CA Intermediate Subjects
Candidates can join the CA-Intermediate course either by clearing the Foundation level or through the Direct Entry route, which is available to graduates/postgraduates with the required marks or those who have cleared the CMA or CS Intermediate exams.
Group I
1. Advanced Accounting (100 marks)
2. Corporate & Other laws (100 marks)
3. Taxation
– Section A – Income-Tax law (50 marks)
– Section B – Indirect Taxes (50 marks)
Group II
4. Cost & Management Accounting (100 marks)
5. Auditing & Ethics (100 marks)
6A. Financial Management (50 marks)
6B. Strategic Management (50 marks)
PAPER 1: ADVANCED ACCOUNTING (100 MARKS)
Objective
CA Intermediate subjects aim to develop the skills to apply relevant accounting standards and regulations to various transactions and events and prepare and present financial statements for diverse business entities.
Contents
1. The process of developing Accounting Standards, including Indian Accounting Standards (Ind AS) aligned with IFRS, and International Financial Reporting Standards (IFRS); a comparison between convergence and adoption; and an understanding of the objectives and principles behind carve-outs.
2. The framework for preparing and presenting financial statements by Accounting Standards.
3. (i) The relevance and application of Accounting Standards across different types of entities.
(ii) Implementation of Accounting Standards:
Accounting Standard 1 – Disclosure of Accounting Policies
Accounting Standard 2 – Inventory Valuation
Accounting Standard 3 – Statement of Cash Flows
Accounting Standard 4 – Uncertainties and Events Arising After the Balance Sheet Date
Accounting Standard 5 – Net profit or loss for the period, adjustments from prior periods, and modifications to accounting policies.
Accounting Standard 7 – Accounting for Construction Contracts
Accounting Standard 9 – Recognition of Revenue
Accounting Standard 10 – Fixed Assets: Property, Plant, and Equipment
Accounting Standard 11 – Impact of Foreign Exchange Rate Fluctuations
Accounting Standard 12 – Recording and Reporting of Government Grants
Accounting Standard 13 – Accounting For Investments
Accounting Standard 14 – Amalgamation Accounting (Excluding Inter-Company Holdings)
Accounting Standard 15 – Accounting for Employee Benefits
Accounting Standard 16 – Accounting for Borrowing Costs
Accounting Standard 17 – Reporting by Business Segments
Accounting Standard 18 – Disclosure of Related Party Transactions
Accounting Standard 19 – Accounting for Leases
Accounting Standard 20 – Calculation of Earnings Per Share (EPS)
Accounting Standard 21 – Consolidated Financial Statements of a Single Subsidiary (Excluding Issues Related to Acquisition of Interest at Different Dates, Cross-Holding, Disposal of Subsidiary, and Foreign Subsidiaries)
Accounting Standard 22 – Accounting For Taxes
Accounting Standard 23 – Accounting for investments in associates as part of consolidated financial statements.
Accounting Standard 24 – Handling discontinued operations.
Accounting Standard 25 – Reporting of Interim Financial Statements
Accounting Standard 26 – Accounting for Intangible Assets
Accounting Standard 27 – Accounting for Interests in Joint Ventures
Accounting Standard 28 – Accounting for Asset Impairment
Accounting Standard 29 – Accounting for Provisions, Contingent Liabilities, and Contingent Assets
4. Accounting for Companies as covered in CA Intermediate subjects
(i) Schedule III of the Companies Act, 2013
(ii) Preparation of Financial Statements – Income Statement, Balance Sheet, and Cash Flow Statement
(iii) Repurchase of Shares or Securities
(iv) Accounting for Company Reconstruction
5. Accounting for Branches, including International Branches, as taught in CA Intermediate subjects
PAPER 2: CORPORATE AND OTHER LAWS (100 MARKS)
PART I– COMPANY LAW AND LIMITED LIABILITY PARTNERSHIP LAW (70 MARKS)
Objective
To gain a thorough understanding of legal provisions and develop the ability to analyze and apply these laws in real-world scenarios, as emphasized in CA Intermediate subjects.
Contents
I The Companies Act, 2013: Covering key regulations and the drafting of notices, resolutions, and other related documents, as part of the ca intermediate subjects .
1. Introduction to Preliminary Matters
2. Company Incorporation and Related Matters
3. Issuance of Prospectus and Allocation of Securities
4. Equity Capital and Debentures
5. Company’s Acceptance of Deposits
6. Charge Registration
7. Corporate Management and Administration
8. Dividend Declaration and Distribution
9. Financial Statements of Companies
10. Auditing and the Role of Auditors
11. Companies Established Outside India
II The Limited Liability Partnership ACT, 2008, Along With Key Regulations
PART II- OTHER LAWS (30 MARKS)
Objective
1. To gain a comprehensive understanding of the General Clauses Act, as covered in CA Intermediate subjects.
2. To gain a thorough understanding of the principles and rules for interpreting statutes.
3. To acquire a fundamental understanding of the Foreign Exchange Management Act, 1999.
Contents
1. The General Clauses Act, 1897: Key Definitions, Scope and Applicability, General Interpretation Rules, Powers and Authorities, Provisions Relating to Orders, Rules, and Other Enactments, along with Miscellaneous Provisions.
2. Interpretation of Statutes: Principles and Rules for Statutory Interpretation, Tools for Interpretation, and Guidelines for Interpreting Deeds and Documents.
3. The Foreign Exchange Management Act, 1999: Key Definitions and Concepts Related to Current and Capital Account Transactions.
PAPER 3: TAXATION (100 MARKS)
SECTION A: INCOME TAX LAW (50 MARKS)
Objective
1. To gain a comprehensive understanding of the provisions under income tax law.
2. CA Intermediate subjects taxation aim to develop the ability to apply these provisions in solving problems and addressing practical, real-world issues.
Contents
1. Basic concepts:
– Introduction to Income Tax Law
– Key concepts in income tax law, including terms such as person, assessee, previous year, assessment year, income, and agricultural income.
– Foundation of the Tax Liability
– Procedure for calculating total income and determining the tax payable for individuals.
2. CA Intermediate subjects cover residential status and the calculation of total income:
– Status of Residence for Tax Purposes
– Extent of Total Income
3. Income Categories and the Rules for Calculating Income Under Each Category:
– Income from Salaries
– Income from House Property or Real Estate
– Profits and Gains from Business or Profession
– Gains from Capital Assets
– Income from Miscellaneous Sources
4. Provisions for Clubbing of Income, Set-Off and Carry Forward of Losses, and Deductions from Gross Total Income, as explained in CA Intermediate subjects.
5. Advance Tax, Tax Deducted at Source (TDS), and Tax Collected at Source (TCS).
6. Provisions for filing income tax returns and self-assessment.
7. CA Intermediate subjects cover the computation of Total Income and Income Tax Payable by an Individual under the Alternative Tax Regimes of the Income Tax Act, 1961, to minimize tax liability.
SECTION B: GOODS AND SERVICES TAX (GST) (50 MARKS)
Objective
1. CA Intermediate subjects provide a comprehensive understanding of the provisions under Goods and Services Tax (GST) law.
2. To develop the ability to apply these provisions effectively in solving issues in moderately complex scenarios.
Contents
1. An Introduction to GST Laws, including Constitutional Considerations.
2. Imposition and Collection of CGST and IGST:
– Application of CGST and IGST Laws
– The Concept of Supply, including Composite and Mixed Supplies
– Tax Liability, including Reverse Charge Mechanism
– Tax Exemptions
– Composition Scheme for Taxation
Basic Concepts of:
– Categorization or Tax Classification
– Determination of Place of Supply
– Determination of Time of Supply
– Determination of Supply Value
– Claiming Input Tax Credit (ITC)
4. Calculation of GST Liability
5. GST Registration Process
6. Tax Invoices, Credit and Debit Notes, and Electronic Way Bill
7. Maintaining Accounts and Records
8. Tax Payment Process & Return Filing Process
PAPER 4: COST AND MANAGEMENT ACCOUNTING (100 MARKS)
Objective
1. To gain a clear understanding of fundamental concepts and their applications in determining the costs involved in producing goods and delivering services, and to use this knowledge for setting appropriate prices.
2. To build a comprehensive understanding of cost accounting statements and their interpretation.
3. To develop the skill to utilize information for cost determination, strategic planning, effective control, and informed decision-making.
4. To use different costing methods to determine costs for various objectives.
5. CA Intermediate subjects teach the use of suitable techniques to aid in making short-term decisions.
Contents
1. An introduction to the principles and practices of Cost and Management Accounting.
A comprehensive introduction to the concepts of Cost and Management Accounting.
– The goals and scope of Cost and Management Accounting, as covered in CA Intermediate subjects.
– The stakeholders of cost and management accounting information and the roles of management accounting.
– CA Intermediate subjects explain the role of the cost accounting department within an organization and its coordination with other departments.
– Implementation of a Costing System.
– The interconnection between Cost Accounting, Financial Accounting, Management Accounting, and Financial Management, as explored in CA Intermediate subjects.
– Key Cost Terms and Concepts
– Cost Reduction and Cost Management
– Components of Costs
– Cost behavior patterns include the breakdown of fixed, variable, semi-variable, and step costs.
– Costing Methods and Costing Techniques.
– Costing in the Digital Era
2. Components of cost and the process of preparing cost sheets, as discussed in CA Intermediate subjects.
– Functional Classification and Determination of Costs.
– Preparation of Cost Sheets for the Manufacturing and Service Sectors.
2. Ascertainment Of Cost & Cost Accounting System:
1. Cost of Materials
A. A comprehensive overview of procurement procedures, as taught in CA Intermediate subjects, covering the valuation of material receipts, issues, closing stock, and stock verification.
B. Analysis of material requirements using digital costing, including the Government e-Marketplace (GeM). An introduction to costing via Enterprise Resource Planning (ERP) systems and the process of tendering and quotations.
C. Inventory Control:
– Methods for determining stock levels, including minimum, maximum, reorder point, safety stock, and the calculation of optimal stock levels, as covered in CA Intermediate subjects, are essential for effective inventory management.
– Calculation of Optimal Order Quantity – Economic Order Quantity (EOQ).
– Inventory Control Techniques: ABC Analysis, FSN (Fast, Slow, and Non-moving), HML (High, Medium, Low), VED (Vital, Essential, Desirable), Just-in-Time (JIT), Stock Taking, Perpetual Inventory System, use of Inventory Control Ratios, and Digital Inventory Management.
D. CA Intermediate subjects discuss the treatment of normal and abnormal losses related to waste, scrap, spoilage, defects, and obsolescence.
2. Employee Cost
A. An Introduction to Attendance Management and Payroll Procedures.
B. Elements of wages- Basic pay, Dearness Allowance, Overtime, Bonus, Holiday and leave wages, Allowances and perquisites.
C. Management of Employee Costs.
D. Employee Turnover: Methods for calculating turnover, causes, and its impact on the organization.
E. Compensation Systems and Incentive Programs: Premium Bonus Methods (Halsey Plan and Rowan Plan).
3. Direct Expenses:
Identification and Allocation of Direct Expenses to the Main Direct Costs or Overhead Expenses. product or Service and Their Treatment.
4. Indirect Costs or Overhead Expenses.
A. Functional Analysis: Factory, Administration, Selling, Distribution, and Research & Development.
B. Behavioral Analysis: Fixed, Variable, and Semi-Variable Costs.
C. Allocation and Apportionment of Overheads Using the Absorption Costing Method.
D. Factory Overheads: Primary and Secondary Distribution.
E. Administration Overheads: Methods of Allocating to Cost Centres or Products.
F. Selling & Distribution Overheads: Analyzing and Allocating Expenses to Products/Customers, the Impact of Marketing Strategies, and the Cost-Effectiveness of Different Sales Promotion Methods.
G. Treatment of Research and Development expenses in Cost Accounting, as discussed in CA Intermediate subjects, is crucial for accurate financial reporting.
H. Principles of Activity-Based Costing (ABC
I. Integration of Cost and Financial Information.
– Recording and Categorization of Financial Data.
– An Overview of Non-Integrated and Integrated Accounting Systems.
– Items are included solely in cost accounts but not in financial accounts, and vice versa.
– Harmonizing profit figures between Cost Accounts and Financial Accounts (in a Non-Integrated Accounting System).
3. Methods of Costing
1. Unit costing for single output, as covered in CA Intermediate subjects, is essential for effective cost management.
2. Job Costing:
Job cost cards and databases, collecting direct costs of each job, attributing overheads to jobs, Application of job costing.
3. Batch Costing:
CA Intermediate subjects cover determining the optimal batch quantity, calculating batch costs, preparing a batch cost sheet, and handling spoiled and defective work.
4. Process/Operation Costing
– Recording process costs, handling process losses, accounting for abnormal gains and losses, calculating equivalent production units, determining inter-process profits, and valuing work in progress.
– Joint Products: Allocation of joint costs and methods for distributing joint costs among joint products.
– By-Products-Methods of apportioning joint costs over by-products, treatment of By-Product cost.
5. Costing of Service Sectors:
Calculating the Costs and Pricing of Services.
4. Cost Control and Analysis: Techniques and Evaluation.
1. Standard Costing:
A. Establishing standards, exploring different types of standards, and utilizing standard costing as a performance measurement tool, as explained in CA Intermediate subjects.
B. Calculation and Reconciliation of Material Costs, Labor Costs, Variable Overheads, and Fixed Overheads.
2. Marginal Costing:
A. Fundamental concepts of marginal costing, contribution margin, break-even analysis, break-even and profit-volume charts, contribution-to-sales ratio, safety margin, incidence angle, and cost-volume-profit (CVP) analysis.
B. Calculation of the cost of a product or service using the marginal costing method and determination of the cost of finished goods and work-in-progress.
C. CA Intermediate subjects explore the comparison between marginal costing and absorption costing methods, along with the reconciliation of profits under both approaches.
D. Short-Term Decision Making:
– Make-or-buy decision
– Discontinuation decision
– Multi-product break-even analysis
– Identifying the limiting (key) factor
3. Budget and Budgetary Control:
A. Definition of a Budget, Key Elements of a Budget, Budget Manual, Budgeting Process, Budget Preparation, and Monitoring Procedures.
B. The role of budgets in planning and control.
C. Flexible budget: Preparation of functional budgets for both operating and non-operating functions.
D. Cash budget and master budget.
E. Introduction to key budget factors, Zero-Based Budgeting (ZBB), performance budgeting, control ratios, and budget variances.
F. Budgets and their impact on motivation.
G. Feedback and feedforward control in budgeting.
PAPER 5: AUDITING AND ETHICS (100 MARKS)
Objective
1. To gain an understanding of auditing concepts, generally accepted auditing procedures, techniques, and skills, and develop the ability to apply them in audit and attestation engagements.
2. CA Intermediate subjects focus on comprehending and applying ethical principles while conducting an audit.
Contents
1. Nature, Objective, and Scope of Audit:
Auditing Concepts: The origin and meaning of auditing, the need for an audit (benefits of audit), the objectives and scope of an audit, external audit engagements, and the qualities of an auditor.
Additionally, the inherent limitations of an audit and its relationship with other disciplines are discussed, as outlined in SA 200: Overall Objectives of the Independent Auditor and the Conduct of an Audit by Auditing Standards.
2. Audit Strategy, Audit Planning, and Audit Program Development
(SA 300: Planning the Audit of Financial Statements)
– The auditor’s responsibility in planning the audit of financial statements and the benefits of effective audit planning.
– Planning is an ongoing and repetitive process.
– Discussion of planning elements with the entity’s management, involvement of key engagement team members in the audit planning process, and initial engagement activities.
– CA Intermediate subjects cover the auditor’s evaluation of client retention and ethical requirements, along with planning activities.
– The auditor’s assessment of client retention and ethical considerations, along with the associated planning activities.
– Formulating a comprehensive audit strategy with support for the auditor, followed by the development of the audit plan.
– Documenting the overall audit strategy, audit plan, and audit program.
– Creation of the Audit Plan and Program.
3. Risk Assessment and Internal Control:
– Audit Risk.
– Risk of material misstatement, including inherent risk, control risk, and detection risk.
– Sampling risk and non-sampling risk.
– The concept of materiality and its application in planning and performing an audit.
– The auditor’s responsibility to apply the concept of materiality in the audit process.
– The auditor’s determination of materiality is based on professional judgment, considering both materiality and audit risk.
– The application of materiality in planning and conducting the audit, along with the concept of performance materiality.
– Establishing materiality and performance materiality during the audit planning process.
– The use of benchmarks to determine materiality for the financial statements as a whole, as well as materiality levels for specific classes of transactions, account balances, or disclosures.
– Revising materiality as the audit progresses and documenting the materiality levels.
(SA 320: Materiality in Planning and Performing an Audit)
– Identifying and evaluating the risk of material misstatement through risk assessment procedures.
– CA Intermediate subjects focus on gaining an understanding of the entity and its environment, including internal control systems.
– Documenting the identified risks.
– Assessment of the internal control system.
– Testing of internal controls; internal control in the IT environment (SA 315: Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment).
Digital Audit: Key features, the impact of IT-related risks, and their effect on controls; internal financial controls by regulatory requirements; types of controls; audit approach; understanding and documenting the automated environment; testing methods; using data analytics in auditing; and assessing and reporting audit findings.
Overview and Introduction: The auditor’s responses to assessed risks as outlined in SA 330.
4. Audit Evidence:
– The meaning of audit evidence: Information gathered to support the auditor’s conclusions, as explained in CA Intermediate subjects.
– The relevance and reliability of audit evidence; obtaining appropriate audit evidence; and the meaning of assertions.
– Assertions made in the financial statements and the sources of audit evidence.
– Control testing.
– Substantive procedures: tests of details and substantive analytical procedures, along with audit procedures for gathering audit evidence.
– Evaluation of audit evidence (SA 500: Audit Evidence) and the audit trail,
Including the use of internal auditors’ work (SA 610)
– The internal audit function.
– The external auditor’s responsibility for the audit and the evaluation of the internal audit function, as outlined in CA Intermediate subjects.
– Basics of Internal Financial Control and reporting requirements. The distinction between Internal Financial Control and Internal Control over Financial Reporting.
– Audit Sampling: (SA 530: Audit Sampling) – The concept of audit sampling.
– Designing an audit sample and the different types of sampling methods (approaches to sampling).
– Determining sample size and selecting items for testing; methods of sample selection.
– Obtaining evidence of inventory existence; audit procedures to identify litigation and claims; gathering evidence regarding the presentation and disclosure of segment information (SA 501: Audit Evidence – Specific Considerations for Selected Items); external confirmation procedures. Management’s refusal to allow the auditor to send a confirmation request; use of negative confirmations (SA 505: External Confirmations); audit evidence concerning opening balances; accounting policies related to opening balances; and reporting requirements for opening balances (SA 510: Initial Audit Engagements – Opening Balances).
– The meaning of related parties; the nature of related party relationships and transactions; understanding the entity’s related party relationships and transactions (SA 550: Related Parties).
– Analytical procedures: Techniques used to evaluate financial information by analyzing relationships among data, as covered in CA Intermediate subjects.
– The meaning, nature, purpose, and timing of analytical procedures, including substantive analytical procedures.
– Planning and conducting analytical procedures during the audit planning phase.
– Analyzing and investigating the outcomes of analytical procedures (SA 520: Analytical Procedures).
5. Audit of Items of Financial Statements:
– Auditing the sale of products and services, as well as income streams such as interest income, rental income, dividend income, and net gains or losses on the sale of investments.
– Auditing purchases, employee benefit expenses, depreciation, interest expenses, and expenditures related to power and fuel, rent, building repairs, machinery repairs, insurance, taxes, travel, and miscellaneous expenses.
– Auditing share capital, reserves and surplus, long-term borrowings, trade payables, provisions, short-term borrowings, and other current liabilities, as covered in CA Intermediate subjects.
– Auditing land, buildings, plant and equipment, furniture and fixtures, vehicles, office equipment, goodwill, brands/trademarks, computer software, and related assets.
– Auditing loans and advances, trade receivables, inventories, cash and cash equivalents, other current assets, and contingent liabilities.
(The list of items is illustrative, as explained in CA Intermediate subjects.)
6. Audit Documentation
– The concept of audit documentation.
– The nature and purpose of audit documentation, including its form, content, and extent. Completion memorandum.
– Ownership and custody of audit documentation (SA 230: Audit Documentation).
7. Completion and Review
– The meaning of subsequent events.
– The auditor’s responsibilities concerning various situations involving subsequent events.
– Procedures for handling subsequent events (SA 560: Subsequent Events).
– The auditor’s responsibilities regarding the going concern assumption and the auditor’s objectives related to evaluating going concern.
– Events or conditions that could raise doubt about the going concern assumption, as discussed in CA Intermediate subjects.
– Audit procedures when events or conditions indicating a going concern issue are identified (SA 570: Going Concern). Overview and introduction to the evaluation of misstatements identified during the audit (SA 450).
– Written representations as a form of audit evidence.
– The auditor’s objective concerning written representations.
– Written representations regarding management’s responsibilities (SA 580: Written Representations).
– Overview and introduction to SA 260: Communication with Those Charged with Governance.
– Overview and Introduction of SA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management.
8. Audit Report
– Formulating an opinion on the financial statements, as covered in CA Intermediate subjects.
– The auditor’s report: key elements (SA 700: Forming an Opinion and Reporting on Financial Statements).
– Communicating key audit matters in the independent auditor’s report (SA 701). Types of modified opinions, and circumstances requiring a modification to the auditor’s opinion, including qualified, adverse, and disclaimer of opinion (SA 705: Modification to the Opinion in the Independent Auditor’s Report).
– SA 706: Emphasis of Matter and Other Matter Paragraphs in the Independent Auditor’s Report.
– The nature of comparative information.
– Corresponding figures and comparative financial statements (SA 710: Comparative Information – Corresponding Figures and Comparative Financial Statements).
– Branch audit, joint audit, and reporting requirements under the Companies Act, 2013, including CARO (Companies Auditor’s Report Order).
9. Special Features of Audit of Different Type of Entities
Appointment of auditors, audit procedures, and audit reporting for various categories of entities, including government, local bodies, not-for-profit organizations, trusts and societies, partnership firms, and different types of undertakings such as educational institutions, hotels, clubs, hospitals, etc. An overview of audit practices for Limited Liability Partnerships (LLPs) and co-operative societies, as covered in CA Intermediate subjects.
10. Audit of Banks
Understanding the accounting system in banks, the audit approach, auditing revenue items, and special considerations in bank audits, with a focus on advances and non-performing assets (NPAs).
11. Ethics and Terms of Audit Engagements
– Definition of Ethics.
– Ethics as a Mindset: The Importance of Professional Ethics.
– Principles-Based Approach vs. Rules-Based Approach: Ethical vs. Legal Perspectives.
– Core Principles of Professional Ethics: Integrity, Objectivity, Professional Competence and Due Care, Confidentiality, and Professional Behavior.
– CA Intermediate subjects emphasize auditor independence.
– Challenges to Auditor Independence: Self-Interest, Self-Review, Advocacy, Familiarity, and Intimidation Threats.
– Maintaining Auditor Independence: Safeguards, Professional Skepticism, Audit Engagement Terms, Preconditions for an Audit, and Audit Engagement Process.
– Establishing Terms for Audit Engagement.
– Terms of Engagement for Recurring Audits (As per SA 210: Agreeing the Terms of Audit Engagements).
– Introduction and Overview of SQC 1: Quality Control for Firms Conducting Audits, Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.
– Introduction and overview of SA 220: Quality Control for Audits of Financial Statements, as covered in CA Intermediate subjects.
PAPER 6: FINANCIAL MANAGEMENT AND STRATEGIC MANAGEMENT (100 MARKS)
SECTION A : FINANCIAL MANAGEMENT (50 MARKS)
Objective
1. To gain a comprehensive understanding of the various aspects of Financial Management and develop the ability to apply this knowledge in decision-making.
2. To understand key financial functions, including financing decisions, investment decisions, and dividend decisions.
3. To gain an understanding of working capital management and its components, as covered in CA Intermediate subjects.
Contents
1. Financial Management and Financial Analysis - An Overview
A. An Overview of the Financial Management Function.
– The objectives and scope of financial management.
– Profit Maximization, Wealth Maximization, and Value Creation.
– The Role of the Financial Manager and Financial Controller.
– The Environment of Financial Management.
– The Roles and Responsibilities of Finance Executives in an Organization.
– Financial Distress and Insolvency.
B. CA Intermediate subjects cover financial analysis using ratios to assess a company’s financial performance.
– Stakeholders in Financial Analysis.
– Sources of Financial Data for Analysis.
– Computation and Interpretation of Ratios.
– Limitations of Ratio Analysis.
2. Financing Decisions and Cost of Capital:
A. Sources of Finance:
– Various Sources of Finance, Characteristics of Different Types of Long-Term Debt and Equity Financing, and Methods of Raising Long-Term Finance.
– Various Sources of Short-Term Finance.
– Modern Sources of Funding: Peer-to-Peer (P2P) Lending, Equity Funding, Crowdfunding, Start-up Financing, and more.
– Internal Funds as a Source of Financing.
– CA Intermediate subjects explore global sources of finance and their impact on business decisions.
– Additional Sources of Finance: Lease Financing, Sale and Leaseback, Convertible Debt, Venture Capital, Grants, and more.
B. Cost of Capital:
– The Importance of the Cost of Capital.
– The Factors Influencing the Cost of Capital.
– Measuring the costs of individual capital components, as explained in CA Intermediate subjects, is crucial for effective financial management.
– Weighted Average Cost of Capital (WACC).
– Marginal Cost of Capital.
C. Capital Structure Decisions:
– The Importance of Capital Structure.
– Factors Influencing Capital Structure.
– Planning and Designing Capital Structure.
– Designing the optimal capital structure, as discussed in CA Intermediate subjects.
– Theories of Capital Structure and Firm Value: Relevance and Irrelevance of Capital Structure.
– EBIT-EPS Analysis and Break-even EBIT Analysis.
– Under-Capitalization and Over-Capitalization.
D. Leverages:
– Types of Leverage: Operating, Financial, and Combined.
– Analysis of Leverage.
3. Investment in Capital and Decisions on Dividends:
1. Decisions on Capital Investments
A. Decisions on Capital Investments
B. Approaches to Investment Appraisal
– Payback Period and Discounted Payback Period
– Accounting Rate of Return (ARR)
– Net Present Value (NPV): Definition, Advantages, Limitations, and Applications, Working Capital Adjustments: Incorporating working capital changes in NPV analysis.
– Limitations of the Internal Rate of Return (IRR) Method and the Issue of Multiple IRRs
– Modified Internal Rate of Return (MIRR) – Definition and Explanation, Calculation Process, and Advantages of the MIRR Method
– Profitability Index – Definition, Calculation, and Interpretation
2. Dividend Decisions – An Overview and Key Considerations
A. Fundamentals of dividends, as covered in CA Intermediate subjects.
B. Cash Dividends, Stock Dividends/Bonus Shares, Stock Splits, and Share Buybacks
C. Factors influencing dividend decisions, as discussed in CA Intermediate subjects
D. Relevance and Irrelevance of Dividend Policies – Traditional Approach, Walter’s Model, Gordon’s Model, and Modigliani-Miller (MM) Hypothesis
4. Working Capital Management
A. Managing Working Capital – Balancing Liquidity and Profitability
B. Working Capital Financing Decisions – Primary and Secondary Sources of Liquidity
C. The Working Capital Cycle (Operating Cycle) – Evaluating Working Capital Effectiveness through Operating and Cash Conversion Cycles.
D. Evaluating Working Capital Requirements.
E. Managing Accounts Receivable (Debtors)
F. Factoring and Forfaiting – Key Concepts and Differences
G. Credit Management – Principles and Practices:
– Credit Approval Process
– Overseeing Accounts Receivable
– Overseeing Accounts Receivable
H. Managing Accounts Payable (Creditors)
I. Cash Management and Treasury Operations
J. Banking Regulations for Working Capital Financing
SECTION B : STRATEGIC MANAGEMENT (50 MARKS)
Objective
CA Intermediate subjects helps to gain a comprehensive understanding of strategic management concepts and techniques, and help develop the ability to apply them effectively in business contexts.
Contents
Overview of Strategic Management
1. Meaning and Nature of Strategic Management.
2. Significance and Challenges of Strategic Management
3. Strategic Intent – Vision, Mission, Objectives, and Core Values
4. Strategic Levels within Organizations – Network, Corporate, Business, and Functional
2. Strategic Analysis: Assessing the External Environment
1. International and Macro Environment: PESTLE Framework Analysis
2. Defining the Industry for Analysis: Value Chain and Product Life Cycle (PLC)
3. Porter’s Five Forces – Analyzing the Industry Environment
4. Gaining Insight into Customers and Markets
5. Industry Competition
1. Identifying Key Stakeholders: Mende low’s Matrix
2. Strategic Drivers: Industry & Markets, Customers, Channels, Products & Services, and Competitive Advantage
3. The importance of resources and capabilities, as discussed in CA Intermediate subjects
4. Integrating External and Internal Analysis: SWOT Analysis
5. Achieving Competitive Advantage: Michael Porter’s Generic Strategies.
4. Strategic Choices:
1. Strategic Choices: Concentric Diversification, Conglomerate Diversification, Market Development, Product Development, Innovation, Horizontal Integration, Vertical Integration, Turnaround Strategy, Divestiture, and Liquidation
2. Developing Strategic Options
– Ansoff’s Growth Matrix
– Arthur D. Little (ADL) Matrix
– Boston Consulting Group (BCG) Matrix
– General Electric (GE) Matrix
5. Implementing and Evaluating Strategy
1. Strategy Implementation: Formulation vs. Implementation Matrix, Key Linkages, and Challenges
2. Driving Strategic Change through Digital Transformation
3. Organizational Structure (Hard Elements) and Culture (Soft Elements)
4. Leadership in strategy, as covered in CA Intermediate subjects
5. Strategic Oversight
6. Measuring Strategic Performance