TAXATION

1. Principles of taxation (11.43%)

 Nature, scope, classification, and essential characteristics

 Principles of sound tax system
 Limitations on the power of taxation
 Tax evasion vs. tax avoidance
 Situs / place of taxation
 Double taxation
 Legislation of tax laws
 Impact of taxes in nation building
 Ethical tax compliance and administration
 Organization of the BIR, BOC, BOI, PEZA, and Local Government Tax Collecting units

2. Tax remedies (11.43%)

 Remedies of the taxpayer

 Remedies of the Government
 Expanded jurisdiction of the Court of Tax Appeals

3. Income taxation (20%)

 Taxpayer and tax base

o Individuals, Corporations, Partnerships, Joint ventures, Estates and trusts, Co-
ownerships, Tax exempt individuals and organizations

 Gross income
o Inclusions in the gross income
o Exclusions/exemptions from gross income
o Compensation Income
o Business Income
o Passive income subject to final withholding tax
o Capital gain

 Deductions from gross income

o Itemized deductions
o Items not deductible
o Optional standard deduction
o Deductions allowed under special laws

 Accounting periods

 Accounting methods
o Reconciliation of income under PFRS and income under Tax Accountant
  Tax return preparation and filing and tax payments
o Manual filing
o Electronic filing and E-submission
o Large taxpayers and non-large taxpayers
o Income tax credits
o Venue and time of filing of tax returns
o Venue and time of payment
o Modes of payment
o Use of tax tables
o Accomplishing of various income tax returns and forms

 Withholding taxes (at source, expanded or creditable withholding tax, final

withholding taxes and withholding tax on government payments)
o Time of withholding
o Income payments subject to withholding
o Year end withholding of tax and requirements
o Venue and time of filing of withholding tax returns
o Venue and time of payment
o Modes of payment
o Time of payment
o Use of tax tables and rates
o Use of various withholding tax returns and forms

 Compliance Requirements
o Administrative requirements (registration, issuance of receipts, printing of
receipts)
o Attachments to the income tax return
o Keeping of books of accounts and records, including report of inventories
o Prescriptive period of maintain books of accounts and other accounting records

4. Transfer taxes (17.14%)

 Estate Tax
 Donor's Tax

5. Value added tax and percentage tax (17.14%)

 Value Added Tax

 Percentage Tax

6. Documentary stamp tax (2.85%)

 Describe, Analyze and Compute Documentary Stamp Tax (Definition, Coverage and
Exemptions, Tax Base Rates, and Time and Manner of Payment)
7. Excise tax (2.85%)

 Describe, Analyze and Compute Excise Tax (Concept, Applicability, Classification of

Excisable Materials and Rates, Specific Tax, Ad Valorem Tax, Coverage, Time of
Payment)

8. Taxation under the local government code (5.73%)

 Scope and different types of local taxes, Tax base and tax rates, Venue and time of filing
of tax returns and payment).
 Limited to Real Property Tax and Local Business Tax

9. Preferential taxation (11.43%)

 Senior Citizens Law

 Magna Carta for Disabled Persons
 Special Economic Zone Act (PEZA)
 Omnibus Investments Code (E.O. 226, Book 1)
 Barangay Micro Business Enterprises Act (BMBE)
 Double Taxation Agreements (DTA)

FINANCIAL ACCOUNTING AND REPORTING (FAR)

DEVELOPMENT OF FINANCIAL REPORTING FRAMEWORK, STANDARD-SETTING

BODIES, REGULATION OF THE ACCOUNTANCY PROFESSION, CONCEPTUAL
FRAMEWORK OF FINANCIAL STATEMENTS AND ACCOUNTING PROCESS (5.71)

Development of Financial Reporting Framework

Standard-Setting Bodies (AASC, FRSC,PIC)
Regulation of the Accountancy Profession
Conceptual Framework
Accounting Process (Adjusting Entries and Accounting Cycle)

PRESENTATION OF FINANCIAL STATEMENTS (14.29%)

Statement of Financial Position (SFP)

Statement of Comprehensive Income
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements

ASSETS

FINANCIAL ASSETS (14.29%)

Cash & Cash Equivalents
Loans and Receivables (Financial Assets at Amortized Cost)
Investments in Debt Instruments
Financial Assets at Fair Value through Profit or Loss (Except Derivatives)
Financial Assets at Fair Value through Other Comprehensive Income
Financial Assets at Amortized Cost
Investments in Associates (equity method of accounting)
Basic Derivatives (excluding Hedge Accounting)

NON-FINANCIAL ASSETS (10%)

Inventories
Property, Plant and Equipment
Investment Property
Intangibles
Biological Assets
Non-Current Assets Held For Sale

LIABILITIES (10%)

FINANCIAL LIABILITIES
Accounts Payable and Other Trade Payables
Debt Restructuring
NON-FINANCIAL LIABILITIES
Premiums and warranties
Unearned revenues for gift certificates and subscriptions

PROVISIONS AND CONTINGENCIES

Recognition and measurement criteria

EQUITY (14.28%)
Share Capital Transactions (PAS 32, PFRS 7)
Dividends
Retained Earnings
Other Comprehensive Income
Book Value per share and Earnings per Share

OTHER TOPICS (14.29%)

Share-based payments (PFRS 2)
Borrowing Costs (PAS 23)
Leases (PAS 17/ PFRS 16)
Income Tax (PAS 12, PFRS 14)
Employee Benefits (PAS 19, PAS 26)
Interim Reporting (PAS 34, PAS 24)
Segment Reporting (PFRS 8)
Cash to Accrual

SMALL AND MEDIUM SIZED ENTITIES/ MICRO ENTERPRISES (5.71%)

Small and Medium Sized Entities (Reporting Requirements, Peculiarities, Principles for
reporting Investments in Debt and Equity Securities)
Micro Enterprises
ADVANCED FINANCIAL ACCOUNTING AND REPORTING (AFAR)
PARTNERSHIP ACCOUNTING (14.29%)
Formation, Operations, Dissolution (Admission, Withdrawal, Incorporation of a partnership),
Liquidation (Lump-sum method and Installment Method)

CORPORATE LIQUIDATION (5.71%)

Statement of Affairs, Statement of Deficiency, Statement of Realization and
Liquidation, Determination of the order of priority of claimants of company assets subject to
liquidation

JOINT ARRANGEMENTS - PFRS 11 (5.71%)

 Joint Operations
 Joint Venture (equity method)
 Accounting for SME

REVENUE RECOGNITION - PFRS 15 (14.29%)

 Installment Sales (PAS 18/ PFRS 15)

 Long-term Construction Contracts (PAS 11/ PFRS 15)
 Franchise Operations – Franchisor's point of view (PAS 18/ PFRS 15)
 Consignment Sales (PAS 18/ PFRS 15)

ACCOUNTING FOR HOME OFFICE, BRANCH AND AGENCY TRANSACTIONS (5.71%)

ACCOUNTING FOR BUSINESS COMBINATION -PFRS 3 (8.57%)

 Acquisition of assets and liabilities (acquisition method);

o Determination of Consideration Transferred; Recognition of Acquired Assets and
Liabilities; Recognition and Measurement of Goodwill and Gain from a Bargain
Purchase; Journal Entries;

 Financial Statement Presentation;

 Accounting for SME

SEPARATE FINANCIAL STATEMENTS - PAS 27 (5.71%)

 Accounting for Investment in Subsidiary

o at cost, equity method, and in accordance with PAS 39/PFRS 9

 Accounting for SME

CONSOLIDATED FINANCIAL STATEMENTS - PFRS 10 (7.14%)

Consolidated Financial Statement in Subsidiary

 Date of acquisition
 Subsequent to date of acquisition
 Determination of:
o Net Income/Total Comprehensive Income/Equity
 Attribution to Equity Holders of Parent/Controlling or Parent’s Interest,
 Non-controlling Interest,
 Consolidated/ Group,

o Retained Earnings/ Common Share / Dividends

 Attributable to Equity Holders of Parent /Controlling or Parent’s Interest/,
Consolidated / Group,
o Accounting for SME

FOREIGN CURRENCY TRANSACTIONS (5.71%)

 Without hedging activities (import, export, lending, and borrowing transactions)

 Hedging Activities: Hedging Foreign Currency Exposures, Foreign Currency Forward
Contacts

o Hedges that not requires a Hedge Accounting (undesignated hedges)

o Hedges that requires a Hedge Accounting (Fair value hedge, Hedge of a Firm
Commitment, Cash flow hedge, Hedge of a Forecasted Transaction (purchase or
sale transaction)
o Hedge of a net investment in foreign entity
o Accounting for SME

TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS - PAS 21/ PAS 29

(4.29%)

 Translation from the functional currency to the presentation currency (Closing/ Current
Rate Method)
 Remeasurement from a foreign currency to the functional currency (Temporal Method)
 Restatement of Financial Statements

NOT-FOR-PROFIT ORGANIZATIONS (2.86%)

 Voluntary health and welfare organizations (VHWO)

 Hospitals and other health care organizations
 Colleges and universities
 Other not-for-profit organizations such as churches, museums, fraternity association,
etc.

GOVERNMENT ACCOUNTING – GENERAL FUND (2.86%)

  Basic Concepts, Budget Process, Journal Entries – Books of National Government
Agency

OTHER SPECIAL TOPICS (2.86%)

 Insurance Accounting (Insurer)

 Build, Operate, and Transfer (PFRIC 12)
 IFRS for SMEs

COST ACCOUNTING (14.29%)

 System of cost Accumulation or Costing System

 Job-order costing system
 Process costing system
 Backflush costing system (JIT system)
 Service Cost Allocation
 Activity-based costing system (ABC costing)
 Accounting for joint and by – products
 Standard Costing (two-way variance excluding mix and yield variances)
 Service Cost Allocation

AUDITING
AUDITING THEORY (50%)
This section covers the candidates' conceptual knowledge and understanding of assurance and
related services performed by professional accountants. The Philippine Standards on Auditing
(PSA) and other regulatory laws and regulations in effect at the time of examination are applied
in all areas of the exam.

 Fundamentals of Auditing and Assurance Services

o APPLICABLE STANDARDS
 Glossary of Terms (December 2002)
 IAASB – Interim Terms of Reference (August 2004); Philippine
Framework for Assurance Engagement
 Preface to International Standards and Philippine Standards
 PSA 120 - Framework of Philippine Standards on Auditing
 The Financial Statements Audit - Client Acceptance, Audit Planning, Supervision
and Monitoring
o APPLICABLE STANDARDS:
 PSA 200 (Revised and Redrafted)
 PSA 210 (Redrafted)
 PSA 300 (Redrafted)
 PSA 240 (Redrafted)
 PSA 250 (Redrafted)
 PSA 260 (Redrafted)
 PSA 610 (Redrafted)
 PSA 620 (Revised and Redrafted)
 Understanding the Entity and its Environment Including its Internal Control and
Assessing the Risks of Material Misstatement
 o APPLICABLE STANDARDS:
 PSA 260 (Revised and Redrafted)
 PSA 265 (New)
 PSA 315 (Redrafted)
 PSA 320 (Revised and Redrafted)
 Audit Objectives, Procedures, Evidences and Documentation
o APPLICABLE STANDARDS:
 PSA 230 (Redrafted)
 PSA 330 (Redrafted)
 PSA 500 (Redrafted)
 PSA 501 (Redrafted)
 PSA 505 (Revised and Redrafted)
 PSA 510 (Redrafted)
 PSA 520 (Redrafted)
 PSA 530 (Redrafted)
 PSA 540 (Revised and Redrafted)
 PSA 550 (Revised and Redrafted)
 Completing the Audit/ Post-Audit Responsibilities
o APPLICABLE STANDARDS:
 PSA 560 (Redrafted)
 PSA 570 (Redrafted)
 PSA 580 (Revised and Redrafted)
 Reports on Audited Financial Statements
o APPLICABLE STANDARDS:
 PSA 700 (Redrafted)
 PSA 705 (Revised and Redrafted)
 PSA 706 (Revised and Redrafted)
 PSA 710 (Redrafted)
 PSA 720 (Redrafted)
 PSA 800 (Revised and Redrafted)
 PSA 805 (Revised and Redrafted)
 PSA 810 (Revised and Redrafted)
 Auditing in a Computerized Information Systems (CIS) Environment
o APPLICABLE STANDARDS:
 PSA 402 (Revised and Redrafted)
 Other Assurance and Non-assurance Services
o APPLICABLE STANDARDS:
 PSA 220 (Revised and Redrafted)

AUDITING PROBLEM (50%)

This section tests the examinee's proficiency in applying auditing standards, techniques, and
procedures to a typical independent audit of a medium-sized service, trading or manufacturing
concern. The examinee must be able to plan and perform an audit, analyze data for possible
errors and irregularities, formulate adjusting entries, resolve audit issues, prepare audit
working papers and complete the audit including the preparation of the audit report.
Evidence Accumulation and Evaluation – Substantive Tests of Transactions
and Balances

Audit of the revenue and receipt cycle

 Audit of sales and revenue transactions

 Audit of receivable balances

Audit of expenditure and disbursement cycle

 Audit of acquisitions and purchases

 Audit of payroll transactions
 Audit of inventory balances
 Audit of trade payable balances
 Audit of prepaid expenses and accrued liabilities

Audit of production cycle

 Audit of conversion activities

 Audit of inventory balances: work-in-process and finished goods
 Audit of cost of goods sold balance

Audit of the financing cycle

 Audit of financing cycle transactions

 Audit of non-trade liability balances
 Audit of interest expense and finance cost balances
 Audit of equity accounts
 Audit of investing cycle

Audit of the financing cycle

 Audit of investing transactions

 Audit of investment account balances
  Audit of property, plant and equipment account balances
 Audit of intangible account balances

Audit of cash balances

 Audit of cash receipt transactions balance

 Audit of cash disbursement transactions balance

MANAGEMENT ADVISORY SERVIVES

MANAGEMENT ACCOUNTING (50%)

 Objectives, role and scope of management accounting

 Management accounting concepts & techniques for planning and control
o Cost Terms, Concepts, and Behaviour
o Cost Accumulation Methods (Job Order, Process, ABC)
o CVP Analysis
o Standard costing and variance analysis
o Variable costing and absorption costing
o Financial Planning and Budget
o Activity-based costing (ABC) and activity-based management (ABM)
o Strategic cost managements

 Management Accounting Concepts & Techniques for Performance Measurement

o Responsibility Accounting and Transfer Pricing
o Balanced Scorecard

 Management Accounting Concepts & Techniques for Decision Making

o Quantitative Techniques
o Relevant Costing and Differential Analysis

FINANCIAL MANAGEMENT (40%)

 Objective and Scope of Financial Management

 Financial Management Concepts and Techniques for Planning, Control and Decision
Making
o Financial Statement Analysis
o Working Capital Finance
o Capital Budgeting
o Investment Risks, and Rates of Returns
o Types and measurement of risks and returns, risk measurement models
o Capital structure and long-term financing decision

MANAGEMENT CONSULTANCY (4.3%)

  Management Consultancy practice by CPAs
 Project Feasibility Studies

ECONOMIC CONCEPTS (5.7%)

 Macroeconomics
 Microeconomics

REGULATORY FRAMEWORK FROM BUSINESS TRANSACTIONS (RFBT)

LAW ON BUSINESS TRANSACTIONS

 Obligations (10%)
 Contracts (10%)
 Sales (7%)

LAW ON CREDIT TRANSACTIONS

 Pledge, Real Mortgage, and Chattel Mortgage (4%)

NEGOTIABLE INSTRUMENTS AND BOUNCING CHECKS LAW

 Negotiable Instruments (4%)

 Bouncing Checks (2%)

LAWS ON BUSINESS ORGANIZATIONS

 Partnership (10%)
 Corporations (28%)
o Including: Securities Regulations Code, Code of Corporate Governance, and
SEC Circulars and Ordinances on Filling, Fines and Penalties.
 Cooperatives (10%)

LAWS ON OTHER BUSINESS TRANSACTIONS

 Philippine Deposit Insurance Corporation (PDIC) (2%)

 Secrecy of Bank Deposits and Unclaimed Balances Law (2%)
 Anti-Money Laundering Act (AMLA) (5%)
 Intellectual Property Law (2%) EXCEPT PART 1 OF R.A. 8293
 Data Privacy Act (2%)
 Electronic Commerce Act (1%)
 Ease of Doing Business Law (1%) NEW

General Banking Laws (GBL), Financial Rehabilitation and Insolvency Act (FRIA), Updates on
special concern have been removed. Ease of Doing Business Law (RA 11032) has been added.