ICWAI  Syllabus : Intermediate Course Stage II

Paper 9: Management Accounting - Performance Management (One Paper: 3 hours: 100 marks)

1. General principles of management, management of change, pattern of management.
2. Business of performance measurement and performance development e.g. Financial (ROI, RI, EPS, NPV etc.) and non-financial e.g. Balanced Scorecard. Performance appraisal in Public Sector Enterprise
3. Standard costing - setting of standards, accounting under standard costing, costs and sales variances, reconciliation of standard costs and profits with actual; interpretation and investigation of variances – interrelationship, significance; planning and operational variances; benchmarking, behavioural aspects in budgeting and standard costing.
4. Budgeting - planning, functional and master budgets, time series and regression; "what if" analysis, controllable and uncontrollable costs, responsibility budgeting – cost, profit and investment centres and divisional performance measurement, residual income; fixed and flexible budgeting, rolling budgets; performance, programming and zero-based budgeting, activity-based budgeting. Report to Management with suggested actions on deviations.
   Principles of transfer pricing, transfer pricing systems - cost / standard costs, cost / standard cost plus, market price, market price less savings.
5. Allocation of resources - resource planning systems - MRP I, MRP II and ERP; just in time, activity-based costing, cost reduction, value analysis, total quality management.
   Single, dual limiting factors for resource allocation, linear programming, transportation. Queuing and simulation problems.
   Multi-product CVP analysis including break-even, profit target, margin of safety, P/V ratio, break-even charts, profit-volume graphs.

Paper 10: Advanced Financial Accounting (One Paper: 3 hours: 100 marks)

1. Basics of Accounting principles, concepts and conventions - measurement of business income; in-depth study of accounting standards - national and international; US GAAP; valuation of enterprise, valuation of inventories, goodwill and shares, buy back of shares.
2. Preparation of company accounts - amalgamation, absorption, reconstruction and capital reduction, holding companies, mergers, de-mergers, joint ventures and associates. Amalgamation of firms, Conversion of firms into company.
   Branch and departmental accounts - leasing, hire purchase and instalment payments; royalty accounts - contract accounts; investment accounts.
   Preparation of accounts from incomplete records - self-balancing ledger.
3. Accounting Services in other organisations - farm accounting, hotel accounting; accounting for non-profit making organisations, e.g. accounting for hospital and educational organisations, accounting for local self-government - rural and urban.
   Accounting for bank and insurance companies - accounting for loss of stock, loss of profit and other compensations including marine insurance claims - Electricity Company accounts, Software accounting as per IAS 2,7 and 9
4. Government accounting in India - general principles, comparison with commercial accounting; role of the Comptroller and Auditor General of India and public accounts committee - review of accounts.

Paper 11: Auditing (One Paper: 3 hours: 100 marks)

1. Evolution of auditing - major influences of auditing; nature and scope of auditing; basic concepts of auditing; role of evidence in auditing; auditing techniques and practices - generally accepted auditing standards; the concept of materiality in auditing.
2. Verification of assets and liabilities - fixed assets, investments, inventories, debtors, loans and advances, cash and bank balances, debentures and creditors, provisions for taxation, proposed dividend and gratuity - other items in the balance sheet; verification of items in the profit and loss account; contingent liabilities; disclosure of accounting policies, practice; expenditure during the period of construction; adjustments for previous year - provisions of the Companies Act, 1956 regarding accounts.
   Nature of internal control, evaluation and audit of internal control - internal control questionnaires; flow chart; systems audit, internal control.
   Auditing-in-depth - statistical sampling in auditing. Use of ratios and percentages for comparison and analysis trends - inter-firm and intra-firm comparison.
3. Appointment of statutory auditors - auditors' remuneration, removal, rights of statutory auditors, duties of statutory auditors, joint auditors, branch audits.
   Audit report - report versus certificate, contents of the reports, qualifications in the report.
   Divisible profits - relevant provisions of the Companies Act, 1956 and the Income-tax Act, 1961.
   Interface between statutory auditor and internal auditor.
4. Nature and scope of internal auditing - financial versus operational audit; concepts of efficiency audit, propriety audit, voucher audit, compliance audit, pre and post audits.
   Impact of the Manufacturing and Other Companies (Auditors' Report) Order, 1988 on the internal auditing functions.
   Organisation of the internal auditing function - selection and training of staff-assignment of audit projects organisational status of the internal auditing functions; scope for audit committees.
   Planning the internal audit project: familiarisation; preparing checklist, internal control questionnaires, audit programmes.
5. Verification of evidence - detailed checking versus sampling plans, statistical sampling as used in internal auditing; flow chart techniques.
   Internal control - nature and scope, internal auditor and internal controls.
   Field work - collecting evidences, interviews; memoranda.
   Audit notes and working papers.
   Audit reports - techniques of effective reporting; follow up of audit report.
   Summary reports of top management.
   Communications in internal auditing - improving auditor-auditee relationship.
6. Auditing the operations functions of an enterprise - accounting and finance, inventory control, procurement, production, marketing, maintenance, personnel, branches and depots; research and development. Information systems audit, Internal Auditor and the investigation of frauds. Auditing the internal auditing function.
7. Audit of accounts prepared as per US GAAP.
8. Secretarial Audit-checklist, contents of memorandum of Association and articles of association, Issue of shares, Right issue, Registers maintained

Paper 12: Quantitative Methods (One Paper: 3 hours: 100 marks)

Mathematical Techniques (40 marks)

Algebra of vectors and matrices and determinants: Addition, subtraction, multiplication and inversion of vectors and matrices, solution of systems of linear equations with the help of matrix algebra.

Calculus: Variables, constants and functions – graphs of functions – limits of algebraic functions, simple differentiation of algebraic function – meaning of derivatives – evaluation of first and second order derivatives, partial differentiation; solution of problems involving maxima and minima of algebraic functions.

Integration (by substitution and by parts): Determining indefinite and definite integrals for simple functions - application of integration to evaluate areas and volume of solids and revolution.

Optimisation of functions under constraints, Linear programming and simplex method of solution; other operations research methods e.g. games theory, simulation, transportation, queuing, etc.

Statistical Techniques (30 marks)

Probabilities - meaning and definition of probability, mutually exclusive and collectively exhausting events, repeated trials, combinatorial analysis. Addition and multiplication rules. Bayes theorem and its application.

Population and samples - sampling methods, uses of random numbers, simulated sampling, concept of sampling distribution and standard errors, confidence intervals for means and percentages, testing hypothesis and uses of z, t, chi-square tests.
Decision making under risks and uncertainty; decision tree analysis.

Simple regression and correlation.

Economic Techniques (30 marks)

Demand analysis - the basis of demand, market demand function, industry demand versus firm's demand; the demand curve; relation between demand function and demand curve; change and shift in demand; demand relation and managerial decisions; theory of consumer behaviour; substitution and income effects; price, income and cross elasticities of demand, other demand elasticities; time impact on elasticity; price elasticity for derived products; revenue concepts; demand estimation.

Forecasting - forecasting methodologies. Time series analysis, trend projection, barometric or leading indicator method; index number analysis - composite and diffusion indices. Econometric models, curve fitting and least square methods; correlation and regression analysis, multiple and partial correlation - input-output analysis; forecasting with input-output tables, criteria for forecasting demand for existing and new products.
Empirical production function analysis, empirical cost analysis, short and long run cost estimation, factor demand, joint product and multi-product, factor demand, joint product and multi-product firm, uncertainty in production function, profit planning under risk & uncertainty.

Group Discussion

Topics for Intermediate Stage II

1. Standard costing as a means of control
2. Responsibility accounting and divisional performance measurement / development.
3. Cenvat operations in Central Excise.
4. Ratio Analysis for inter-firm comparison.
5. Budgetary control and resource allocation.
6. Changes in relation to Indirect Tax in the Central Budget.