prototyping, object oriented design

•           Input design: batch and online input methods, system user issues, graphical  user interface issues for input design

•         Out put design: types of output, systems user interface for output design

 

6.          E-Commerce and Inter organizational Systems

 

•          Introduction to E-commerce: scope, technology and process

•          Features of e-commerce: ubiquity, global reach,

•        Universal standards,   richness, interactivity, information density, personalization

•          Categories of E-commerce: B2B, B2C, C2C

•           Electronic payment process: web payment process, electronic fund transfer, micro payment systems, secure electronics payments

 

7.           E-Business Enabling Software Package

 

•           Enterprises Resource Planning (ERP): introduction, model, functional areas or modules, implementations, benefits and challenge

•          Supply Chain Management: introduction , model, reverse logistic, supply chain planning and execution system

•        Sales Force Automation: introduction and model

•          Customer relationship management (CRM): introduction to computer based

CRM, models,  operations, challenged and benefits

•        Emerging technologies in IT business  environment

           Cloud computing

           Mobile computing

           Virtualization

           Virtual organization

           Software as a service

           Data exchange

 

8. Protection of Information Assets

 

Three primary  goals of information security: confidentiality, integrity and availability

 

•           Information security principles: accountability, awareness, ethics, multi- disciplinary, proportionality, integration, timeliness, assessment and equity

•           System vulnerability and abuse: why system are vulnerable, hackers  and computer viruses, disaster, security and errors

•           System quality problems: software and data, bugs and defects, maintenance nightmare, data quality problems

•          IT general controls, Logical access control, Network access control and Application controls

•          Information security programs – people, policy and technology

•           security policies, procedures, practices, standards and guidelines

•        Training  and education, ownership, defined  relationships, cost considerations

•          Basic job responsibilities of various IT functions – programmer, system analysts, database administrator, project manager, tester, network administrator, web content manager, webmaster, hardware technician, security specialist, Chief Information Officer, IS auditor

•          Segregation of duties

•           Development of control structure: cost and benefits, role of auditing in control process

 

9.          Disaster Recovery and Business Continuity Planning

 

•        Assessing business  continuity management

•          Disasters recovery planning

•           Data backup  and recovery strategies: RAID, mirroring, clustering, high availability planning of servers

•          Alternative processing facility arrangements

IT outsourcing

 

10.        Auditing and Information System

 

•          Introduction to information system audit and other assurance engagements

•          Information system audit strategy

•          Phases in information system audit – audit planning(scope, objective and audit program), examining and evaluating information, audit evidence,  reporting audit findings

•          Review of IT general controls, access controls, network controls, application controls, input and output controls

•        Review of DRP/BCP

•           Evaluation of IS: criterion for evaluation and risk, computer assisted audit techniques (CAAT)

Introduction to standards for IS audit

 

11.         Ethics and legal Issues in Information Technology

 

•           Agreement for confidentiality, trade secrets, discovery, non compete

•          Patents, trademarks and copyright

•        Significance of IT law

•          Digital signatures and authentication of digitized information

•          Introduction to digital data exchange  and digital reporting standard-XML and

XBRL

•           Government initiative for digitized financial information filing: IRD, OCR and others

•        Need for system audit as per various regulations such as NRB and IB requirement

Brief introduction of COSO, COBIT, CMM, ITIL, ISO/IEC27001

 

12.         Electronic Transactions Act, 2063

 

•          Electronic record  and digital signature

•          Controller and certifying authority:

•          Dispatch, receipt and acknowledgement of  electronic records

•          Digital signature and certificates

•          Functions, duties and rights of subscriber

•          Electronic record  and use of digital signature

•          Network service

•        Offence relating to computer

•          Information technology tribunal

•          Relevant provision  of Electronic Transactions Act, 2063

 

Level: CAP-III

Paper 6: Advanced Taxation

(One Paper- Two sections-Three hours-100 Marks) Level of Knowledge: Expert

Course objectives:

    Gain  expert knowledge on  direct & indirect  taxes as  well  as  to make  the students to acquire  ability to apply the expert knowledge in actual practice.

    Gain expert knowledge of the provisions  of the direct and indirect tax laws.

    Acquire  the  ability to  apply  the  knowledge of  the provisions   of  laws  to the various situations.

 

 

Course contents

 

1.   Income Tax Act 2058 and Rules 2059

 

2.   Ethics and professional conduct in providing taxation services

•   Tax services provided by professional accountants

•    Application of IFAC Code of Ethics on taxation services

•    Ethical requirements as per Income  Tax Act and Anti Money Laundering provisions

 

3.  Fundamentals of taxation and Nepalese tax system, income heads

 

a.   Basic terms used in tax law and their tax connection

•   All definitions as per sec. 2 and relevant connecting sections

 

b.   Residential concept

•    Concept of resident and non-resident

•    Worldwide taxation and source taxation

•    Concept of Nepal sourced  income  and provisions

•    Double tax relief mechanism- foreign tax credit and double  tax avoidance  treaties- (including  advance calculation)

•   Foreign permanent establishment

•    Controlled foreign entities

 

c.   Basis  of Taxation

•   Persons  liable to pay tax

•   Tax exempt organizations

•    Exempt incomes

•   Taxable income  and assessable  income

•    Rates of tax and business  concessions

•   Head of income

 

d.   Tax Accounting

•   Nepal accounting standard vs tax accounting

•   Cash vs. accrual basis of accounting in taxation

•   Basis of accounting for natural person  and entities

•   Change in accounting methods

•   Reverse of amounts including bad debts

 

e.   Calculation of income from business

•    Components of income  from business

•   Incomes  which do not form part of income  from business

•     Deductions allowed from income  from business

•    Limitations and conditions for a particular deduction

•   Schedule  2 of the Act.

f.   Calculation of income from employment

•    Components of income  from employment

•   Incomes  which are excluded  from income  from employment

g.   Calculation of income from investment

•    Components of income  from investment

•   Incomes  which do not form part of income  from investment

•    Deductions allowed from income  from business

•    Limitations and conditions for a particular deduction

h.   Deductions allowed from taxable income

•    Deduction for donation and gifts

•    Deductions for contributions to retirement funds

•    Deduction for life insurance premium paid

•    Deduction for losses from income  from business  or investment

•   Carry forward and carry back of losses for setoff

•    Deductions not allowed

 

i.   Calculation of net gains from disposal of assets and liabilities

•    Net gain and tax calculation from gain from disposal of non business  chargeable assets

•    Net gain and tax calculation from disposal of business  assets

 

j.   Tax Credits

•   Medical tax credits

•   Foreign tax credits

 

k.   Quantification, allocation and characterization of amounts

•   Quantification

•    Characterization of payments under annuities, installments and leases

l.   Special Provisions

•    Taxation of shipping, telecom and air service providers (Sec. 70)

•   Banking business

•    Insurance business

4.   Administration and documentation administration, withholding and payments of tax a.   Administration tax authorities

Revenue  structure at Finance  Ministry, Tax department/office: structure, duties and  power, management,  tax payer's  right, advance   ruing,  public  circulars,   international  agreements, permanent account number

b.   Documentation

Form of documentation, service of documents, defective documents

c.   Tax withholding

By  employers,  from   investment  and   service   fee   payments,  contract   payments,  final withholding, and  tax credit or tax adjustment.  Withholding taxes in case  of countries with Double Tax Avoidance Treaties

 

d.   Payment of Tax

Time and mode of payment, Installments, proof of tax payment

 

5. Returns and Assessments, Collection, Remission and refund a.     Returns

Time of return of incomes,  extension of time of return, return not required estimated return

 

b.     Assessments

Self assessment, jeopardy  assessment and amended assessment, assessments order & notices

 

c.    Collection

Preference for tax payable  by withholding, claim  over assets, auction of assets, prohibition order, liquidities of officers, recovery from recover and agent, suit filing

d.     Remission and Refund

Remission  by Government, refund  & set off and its procedure

6.  Legal Remedies, Interest, Fees,  Penalties Offences

 

a.     Administrative review

Decisions,  procedures, application to object the review b.    Appeal

Appeal to the Revenue Tribunal

 

c.     Interest

Under  payment of installments, failure to pay tax, failure to pay with deposit withholding tax d.    Fees

For  failure  to maintain documents, for  failure  to file  return, for  failure  to making   false document and aiding and obtains, assessments of interest and fees

e.     Penalties

For failure  to pay tax, to authorized and  unauthorized person,  to accomplice, payment of penalties

f.    Offence

For misleading statements, for obstructing or using inappropriate influence

 

All provisions  of Income  Tax Act 2058 and Income  Tax Rules 2069.

 

7. Value  Added Tax Act, 2052 and Rules 2053

a. Introduction, coverage and administration

(i)         Introduction of VAT in Nepal

 

(ii)         Spirit of preamble VAT Act, Terms used; Service, Supply, Return, Import, Export, Market price, person,  registrant, TPIN, Supplier, value addition

(iii)       Coverage:  Taxable  activities, time of place  of supply,  tax rate, Zero rated areas, exempted  goods  and   services,  Treatment  of  negative  value  addition,  Capital goods,  threshold, determination of market price, and  treatment of reconditioned goods, discount and gifts, importation under bank guarantee

 

(iv)       Tax  Administration:  Registration,  tax invoicing,  Accounting, Return  filing,  Tax Assessments, conditions  for  assessing   by  tax officer,  Collection/payments,  Tax credit;  full  credit, partial credit, proportionate  credit, Refunds,  Tax  audit and investigation, suspension of business  transaction

 

b. Tax Authorities, revision and appeal and fees  and interest

 

(i)    Tax authorities and rights and duties of taxpayers

 

(ii)   Administrative revision and appeal to revenue  tribunal

 

(iii)   Additional fees and interests, offences and penalties

 

8. Excise  Act, 2058 and Excise  Rules 2059

 

a.    Concept of excise and excise duty, history of excise duty in Nepal in brief b.    Scope and objectives of Excise Act, 2058

c.    Terms;   goods,   service,   institution  (Pratisthan),  license,   license   holder,   production, producer, person,  factory price, price, import, invoice

 

d.    Excisable products, exemption of excise, collection of excise, pricing of excisable products, obtaining and  termination of license,  renew  of license,  excise  duties and  fees,  special provisions  for  cigarettes, bidi,  alcoholic  (madira) and  molasses,    conditions related to seize,  possession and arrest

e.    Provisions  of self-issue and physical control system, recovery ratios f.     Penalties, administrative review and appeal

9. Customs Act, 2064 and Rules 2064

a.      Scope  and  objectives of  Customs Act, terms:  export, import,  customs  duty,  chief  of customs, customs officer,  customs area,  pragyapan patra, demurrage, unauthorized and illegal import and  export, customs facility, facility in duty, under invoicing,  classification of goods for customs purpose

b.   Import and export procedures, documents required for export and import, determination of duty, valuation: procedure and methods in practice, post clearance audit

 

c.   Charging of different duties and charges in customs point

 

d.   Provisions  regarding jhitigunta, accompanied and unaccompanied goods

 

e.   Import under duty refundable procedure (DRP) and  in bond  system, bonded warehouse system, bank guarantee and the provision  of re-export

 

f.    Finance act and related schedule

g.   Circulars relating to specific acts issued by Department of customs

 

10.Double tax avoidance agreement (DTAA) and international taxation a.   Double Tax Avoidance Agreement (DTAA)

Features, general  definitions, resident, permanent establishment, income  from immovable

property, business  profit, shipping and  air  transport,  associated enterprises, dividends, interest,  royalties,  capital  gains,   personal  services,   government  service,   methods   of elimination of double  taxation, non-discrimination, mutual agreement procedures, assistance in collection of tax

 

b.   International Taxation

Concepts, models,  transfer pricing

 

Level: CAP-III

Paper 7 : Advanced Cost & Management Accounting

(One Paper-Three Hours-100 Marks) Level of Knowledge: Expert

 

Course objectives:

    Understand cost accounting in relation to management functions.

    Provide    knowledge   of   using    costing  data   for   decision    making,    control   and understanding of emerging and  techniques of performance appraisal  and  operational research.

 

 

Course contents

 

Advanced Cost Accounting                                                                                              [70 Marks] Cost concepts and objectives of Costing systems

•        Basic cost concepts

•          Cost classification

•          Cost analysis

•          Costing system

•          Inventory valuation

•          Data base for operational control and decision  making

•          Cost concept in decision  making

•          Application of incremental/differential cost techniques in managerial decision

•          Programmed & non-programmed decisions

•          Steps in decision  making

•        Behavioral study of costs for decision  making

 

Marginal Costing and Decision making problems

•        Theory of marginal  costing

•          Ascertainment of marginal  cost

•          Advantages and limitations of marginal  costing

•        Marginal cost equation

•          Important factors in marginal  costing decisions

•        Pricing decisions  under special circumstances decision  making

•        Key factor/limiting factor/budget factor

•          Product mix and Price mix

•          Profit planning

 

Standard Costing and Variance analysis

•          Definitions and types of standards

•          Setting up of standards

•        Standard product cost sheet

•          Advantages and criticism of standard costing

•          Application of standard costing

•          Control through variance analysis

 

 

•          Computation of variances

•          Reporting of variances

•        Disposal of variances

•          Accounting procedure for standard cost

•          Disposition of variances

 

Budget & Budgetary Control

•          Budgetary control system

•        Types of budgets

•          Preparation of budgets

•          Budget ratios

•        Causes of difference  with actual performance

•        Zero based budgeting

            Responsibility accounting

•          Performance budgeting

•          Participative budgeting

 

Performance measurement

•        Meaning

•          Importance of performance measurement

•          Evaluation and reporting of performance

•        Balance score card and its advantages

•        Four basic business  perspectives

•        Benchmarking

•          Advantages of benchmarking

•        Types of benchmarking and process

•        Theory of constraints (TOC)

•        Key measurements required by TOC

•        Five steps in TOC

Activity Based Costing

•        Meaning  and definition

•          Stages in activity based costing

•          Purposes and benefits of activity based costing

•          Installation and operation of activity based costing system

•           Activity based cost management

•        Difference between ABC and ABM

•          Cost driver analysis

•          Criticism of ABC System

•           Activity based budgeting

 

Costing of Service Sector

•        Main characteristics of service sector

•          Collection of costing data

•          Costing methods used

•        Pricing by service sector

 

Pricing Strategies

•        Pricing of finished  products

•        Theory of price

•        Pricing policy

•        Principles  of product pricing

•        New product pricing

•        Pricing strategies

•          Pareto analysis

•        Transfer pricing

Emerging concepts in cost management

Just in time approach

•        Meaning

•          Impact of Just-in-time systems

•          Performance measurement

•        Back flushing in a just-in-time system

Material Requirement Planning (MRP)

•        Meaning  and Purpose

•          Data requirements to operate MRP System

•          Methods of Operation

•          Pre-requisite for successful operation of MRP System

Enterprise Resource Planning (ERP)

•        Meaning  and Features of ERP

•          Benefits of ERP

•        Reasons for implementation of ERP by companies

Total Quality Management (TQM)

•        Introduction

•          Operationalzing TQM

•        Six Cs of TQM

•          Overcoming TQM paralysis

•          Control: The missing link of TQM

Life cycle costing

            Product life cycle

            Phases of product life cycle

            Life cycle costs

            Life cycle costing and management control

            Advantages of life cycle costing

Target costing

            Target cost definitions

            Four steps approach to target costing

            Target costing for target pricing

            Target costing vs. traditional costing

Value  chain analysis

            Meaning  & definitions

 

            Classification of business  activities for VCA

            Competitive advantage and customer value

            Value chain approach for assessing competitive advantages

            Strategic framework for VCA

            Limitations of VCA

            Value chain analysis vs. conventional management accounting

Cost Audit

•          Important aspects of cost audit

•        Purpose  of cost audit

•        Types of cost audit

•          Advantages of cost audit

•          Functions of cost auditor

Quantitative Techniques                                                                     [30 Marks] Linear Programming

•        Introduction

•        Graphical  method

•        Trial and error method of solving linear programming problem

•        The simplex method

•        Marginal value of a resource

•          Practical application of linear programming

•          Limitation of linear programming

Transportation Problems

•        Introduction

•          Methods of finding initial solution to transportation problem

•          Optimality test

•        Special cases

•          Maximization transportation problem

•          Prohibited routes

Assignment Problems

•        Introduction

•        The assignment algorithm

•          Unbalanced assignment problems

Network Planning-PERT/CPM

•        General framework of PERT/CPM

•          Advantages of critical path analysis

•          Fundamentals of CPA network

•          Critical path analysis

•          Probability of achieving completion date

•          Comments on assumptions of PERT/CPM

•          Distinction between CPM and PERT

•          Updating the network

•          Project crashing

•        Resource smoothing

 

 

•        Resource leveling

Simulation

•        Introduction

•          Monte carlo simulation

•          Simulation and inventory control

Learning Curve Theory

•        Introduction

•          Distinctive features of learning  curve theory in manufacturing environment

•        The learning  curve ratio

•        Learning curve equation

•        Learning curve application

•          Limitation of learning  curve theory

 

 

CAP-III Paper 8 : Strategic Management and Decision Making Analysis

(One Paper-Three Hours-100 Marks) Level of Knowledge: Expert

Course objectives:

    Develop  knowledge and  understanding of process,  concepts and  techniques of strategic management and decision  making  analysis relevant to a professional accountant.

    Develop   skills  to  formulate and   implement  strategies  and   analyze   decisions   in  the

Nepalese context.

 

Course contents

Concept of Strategy

 

•    Concept and characteristics of strategy

•   Levels of strategy

•    Strategic planning

•   Relevance of strategic thinking for professional accountant.

 

 

Strategic Management

 

•    Concept, characteristics and importance of strategic management

•   Process of strategic management

•    Elements of strategic management

 

External Environment Analysis

 

•   Meaning  and nature of environment

•    Elements of environment

•    Objective setting

•   SWOT analysis, ETOP, PEST-NG approach

•    External environment analysis process

 

Internal Analysis

•    Concept and process of internal analysis

•   Areas of internal analysis

•    Techniques of internal analysis

•    Assessment of internal resources and core competencies

•    Strategic advantage profile

 

Strategic options

 

•    Concept of strategic options

•    Strategic alternatives at corporate, business  and functional levels

•    Directions and methods for strategy development

•   Blue ocean versus Red ocean strategy

 

Strategy Formulation and Strategic Choice

 

•   Process of strategy formulation

•    Evaluation of strategic alternatives

•    Portfolio analysis

•   Risk analysis

•    Strategic choice: criteria and techniques (BCG & GE Matrix)

 

Strategy Implementation and Evaluation

 

•    Concept and process of strategy implementation

•   Designing  structure

•   Resource planning

•    Management system

•    Strategic information system

•    Strategic control, process, types

•    Strategic change  management: concept and approaches

 

Role  of Chief Executive in Strategic Management

 

•   Role in formulation of strategies

•   Role in implementation and evaluation of strategies

 

Decision Making Process and Techniques

 

•    Rational decision  making process

•    Strategic decision  making: concept, characteristics, process and importance

•    Techniques of strategic decision  making

 

Project Management

•   Project- definition of the project; why project management; project life cycle

•   Project selection –criteria for choice; project selection model; management of risk;

project portfolio process; project proposal.

•    Project management – the project manager; selection of project manager; institutional environment and managerial behavior.

•    Project organization- project as a part of functional organization; pure project organization; matrix and mixed organizational system.

•   Project planning – initial project coordination; system integration; sorting out the project;

work breakdown and responsibility chart;

•   Conflict and negotiation – nature of negotiation; partnering, chartering and change;

conflict and project life cycle; principles of negotiation

•   Budgeting and cost negotiation – project budget estimate.

•   Scheduling – PERT, CPM; risk analysis using simulation; extension and application.

•   Resource allocation –resource loading; resource leveling; resource scheduling.

 

 

•    Monitoring and information system – planning-monitoring-controlling cycle; reporting process;

•    Project control – purpose of control; control process; design control system; control of change.

•    Project termination – project auditing; varieties of project termination; termination process; final report

 

Strategic Management and Decision Making Practices in Nepal

 

•    Strategic management practices in corporate sector of Nepal

•   Decision making  practices in corporate sector of  Nepal


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