SUBJECTS IN C.A FINAL

Paper 1: Financial Reporting
(One paper – Three hours – 100 marks)
Level of Knowledge: Advanced knowledge
Objectives:
(a) To gain ability to analyze financial statements including consolidated financial
statements of group companies and financial reports of various types of entities,
(b) To gain ability to apply valuation principles,
(c) To familiarise with recent developments in the area of financial reporting,
(d) To gain ability to solve financial reporting and valuation cases.
Contents:
1. Accounting Standards, Accounting Standards Interpretations and Guidance Notes on
various accounting aspects issued by the ICAI and their applications.
2. Overview of International Accounting Standards (IAS)/International Financial
Reporting Standards (IFRS), Interpretations by International Financial Reporting
Interpretation Committee (IFRIC), Significant difference vis-a-vis Indian Accounting
Standards.
Understanding of US GAAP,
Applications of IFRS and US GAAP.
3. Corporate Financial Reporting - Issues and problems with special reference to
published financial statements.
4. Accounting for Corporate Restructuring (including inter-company holdings).
5. Consolidated Financial Statements of Group Companies Concept of a Group, purposes
of consolidated financial statements minority interest, Goodwill, Consolidation procedures
– Minority interests, Goodwill, Treatment of pre- acquisition and post-acquisition profit.
Consolidation with two or more subsidiaries, consolidation with foreign subsidiaries.
Consolidated profit and loss account, balance sheet and cash flow statement.
Treatment of investment in associates in consolidated financial statements.
Treatment of investments in joint ventures in consolidated financial statements.
6. Accounting and Reporting of Financial Instruments
Meaning, recognition, derecognition and offset, compound financial instruments
Measurement of financial instruments
Hedge accounting
Disclosures
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7. Share based payments
Meaning, Equity settled transactions, Transaction with employees and non- employees
Determination of fair value of equity instruments
Vesting conditions
Modification, cancellation and settlement
Disclosures
8. Financial Reporting by Mutual funds, Non-banking finance companies, Merchant
bankers, Stock and commodity market intermediaries.
9. Valuation
(a) Concept of Valuation
(b) Valuation of Tangible Fixed Assets
(c) Valuation of Intangibles including Brand Valuation and Valuation of Goodwill
(d) Valuation of Liabilities
(e) Valuation of Shares
(f) Valuation of Business
10. Developments in Financial Reporting
(a) Value Added Statement
(b) Economic Value Added, Market Value Added, Shareholders’ Value Added
(c ) Human Resource Reporting
(d) Inflation Accounting
Note: If either old Accounting Standards (ASs), Accounting Standards Interpretations
(ASIs), Guidance Notes (GNs), Announcements and Limited Revisions to ASs are
withdrawn or new ASs, GNs, Announcements and Limited Revisions to AS are issued by
the Institute of Chartered Accountants of India in place of existing ASs, ASIs, GNs,
Announcements and Limited Revisions to AS, the syllabus will accordingly include/exclude
such new developments in the place of the existing ones with effect from the date to be
notified by the Institute.






Paper 2: Strategic Financial Management
(One paper – Three hours – 100 marks)
Level of Knowledge: Advanced knowledge
Objective:
To apply financial management theories and techniques for strategic decision making.
Contents:
1. Financial Policy and Corporate Strategy
Strategic decision making framework
Interface of Financial Policy and strategic management
Balancing financial goals vis-à-vis sustainable growth.
2. Project Planning and Capital Budgeting
Feasibility study
Cash flow Projections – Impact of taxation, depreciation, inflation and working capital
Capital Budgeting Decisions - Certainty Equivalent approach, Evaluation of Risky
Investment Proposals, Risk and Return analysis, Simulation and decision tree analysis,
Sensitivity analysis, Capital Rationing, Adjusted Net Present Value, Replacement
decisions, Application of Real Options in capital budgeting, Impact of inflation on capital
budgeting decisions
Preparation of Project Report
Social cost benefit analysis.
3. Leasing decision including cross border leasing
4. Dividend Decisions
Dividend theories, Determinants of dividend policies.
5. (a) Indian Capital Market including role of various primary and secondary market
institutions
(b) Capital Market Instruments
Financial derivatives – stock futures, stock options, index futures, index options
Option valuation techniques : Binomial model, Black Scholes Option Pricing Model, Greeks
– Delta, Gamma, Theta, Rho and Vega
Pricing of Futures – Cost of carry model
Imbedded derivatives
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(c) Commodity derivatives
(d) OTC derivatives -Swaps, Swaptions, Forward Rate Agreements (FRAs), Caps, Floors
and Collors.
6. Security Analysis
Fundamental analysis - Economic analysis, Industry analysis and Company Analysis
Bond valuation, Price Yield relationship, Bond Price forecasting – application of duration
and convexity, Yield curve strategies
Technical Analysis – market cycle model and basic trend identification, different types of
charting, support and resistance, price patterns, moving averages, Bollinger Bands,
momentum analysis.
7. Portfolio Theory and Asset Pricing
Efficient Market Theory – Random walk theory ; Markowitz model of risk return optimization
Capital Asset Pricing Model (CAPM)
Arbitrage Pricing Theory (APT)
Sharpe Index Model
Portfolio Management - Formulation, Monitoring and Evaluation
Equity Style Management
Principles and Management of Hedge Funds
International Portfolio Management.
8. Financial Services in India
Investment Banking
Retail Banking
On Line Share Trading
Depository Service.
9. (a) Mutual Funds: Regulatory framework, formulation, monitoring and evaluation of
various schemes of Mutual funds, Money market mutual funds.
(b) Exchange Traded Funds.
10. Money Market operations
11. (a) Foreign Direct Investment, Foreign Institutional Investment.
(b) International Financial Management
Raising of capital abroad - American Depository Receipts, Global Depository Receipts,
External Commercial Borrowings and Foreign Currency Convertible Bonds
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International Capital Budgeting
International Working Capital Management.
12. Foreign Exchange Exposure and Risk Management
Exchange rate determination, Exchange rate forecasting
Foreign currency market
Foreign exchange derivatives – Forward, futures, options and swaps
Management of transaction, translation and economic exposures
Hedging currency risk.
13. Mergers, Acquisitions and Restructuring
Meaning of mergers and acquisition, categories, purposes
Process of mergers and acquisition – Identification and valuation of the target, acquisition
through negotiation, due diligence, post – merger integration
Legal and regulatory requirements
Merger and Acquisition agreement
Reverse merger
Potential adverse competitive effects of mergers
Corporate Takeovers: Motivations, Co-insurance effect, Cross-border takeovers, Forms of
takeovers, Takeover defenses
Going Private and Other Control Transactions: Leveraged Buyouts (LBOs), Management
Buyouts (MBOs), Spin Offs and Asset Divestitures
Corporate Restructuring : Refinancing and rescue financing, reorganizations of debtors and
creditors, Sale of assets, targeted stock offerings, downsizing and layoff programmes,
negotiated wage give-backs, employee buyouts.