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CIMA Operational level F1 Financial reporting and taxation

CIMA Operational level F1 Financial reporting and taxation

CIMA Operational level F1 Financial reporting and taxation: Topics that have moved into the current F1 Financial Reporting and Taxation exam (mostly from the old F2 Financial Management paper) are:

– IAS 19, “Employee benefits”.

– IAS 20, “Accounting for government grants and disclosure of government assistance” (a newly examinable topic).

– IAS 21, “Foreign currency”.

– IAS 26, “Accounting and reporting by retirement and benefit plans”.

– IAS 34, “Interim financial reporting” (newly examinable).

– IAS 40, “Investment properties” (newly examinable).

– IAS 41, “Agriculture”.

– IFRS 4, “Insurance contracts”

–IFRS 6, “Exploration for, and evaluation of, mineral resources”.

– IFRS 13, “Fair-value measurement”.

– IFRS for SMEs. – Corporate governance (from various papers under the previous syllabus).

– Accounting for non-controlling interests for consolidated financial statements.

– Accounting for mid-year acquisitions for consolidated financial statements.

– The management of working capital, cash and sources of short-term finance (mainly from the old P1 Performance Operations paper).

– Transfer pricing for taxation purposes (newly examinable).

CIMA Operational level F1 Financial reporting and taxation

The topics that have moved out of the old F1 Financial Operations paper and into the current F2 Advanced Financial Reporting exam are: – IAS 11, “Construction contracts”. – IAS 12, “Taxation” (the element on accounting for deferred tax). – IAS 17, “Leases”. – IAS 18, “Revenue recognition”. – IAS 24, “Related-party transactions”. – IAS 32, “Financial instruments”. – IAS 37, “Provisions, contingent assets and contingent liabilities”. – Fair-value adjustments in respect of assets and liabilities at acquisition in a group scenario. As with all exams under the current syllabus (apart from the Case Study Exams concluding the three levels of the professional qualification) F1 Financial Reporting and Taxation takes the form of a computer-based objective test that can be taken “on demand” – ie, at any time. This offers far more flexibility than the 2010 syllabus, which restricted candidates to two sittings a year. The test lasts 90 minutes, as opposed to the previous paper-based exam’s three hours.

It covers all learning outcomes on the syllabus and the pass mark is 70 per cent, so the days of questionspotting are over. The questions are drawn from a secure bank that’s updated regularly. A number of variants of the test will be available at any time, rendering pointless any attempt by candidates to share its contents after they have taken one. The results are released shortly afterwards. These will give feedback that states clearly whether you have passed or failed and, if you have been unsuccessful, offer guidance on areas for improvement. The assessment comprises 60 questions, which means that you should take an average of 90 seconds on each to complete it. Some questions will take less than a minute to answer, though. The test will feature a variety of question styles, requiring a mixture of calculation and discussion (all five of the verb levels are covered). Let’s have a closer look at the six general types of question you will encounter when sitting F1. Multiple-choice questions These require students to choose one correct answer from a choice of four. Let’s consider an example of this type: In country X, a company called MNO earns $50,000 profit for the year and receives a tax bill for $20,000. Company QRS earns $100,000 profit for the year and receives a tax bill for $50,000. How could X’s income tax be classified? A: regressive tax. B: proportional tax. C: progressive tax. D: fixed-rate tax. The right answer is C. MNO pays 40 per cent tax on its profit, while QRS pays 50 per cent on its bigger profit.

CIMA Operational level F1 Financial reporting and taxation

This is an example of a progressive tax: the greater the profit, the greater the tax charged. Multi-response questions These require students to select a number of correct responses from a choice of options. In some cases, you may be asked to select two true statements. In more difficult variants, you may be asked to select all applicable responses. Let’s consider an example of this type: According to IAS 20, “Accounting for government grants and disclosure of government assistance”, which two of the following statements explain how you can account for a capital grant? A: present it as a credit in the statement of profit or loss. B: present it as a credit in the statement of profit or loss, or deduct it from the related expense. C: deduct it from the related expense in the statement of profit or loss. D: deduct it from the cost of the non-current asset. E: treat it as a deferred credit and transfer a proportion to other income in the statement of profit or loss each year. The right answers are D and E. Statements A, B and C concern how to account for a revenue grant. ‘Complete the following sentence’ questions These require students to use a drop-down list to choose from a number of options. It may require more than one response from a list of words or phrases in order to complete a sentence or number of sentences. Let’s consider an example of this type: Complete the sentence below by placing one of the following options into each of the three spaces: “An operating segment is defined by IFRS 8 as a component of an entity whose results are reviewed regularly by the entity’s chief operating

CIMA Operational level F1 Financial reporting and taxation: History and Services

CIMA Operational level F1 Financial reporting and taxation: The Chartered Institute of Management Accountants (CIMA) is a UK based professional body offering training and qualification in management accountancy and related subjects. It is focused on accountants working in industry, and provides ongoing support and training for members.

CIMA is one of the professional associations for accountants in the UK and Ireland. Its particular emphasis is on developing the management accounting profession. CIMA is the largest management accounting body in the world with more than 227,000 members and students in 179 countries. CIMA is also a member of the International Federation of Accountants.

CIMA operates a standard scheme of qualifying examinations for prospective members. It promotes local education, training and management development operations, and new techniques through its research foundation and the dissemination of management accounting practices through publications and other media related activities. CIMA has been active in recent educational and vocational initiatives in former Eastern bloc countries. It publishes a monthly journal, supplied free to members and registered students, called ‘Financial Management’.

CIMA is recognised as a professional accounting body for various statutory purposes by UK and various overseas governments. The institute regulates the activities of its members by a code of practice, a discipline committee and (a recent innovation) a continuing education scheme. Its governing body is its council, comprising members elected from regional branches. Each of the branches has a committee and is responsible for much of the ‘grass roots’ activity. Activity such as qualification development is undertaken from the London head office.

The CIMA Global Business Challenge, an annual international business and strategic management competition for undergraduates around the world, is designed to bring out the best in the young business leaders of tomorrow.

In July 2009, CIMA added an online community – CIMAsphere – to its website. The community consisted of a range of blogs, discussion boards, groups, community answers, expert Q&A sessions and some social networking features for members, students and the general public. This has since been shut down. Members are instead encouraged to join the CIMA LinkedIn group, and students are directed to CIMAconnect, an online study support portal.

In 2011, CIMA entered into a joint venture with the American Institute of Certified Public Accountants (AICPA) to launch a global management accounting designation called the Chartered Global Management Accountant (CGMA).In the Americas outside the U.S., non-U.S. CPAs can obtain the new designation as an AICPA International Associate, after a rigorous assessment process. In the rest of the world, new designation holders are able to become members of CIMA after the same assessment process.

CIMA is proactive to tie up with American CPA because of the current convergence trend between US-GAAP and IFRS, reinforced following the merger of the iconic New York Stock Exchange with Germany’s Deutsche Boerse AG. “It remains to be seen whether companies listed in a combined exchange would be required to report under IFRS, US GAAP or both, but as the US appears to be moving towards IFRS adoption it is more likely the international standards would be the accounting rules of choice”.

CIMA Operational level F1 Financial reporting and taxation

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