SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 1

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1 SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 1

2 SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME Singapore QP Syllabus Handbook Singapore Accountancy Commission SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 2

3 Singapore Qualification Programme The Singapore Qualification Programme (Singapore QP) is a post-university professional accountancy qualification with 3 main components: 1. Academic Base; 2. Professional Programme; and 3. Practical Experience. The inter-relationships between these components are shown in the following diagram: CHARTERED ACCOUNTANT OF SINGAPORE SINGAPORE QUALIFICATION PROGRAMME PROFESSIONAL PROGRAMME PRACTICAL EXPERIENCE Integrative Business Solutions Financial Reporting Business Value, Governance and Risk Assurance Taxation Minimum 3 years experience within a training commitment in an Accredited Training Organisation supervised by an Approved Mentor Ethics and Professionalism ACADEMIC BASE Accredited Degree in Accountancy Foundation Programme Non-Accredited Degree SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 3

4 PROGRAMME OBJECTIVE The Foundation Programme provides a pathway into the Singapore QP for candidates who do not have an Accredited Accountancy Degree. The Foundation Programme of the Academic Base will develop in graduates the base technical knowledge and skills as well as capacities for inquiry, abstract logical thinking, critical analysis, appropriate communication, personal and interpersonal skills required by the accounting profession. These provide a base for further development during the Professional Programme and Practical Experience. The Foundation Programme covers a set of 6 core syllabus areas: 1. Financial Accounting and Reporting; 2. Management Accounting; 3. Financial Management; 4. Audit and Assurance; 5. Singapore Law; and 6. Singapore Taxation. Candidates will be assessed on these areas using examinations conducted by an Accredited Learning Organisation. Candidates with accounting and business related qualifications may apply to the SAC with their transcripts for exemptions against 1 or more areas of the Foundation Programme. SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 4

5 FINANCIAL ACCOUNTING & REPORTING SYLLABUS Rationale The Financial Accounting & Reporting (FAR) module provides students with a solid grounding in the basics of double entry bookkeeping, thereby enabling students to prepare financial statements for both single entity and group entities applying the Singapore Financial Reporting Standards (SFRS). Students are expected to interpret financial statements for different types of business entities to different stakeholders, recognising the various needs of the respective stakeholders. AIM To develop knowledge and skills in understanding and applying accounting standards and the theoretical framework in the preparation for financial statements of entities, including group entities and analysing and interpreting those financial statements. STUDENTS SHOULD BE ABLE TO: A Discuss the need for and the components of a conceptual and regulatory framework, considering alternative models and practices. Recognise and account for the changes in accounting policies and correction of prior period errors. B Describe and apply the double entry system based on the accounting treatments prescribed by SFRS to different business transactions for a Singapore business entity. Prepare relevant extracts of financial statements, as appropriate. D Review a set or extracts of financial statements and compute financial ratios to identify and advise on the key trends, reasons for and possible implications of these trends for different types of businesses and stakeholders. Outline the limitations of interpretation techniques on financial statements. Guidance on the weighting of areas within any given examination is outlined in the relational diagram below. ILLUSTRATIVE RELATIONAL DIAGRAM OF SYLLABUS OUTLINE C Prepare consolidated accounts for subsidiaries and associates under a business combination. Determine and account for the components of goodwill, inter-group trading and inter-group indebtedness. Explain circumstances when management may wish and can claim exemption from preparing consolidated financial statements. A conceptual and regulatory framework for financial reporting (A) up to 10% Financial statements (B) 40%-60% Business combinations (C) 25% Analysing and interpreting financial statements (D) 10% -25% SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 5

6 FINANCIAL ACCOUNTING & REPORTING SYLLABUS IN DETAIL A Legal and Regulatory Framework for Financial Reporting a) The need for a regulatory framework b) The accounting standard setting process c) Legal and regulatory requirements for specialised, not-for-profit and public sector entities d) Legal requirements relating to the presentation of single entity financial statements A Conceptual Framework for Financial Reporting a) The need for a conceptual framework b) Relevance, reliability, comparability and understandability c) Recognition and measurement of assets and liabilities d) The legal versus the commercial view of accounting e) Alternative financial reporting models and practices f) The concept of true and fair view ( faithful representation ) Business combinations a) The concept and principles of a group structure b) The concept of consolidated financial statements c) Preparation of consolidated financial statements including subsidiaries and associates Financial Reporting Standards a) FRS 1: Presentation of financial statements b) FRS 2: Inventory c) FRS 7: Cash Flow Statements d) FRS 12: Income Taxes e) FRS 16: Property, Plant and Equipment f) FRS 17: Leases g) FRS 36: Impairment of assets h) FRS 37: Provisions, Contingent Liabilities and Contingent Assets i) FRS 38: Intangible assets j) FRS 39: Recognition and Measurement of Financial Instruments k) Regulatory requirements for preparing financial statements l) Reporting on an entity s financial performance Analysing and Interpreting Financial Statements a) Limitations of financial statements b) Calculate and interpret financial ratios and trends to address various stakeholders needs c) Limitations of interpretation techniques d) Analyse and interpret financial statements for specialised, not-forprofit, and public sector entities SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 6

7 MANAGEMENT ACCOUNTING SYLLABUS Rationale The Management Accounting module introduces and develops cost accounting techniques for decision-making. Students will appreciate the issues surrounding scarce resources, pricing and make-or-buy decisions, and how this relates to performance assessment. As budgeting is an important aspect for many accountants, students will explore different budgeting techniques and their respective inherent problems. Some of the budgeting techniques introduced in this module include standard costing and variances, mix, yield, planning and operational variances. It is important for accountants to be able to interpret the variances in the context of performance measurement. Students will also be required to understand how performance is measured and controlled. Accountants need to understand how a business should be managed and controlled. They should appreciate the importance of both financial and non-financial performance measures in management accounting. Accountants should also appreciate the difficulties in assessing performance in divisionalised businesses and the problems caused by external influences. AIM To develop knowledge and skills in the application of management accounting techniques to quantitative and qualitative information for planning, decision-making, performance evaluation, and control. STUDENTS SHOULD BE ABLE TO: A Explain, apply and contrast a variety of cost accounting techniques, including activity based costing (ABC), target costing, life-cycle, throughput accounting and environmental accounting. B Select and appropriately apply decision-making techniques such as relevant cost analysis, cost volume analysis, limiting factor, pricing and make or outsource decisions to promote efficient and effective use of scarce business resources, appreciate the risks and uncertainties inherent in business and control those risks. C Explain the objectives of budgeting and the fit of different budgetary systems within the performance hierarchy and apply appropriate budgeting techniques such as zero based, activity based, capital budgeting, statistical, incremental and feed-forward control. Use and appraise various quantitative methods for planning and control, taking into account how behaviours impact budget setting and control. D Determine and investigate discrepancies between budget and actual performance, presenting information in an appropriate format for management purposes and recommend to management possible remedial actions. Standard costing systems include flexed budgets, sales, production and ABC variance analysis whilst paying attention to the behavioural problems that can result from such analysis. E Use a variety of financial and non-financial performance indicators to assess the performance of a business. Explain the benefits and problems faced when assessing divisional performance and consider the impact of different transfer pricing systems on performance measurement. Discuss how performance measurement and control would differ in the not-for-profit and public sectors. SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 7

8 Guidance on the weighting of the areas within any given examination is outlined within the relational diagram to the right. ILLUSTRATIVE RELATIONAL DIAGRAM OF SYLLABUS OUTLINE Cost and management accounting techniques (A) 20% Decision-making techniques (B) 20% Performance measurement and control (E) 20% Budgeting (C) 20% MANAGEMENT ACCOUNTING SYLLABUS IN DETAIL Standard costing and variance analysis (D) 20% Budgeting Specialist cost and management accounting techniques a) Activity based costing b) Target costing c) Life-cycle costing d) Throughput accounting e) Environmental accounting a) Objectives b) Budgetary systems c) Types of budgets d) Quantitative analysis in budgeting e) Behavioural aspects of budgeting Standard costing and variances analysis a) Budgeting and standard costing b) Basic variances and operating statements c) Mix and yield variances d) Planning and operational variances e) Behavioural aspects of standard costing Decision-making techniques a) Relevant cost analysis b) Cost volume analysis c) Limiting factors d) Pricing decisions e) Make or buy and other short term decisions f) Dealing with risk and uncertainty in decision making Performance measurement and control a) The scope of performance measurement b) Divisional performance and transfer pricing c) Performance analysis in not-for-profit organisations and the public sector d) External considerations and behavioural aspects SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 8

9 AUDIT & ASSURANCE SYLLABUS Rationale The Audit & Assurance module provides students with the requisite knowledge to plan and perform an audit in accordance with appropriate Singapore Standards on Auditing (SSA) and the regulations to form an audit opinion on whether the financial statements are free from material misstatement. AIM To develop knowledge and understanding on the process of carrying out the assurance engagement based on the Singapore Standards on Auditing. Students will be expected to understand the nature, purpose and scope of assurance engagements, including statutory audits and its regulatory environment. Professional ethics relating to audit and assurance will also be introduced. Students are also required to understand the scope of an internal audit and the differences between an internal audit and external audit. Areas covered under the audit of financial statements include planning and risk assessment, evaluating internal controls, audit evidence and procedures. Students will also learn how an audit is completed along with a review of the financial statements and reporting, including statutory audit reports, management reports, and internal audit reports. STUDENTS SHOULD BE ABLE TO: A Explain the nature, purpose and scope of audit and assurance engagements and the regulatory environments for statutory audits. Discuss the need for corporate governance and the provisions of the Code of Corporate Governance. Define and apply the fundamental principles of professional ethics. B Discuss the need for internal audit with reference to corporate governance. Compare the differences between an external and internal audit. Discuss the scope of internal audit, the advantages and disadvantages of outsourcing the internal audit function, and the nature and purpose of internal audit assignments. C Demonstrate how the auditor obtains an understanding of the entity and its environment and assesses the risk of material misstatement. Explain the concept of materiality. Discuss the auditor s responsibilities in relation to fraud, and laws and regulations. Demonstrate how an auditor plans an audit and documents his work. D Describe and evaluate the information systems and internal controls to identify and communicate control risks and their potential consequences, making appropriate recommendations. Explain and list the various tests of controls. E Identify and describe audit procedures and evidence required on specific items to meet the objectives of audit engagements and the application of SSA. Explain the use of SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 9

10 computer-assisted audit techniques (CAAT) and the extent to which auditors are able to rely on the work of others. F Discuss procedures used in a subsequent events review and a going concern review. Consider written representations as a form of audit evidence. Explain how the conclusions from audit work are reflected in different types of audit reports, and explain other types of assurance reports. Guidance on the weighting of the areas within any given examination is outlined within the relational diagram on the right. ILLUSTRATIVE RELATIONAL DIAGRAM OF SYLLABUS OUTLINE Audit framework, ethics and corporate governance (A) 15% Audit planning and risk (C) 20% Internal control (D) 20% Audit evidence and procedures (E) 15% Internal audit (B) 10% AUDIT & ASSURANCE SYLLABUS IN DETAIL Audit completion and reports (F) 20% Internal Audit a) Internal audit and corporate governance b) Differences between the external auditor and the internal auditor c) The scope of the internal audit function d) Outsourcing the internal audit function e) Internal audit assignments Audit Framework and Regulation a) The concept of audit and other assurance engagements b) Statutory audits c) The regulatory environment and corporate governance d) Professional ethics Audit Evidence a) The use of assertions by auditors b) Audit procedures c) The audit of specific items d) Audit sampling and other means of testing e) Computer-assisted audit techniques f) Using the work of others g) Auditing for not-for-profit organisations Internal control Reporting a) Audit reports b) Reports to management c) Internal audit reports a) Internal control systems b) The use of internal control systems by auditors c) Transaction cycles d) Tests of controls e) The evaluation of internal control components f) Communication of internal controls to the audit committee a) Subsequent events b) Going concern c) Written representations Planning and Risk Assessment Review d) Audit finalisation and the final review a) Objective and general principles b) Assessing the risks of material misstatement c) Understanding the entity and its external environment d) Materiality, fraud, laws and regulations e) Analytical procedures f) Planning an audit g) Audit documentation SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 10

11 FINANCIAL MANAGEMENT SYLLABUS Rationale The Financial Management (FM) module is designed to equip students with the skills that would be expected from a finance manager responsible for the finance function of a business. Students will be introduced to the role and purpose of the financial management function within a business. An exploration of the economic environment will preclude the discussion of the three key financial management decisions of investing, financing, and dividend policy. AIM To develop the knowledge and skills expected of a finance manager, in relation to investment, financing, and dividend policy decisions. The introduction to investing decisions will be covered in two stages - investment in (and the management of) working capital and the appraisal of long-term investments. The section on financing decisions will examine the various sources of business finance, including dividend policy and how much finance can be raised from within the business. Cost of capital and other factors that influence the choice of the type of capital a business will raise follows. The principles underlying the valuation of business and financial assets, including the impact of cost of capital on the value of business, is covered next. The module concludes with an introduction to, and examination of, risk and the main techniques employed in the management of such risk. STUDENTS SHOULD BE ABLE TO: A Describe the nature and purpose of financial management and how the objectives relate to an entity s corporate strategy both financially and non-financially in different types of organisations. For each type of business, outline the economic environment faced by the business and consider the role of financial markets and institutions. B Discuss the importance of working capital management and describe the different management approaches relating to inventory, accounts receivable, accounts payable and cash appropriate to the business entity, for working capital needs and funding strategies. C Identify the purpose of investment appraisal, and apply the non discounted and discounted cash flow techniques, adjusting for the effects of risk and uncertainty. Effects of inflation and taxation should also be considered under the discounted cash flow techniques, as appropriate. D Describe the different sources of short and long term finance including Islamic finance that is appropriate and available to different business entities, in different industries and size, including small and medium sized entities. Consider the implications of an existing or proposed finance structure on gearing, cost of capital (debt and equity) and the capital structure. Consider the impact of cost of capital in investment appraisal. SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 11

12 E Identify the different types of risk that may be contained within a defined business environment and discuss the available mitigation strategies available. F Describe and apply the different business valuation models available to value a business entity with debt and/or equity. Outline the efficient market hypothesis and how this affects the valuation of shares. ILLUSTRATIVE RELATIONAL DIAGRAM OF SYLLABUS OUTLINE Financial management function and environment (A) 10% Working capital management (B) 20% Investment appraisal (C) 20% Guidance on the weighting of the areas within any given examination is outlined within the relational diagram on the right. Business finance and the cost of capital (D) 20% Risk management (E) 20% Business valuations (F) 10% FINANCIAL MANAGEMENT SYLLABUS IN DETAIL Financial Management Function a) The nature and purpose of financial management b) Financial objectives and relationship with corporate strategy c) Stakeholders and impact on corporate objectives d) Financial and other non-financial objectives in not-for-profit organisations Financial Management Environment a) The economic environment for business b) The nature and role of financial markets and institutions Working Capital Management a) The nature, elements and importance of working capital b) Management of inventories, accounts receivable, accounts payable and cash c) Determining working capital needs and funding strategies Investment Appraisal a) The nature of investment decisions and the appraisal process b) Non-discounted cash flow techniques c) Discounted cash flow (DCF) techniques d) Allowing for inflation and taxation in DCF e) Adjusting for risk and uncertainty in investment appraisal f) Specific investment decisions (lease or buy; asset replacement, capital rationing) SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 12

13 Business Finance a) Sources of, and raising short-term finance b) Sources of, and raising long-term finance c) Raising short and long term finance through Islamic financing d) Gearing and capital structure considerations e) Finance for Small and Medium-sized Entities (SMEs) Cost of Capital a) Sources of finance and their relative costs b) Estimating the cost of equity c) Estimating the cost of debt and other capital instruments d) Estimating the overall cost of capital e) Capital structure theories and practical considerations f) Impact of cost of capital on investments Business Valuations a) Nature and purpose of the valuation of business and financial assets b) Models for the valuation of shares c) The valuation of debt and other financial assets d) Efficient Market Hypothesis (EMH) and practical considerations in the determination of share prices e) Principles of microeconomics f) Principles of macroeconomics Risk Management a) The nature and types of risks (including operational, market, exchange rate, interest rate, information systems, information, reputational and strategic) and approaches to risk management b) Reasons for exchange rate differences and interest rate fluctuations c) Hedging techniques for foreign currency risk d) Hedging techniques for interest rate risk SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 13

14 SINGAPORE LAW SYLLABUS Rationale AIM To develop knowledge and skills in the understanding of the general legal framework, and specific legal areas relating to business, recognising the need to seek further specialist legal advice where necessary. Singapore Law provides students with a basic understanding of the Singapore corporate and business law and recognising legal issues. The module covers an introduction to the legal system in Singapore, the basics of contract law and tort law and professional negligence. The module will also cover specific legal areas relating to partnerships and companies. This includes the formation and constitution of companies, the financing of companies and types of capital, the day to day management, and administration of companies. Students will also learn the concept of majority control and minority protection, and the insolvency of companies including alternatives to winding up. STUDENTS SHOULD BE ABLE TO: A Identify the essential elements of the Singapore legal system including the court structure, different types of law, the main sources of law, including precedent and statutory interpretation, and the reception of English law in Singapore. B Recognise the formation of a contract and the content of contracts, vitiating factors, and breach of contract and remedies. Understand the law of torts and the duty of care, including the duty of care expected of accountants and auditors. C Distinguish between different forms of business organisations. Demonstrate knowledge of the legislation governing partnerships. Explain separate legal personality. Understand company formations and its constitutions. F Recognise and apply the appropriate legal rules relating to majority control and minority protection and the remedies available. G Explain the procedure for the voluntary and compulsory liquidation of insolvent companies, judicial management and other alternatives to winding up. H Demonstrate an understanding of corporate governance relating to business. Recognise the nature and legal control over insider dealing, fraudulent and wrongful behaviour. D Recognise and compare types of capital and the financing of companies, including share capital and loan capital. Explain the doctrine of capital maintenance and capital reduction, and the rules governing the distribution of dividends. E Describe and explain how companies are managed, administered and regulated including the roles of directors, company secretaries, and auditors, and the procedures for company meetings, including resolutions. SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 14

15 Guidance on the weighting of the areas within any given examination is outlined within the relational diagram on the right. ILLUSTRATIVE RELATIONAL DIAGRAM OF SYLLABUS OUTLINE The Singapore legal system (A) 10% Contract law, tort law and professional negligence (B) 20% Partnerships, companies, and legal personality (C) 15% Capital and financing of companies (D) 15% Management and administration of companies (E) 15% Majority control and minority protection (F) 5% Insolvency (G) 10% Corporate governance and fraudulent behaviour (H) 10% SINGAPORE LAW SYLLABUS IN DETAIL The Formation and Constitution of Business Organisations a) Types of business organisations b) Partnerships and limited liability partnerships c) Corporations and separate legal personality concept d) Company formations Essential Elements of the Legal System a) Court structure b) Sources of law c) Precedent and statutory interpretation d) Reception of English Law in Singapore The Law of Obligations Capital and the Financing of Companies a) Formation of contract b) Content of contracts c) Vitiating factors d) Discharge of contract, breach of contract and remedies e) The law of torts f) Professional negligence a) Share capital b) Loan capital c) Capital maintenance and dividend law SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 15

16 Management, Administration and Regulation of Companies a) Company directors b) Other company officers c) Company meetings and resolutions Legal Implications Relating to Companies in Difficulty or in Crisis a) Insolvency b) Voluntary and compulsory liquidation c) Judicial management Corporate Governance and Ethical Issues Relating to Business a) Corporate governance b) Fraudulent behaviour Majority Control and Minority Protection a) Majority rule and minority rights SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 16

17 SINGAPORE TAXATION SYLLABUS Rationale Singapore Taxation introduces students to the subject and system of taxation in Singapore and provides the core knowledge of the underlying principles and major technical areas of taxation, as they affect the activities of individuals and businesses in Singapore. In this module, students are introduced to the rationale behind and the functions of the tax system in Singapore. The module then considers the different tax types that an accountant would need to have a detailed knowledge of, such as income tax from self-employment, employment and investments; partnerships; the corporation tax liability of individual companies and groups of companies; and the goods and services tax liability of businesses. Having covered the core areas of the basic taxes, the student should be able to compute tax liabilities, explain the basis of their calculations, apply tax planning techniques for individuals and companies and identify the compliance issues for each major tax type through a variety of business and personal scenarios and situations. These issues include time-bars and penalties for non-compliance. AIM To develop knowledge and skills relating to the tax system for individuals, single companies and groups of companies. STUDENTS SHOULD BE ABLE TO: A Explain the overall function and purpose of the taxation system in the Singapore economy, identifying the different types of taxes (revenue, direct and indirect) and the principal sources of revenue law and practice including how our domestic tax laws interact with that of other jurisdictions. Appreciate the difference between tax avoidance and tax evasion. B Define the scope of individual tax, including income from employment, self-employment, partnership, investment income and the comprehensive computation of taxable income and liability to tax, taking into account allowable exemptions and reliefs. C Define the scope of tax and profits chargeable to corporate income tax and the comprehensive computation of corporate income tax liability, taking into account group structures and identify exemptions and reliefs available to companies to minimise tax liabilities. D Define the scope of goods and services tax (GST) and explain the GST registration requirements and compute GST payments and refunds. E Identify and explain the obligations of taxpayers and/or their agents in Singapore and the implications of non-compliance within the regulatory framework, in respect of time limits for the submission of information, claims and payment of tax and procedures, relating to appeals and disputes, including the penalties for non-compliance. SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 17

18 Guidance on the weighting of the areas within any given examination is outlined within the relational diagram on the right. ILLUSTRATIVE RELATIONAL DIAGRAM OF SYLLABUS OUTLINE The Singapore tax system (A) 10% Individual tax liabilities (B) 30% Corporate income tax liabilities (C) 30% Goods and services tax (D) 15% The obligations of the taxpayer and/or their agents (E) 15% SINGAPORE TAXATION SYLLABUS IN DETAIL Goods and Services Tax a) The scope of goods and services tax (GST) b) The GST registration requirements c) The computation of GST payments/refunds The Singapore Tax System a) The overall function and purpose of taxation in a modern economy b) Different types of taxes c) Principal sources of revenue law and practice d) Tax avoidance and tax evasion Corporate Income Tax Liabilities a) The scope of corporate income tax b) Profits chargeable to corporate income tax c) The comprehensive computation of the corporate income tax liability d) The effect of a group corporate structure for corporate income tax purposes e) The use of exemptions and reliefs in deferring and minimising corporate income tax liabilities Individual Tax Liabilities a) The scope of income tax b) Income from employment c) Income from self-employment d) Property and investment income e) The comprehensive computation of taxable income and income tax liability f) The use of exemptions and reliefs in deferring and minimising income tax liabilities The Obligations of Tax Payers and/or Their Agents a) The time limits for the submission of information, claims and payment of tax b) The procedures relating to enquiries, appeals and disputes c) Penalties for non-compliance SINGAPORE QP SYLLABUS HANDBOOK FOUNDATION PROGRAMME 18

19 Singapore Accountancy Commission 10 Anson Road #05-18 International Plaza Singapore