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September 2018toJune 2019FinancialReporting (FR)Syllabus and study guide
Financial Reporting (FR)Guide to structure of thesyllabus and study guideOverall aim of the syllabusThis explains briefly the overall objectiveof the syllabus and indicates in thebroadest sense the capabilities to bedeveloped within the exam.Relational diagram linking FinancialReporting with other ACCAexamsThis diagram shows direct and indirectlinks between this exam and otherexams preceding or following it. Itindicates where you are expected tohave underpinning knowledge andwhere it would be useful to reviewprevious learning before undertakingstudy.Main capabilitiesThe aim of the syllabus is broken downinto several main capabilities whichdivide the syllabus and study guide intodiscrete sections.Relational diagram of the maincapabilitiesThis diagram illustrates the flows andlinks between the main capabilities(sections) of the syllabus and should beused as an aid to planning teaching andlearning in a structured way.Detailed syllabusThis shows the breakdown of the maincapabilities (sections) of the syllabusinto subject areas. This is the blueprintfor the detailed study guide.Approach to examining the syllabusThis section briefly explains thestructure of the examination and how itis assessed.Study GuideThis is the main document that students,education and content providers shoulduse as the basis of their studies,instruction and materials. Examinationswill be based on the detail of the studyguide which comprehensively identifieswhat could be assessed in anyexamination session. The study guide isa precise reflection and breakdown ofthe syllabus. It is divided into sectionsbased on the main capabilities identifiedin the syllabus. These sections aredivided into subject areas which relate tothe sub-capabilities included in thedetailed syllabus. Subject areas arebroken down into sub-headings whichdescribe the detailed outcomes thatcould be assessed in examinations.These outcomes are described usingverbs indicating what exams mayrequire students to demonstrate, and thebroad intellectual level at which thesemay need to be demonstrated(*see intellectual levels below).Syllabus rationaleThis is a narrative explaining how thesyllabus is structured and how the maincapabilities are linked. The rationalealso explains in further detail what theexamination intends to assess and why. ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Intellectual LevelsThe syllabus is designed toprogressively broaden and deepen theknowledge, skills and professionalvalues demonstrated by the student ontheir way through the qualification.The specific capabilities within thedetailed syllabuses and study guides areassessed at one of three intellectual orcognitive levels:Level 1:Level 2:Level 3:Knowledge andcomprehensionApplication and analysisSynthesis and evaluationVery broadly, these intellectual levelsrelate to the three cognitive levels atwhich the Applied Knowledge,the Applied Skills and the StrategicProfessional examsare assessed.Each subject area in the detailed studyguide included in this document is givena 1, 2, or 3 superscript, denotingintellectual level, marked at the end ofeach relevant line. This gives anindication of the intellectual depth atwhich an area could be assessed withinthe examination. However, while level 1broadly equates with AppliedKnowledge , level 2 equates to AppliedSkills and level 3 to StrategicProfessional, some lower level skills cancontinue to be assessed as the studentprogresses through each level. Thisreflects that at each stage of study therewill be a requirement to broaden, as wellas deepen capabilities. It is alsopossible that occasionally some higherlevel capabilities may be assessed atlower levels.Learning Hours andEducation RecognitionThe ACCA qualification does notprescribe or recommend any particularnumber of learning hours forexaminations because study andlearning patterns and styles vary greatlybetween people and organisations. Thisalso recognises the wide diversity ofpersonal, professional and educationalcircumstances in which ACCA studentsfind themselves.As a member of the InternationalFederation of Accountants, ACCA seeksto enhance the education recognition ofits qualification on both national andinternational education frameworks, andwith educational authorities and partnersglobally. In doing so, ACCA aims toensure that its qualifications arerecognised and valued by governments,regulatory authorities and employersacross all sectors. To this end, ACCAqualifications are currently recognisedon the education frameworks in severalcountries. Please refer to your nationaleducation framework regulator forfurther information.Each syllabus contains between 20 and35 main subject area headingsdepending on the nature of the subjectand how these areas have been brokendown. ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Guide to ACCAExamination StructureThe structure of examinations varieswithin and between levels.The Applied Knowledge examinationscontain 100% compulsory questions toencourage candidates to study acrossthe breadth of each syllabus. These areassessed by a two-hour computer basedexamination.The Corporate and Business Law examis a two-hour computer-based objectivetest examination for English and Global,and available as a paper based versionfor all variants.The other Applied Skills examinations(PM, TX-UK, FR, AA, and FM)contain a mix of objective and longertype questions with a duration of threehours for 100 marks, these questionsdirectly contribute towards the candidateresult. These exams are available incomputer-based and paper-basedformats. Prior to the start of each examthere will be time allocated for studentsto be informed of the exam instructions.Computer-based examsFor the Applied Skills (PM, TX-UK, FR,AA and FM) computer-based examscandidates will be delivered an extra 10marks of objective test content (eitherfive single OT questions or five OTquestions based around a singlescenario), for which candidates aregiven an extra 20 minutes. Thesequestions are included to ensurefairness, reliability and security ofexams. These questions do not directlycontribute towards the candidate’sscore. Candidates will not be able todifferentiate between the questions thatcontribute to the result and those that donot. All questions have been subject toACCA’s regulatory approved qualityassurance process.The total exam time is therefore 3 hoursand 20 minutes. Prior to the start of theexam candidates are given an extra 10minutes to read the exam instructions.Paper-based examsFor paper-based exams 15 minutes areadded to the three hours to reflect themanual effort required as compared tocomputer-based exams. All paperbased and computer-based questionshave been subject to the same qualityassurance process. There will be timeawarded by the invigilator to read theexam instructions.Strategic Business Leader is ACCA’scase study examination at the StrategicProfessional level and is examined as aclosed book exam of four hours,including reading, planning andreflection time which can be usedflexibly within the examination. There isno pre-seen information and all examrelated material, including caseinformation and exhibits are availablewithin the examination. StrategicBusiness Leader is an exam based onone main business scenario whichinvolves candidates completing severaltasks within which additional materialmay be introduced. All questions arecompulsory and each examination willcontain a total of 80 technical marks and20 Professional Skills marks. The detailof the structure of this exam is describedin the Strategic Business Leadersyllabus and study guide document.The other Strategic Professional examsare all of three hours and 15 minutesduration. All contain twoSections and all questions arecompulsory. These exams all containfour professional marks. The detail of ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)the structure of each of these exams isdescribed in the individual syllabus andstudy guide documents.ACCA encourages students to take timeto read questions carefully and to plananswers but once the exam time hasstarted, there are no additionalrestrictions as to when candidates maystart writing in their answer books.Time should be taken to ensure that allthe information and exam requirementsare properly read and understood.The pass mark for all ACCAQualification examinations is 50%. ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Guide to ACCAExamination AssessmentACCA reserves the right to examineanything contained within the studyguide at any examination session. Thisincludes knowledge, techniques,principles, theories, and concepts asspecified. For the financial accounting,audit and assurance, law and tax examsexcept where indicated otherwise,ACCA will publish examinabledocuments once a year to indicateexactly what regulations and legislationcould potentially be assessed withinidentified examination sessions.For examinations, regulation issued orlegislation passed on or before 31August annually, will be examinablefrom 1 September of the following yearto 31 August of the year after that.Please refer to the examinabledocuments for the exam (whererelevant) for further information.Regulation issued or legislation passedin accordance with the above dates maybe examinable even if the effective dateis in the future.The term issued or passed relates towhen regulation or legislation has beenformally approved.The term effective relates to whenregulation or legislation must be appliedto an entity transactions and businesspractices.The study guide offers more detailedguidance on the depth and level atwhich the examinable documents will beexamined. The study guide shouldtherefore be read in conjunction with theexaminable documents list. ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Financial Reporting (FR) Syllabus and study guideThis syllabus and study guide is designed to help with planning study and to providedetailed information on what could be assessed in any examination session.AimTo develop knowledge and skills inunderstanding and applying accountingstandards and the theoretical frameworkin the preparation of financial statementsof entities, including groups and how toanalyse and interpret those financialstatements.SyllabusRelational diagram linking FinancialReporting (FR) with other ACCAexamsThis diagram shows direct and indirectlinks between this exam and otherexams preceding or following it. Some exams are directly underpinned by otherexams such as Strategic Business Reporting by Financial Reporting . These linksare shown as solid line arrows. Other exams only have indirect relationships witheach other such as links existing between the accounting and auditing exams. Thelinks between these are shown as dotted line arrows. This diagram indicates whereyou are expected to have underpinning knowledge and where it would be useful toreview previous learning before undertaking study. ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Main capabilitiesOn successful completion of this exam, candidates should be able to:A Discuss and apply a conceptual and regulatory frameworks for financialreportingB Account for transactions in accordance with International accounting standardsC Analyse and interpret financial statements.D Prepare and present financial statements for single entities and businesscombinations in accordance with International accounting standardsThis diagram illustrates the flows and links between the main capabilities (sections)of the syllabus and should be used as an aid to planning teaching and learning in astructured way. ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)RationaleThe financial reporting syllabusassumes knowledge acquired inFinancial Accounting (FA), and developsand applies this further and in greaterdepth.The syllabus begins with the conceptualframework for financial reporting withreference to the qualitativecharacteristics of useful information andthe fundamental bases of accountingintroduced in the Financial Accounting(FA) syllabus within the Knowledgemodule. It then moves into a detailedexamination of the regulatory frameworkof accounting and how this informs thestandard setting process.The main areas of the syllabus cover thereporting of financial information forsingle companies and for groups inaccordance with generally acceptedaccounting principles and relevantaccounting standards.Finally, the syllabus covers the analysisand interpretation of information fromfinancial reports. ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Detailed syllabusA The conceptual and regulatoryframework for financial reporting1. The need for a conceptualframework and the characteristics ofuseful information2. Recognition and measurementC Analysing and interpreting thefinancial statements of singleentities and groups1. Limitations of financial statements2. Calculation and interpretation ofaccounting ratios and trends toaddress users’ and stakeholders’needs3. Regulatory framework3. Limitations of interpretationtechniques4. The concepts and principles ofgroups and consolidated financialstatements4. Specialised, not-for-profit, and publicsector entitiesB Accounting for transactions infinancial statements1. Tangible non-current assets2. Intangible assets3. Impairment of assetsD Preparation of financialstatements1. Preparation of single entity financialstatements2. Preparation of consolidated financialstatements including an associate4. Inventory and biological assets5. Financial instruments6. Leasing7. Provisions and events after thereporting period8. Taxation9. Reporting financial performance10. Revenue11. Government grants12. Foreign currency transactions ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Approach to examining the syllabusThe syllabus is assessed by a three-hour examination available in both computerbased and paper-based formats.**For paper-based exams there is an extra 15 minutes to reflect the manual effortrequired.All questions are compulsory. The exam will contain both computational anddiscursive elements.Some questions will adopt a scenario/case study approach.Computer-based exams*For computer-based exams an extra 20 minutes is provided to candidates to reflectthe additional content as per below. The total exam time is therefore 3 hours and 20minutes. Prior to the start of the exam candidates are given an extra 10 minutes toread the exam instructions.Section A of the computer-based exam comprises 15 objective test questions of 2marks each plus additional content as per below.Section B of the computer-based exam comprises three questions each containingfive objective test questions plus additional content as per below.For the computer-based exam candidates will be delivered an extra 10 marks ofobjective test content (either five single OT questions OR five OT questions basedaround a single scenario), for which candidates are given an extra 20minutes. These questions are included to ensure fairness, reliability and security ofexams. These questions do not directly contribute towards the candidate’sscore. Candidates will not be able to differentiate between the questions thatcontribute to the result and those that do not.Section C of the exam comprises two 20 mark constructed response questions.Paper-based exams*For paper-based exams an extra 15 minutes is provided to candidates to reflect themanual effort required as compared to the time needed for the computer-basedexams. The total exam time is therefore three hours and 15 minutes. Prior to thestart of the exam candidates are given an extra 10 minutes to read the examinstructions.Section A of the paper-based exam comprises 15 multiple choice questions of 2marks each ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Section B of the paper-based exam comprises three questions containing fivemultiple choice questions.Section C of the exam comprises two 20 mark questions.The 20 mark questions will examine the interpretation and preparation of financialstatements for either a single entity or a group. The section A questions and theother questions in section B can cover any areas of the syllabus.An individual question may often involve elements that relate to different subjectareas of the syllabus. For example the preparation of an entity’s financial statementscould include matters relating to several accounting standards.Questions may ask candidates to comment on the appropriateness or acceptabilityof management’s opinion or chosen accounting treatment. An understanding ofaccounting principles and concepts and how these are applied to practical exampleswill be tested.Questions on topic areas that are also included in Paper F3 will be examined at anappropriately greater depth in this paper.Candidates will be expected to have an appreciation of the need for specifiedaccounting standards and why they have been issued. For detailed or complexstandards, candidates need to be aware of their principles and key elements. ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)Study GuideA. the conceptual andregulatory framework forfinancial reporting1. The need for a conceptualframework and the characteristicsof useful informationa) Describe what is meant by aconceptual framework for financialreporting.[2]b) Discuss whether a conceptualframework is necessary and what analternative system might be.[2]c) Discuss what is meant by relevanceand faithful representation anddescribe the qualities that enhancethese characteristics.[2]d) Discuss whether faithfulrepresentation constitutes more thancompliance with accountingstandards.[1]e) Discuss what is meant byunderstandability and verifiability inrelation to the provision of financialinformation.[2]f)Discuss the importance ofcomparability and timeliness tousers of financial statements.[2]g) Discuss the principle ofcomparability in accounting forchanges in accounting policies.[2]2. Recognition and measurementa) Define what is meant by ‘recognition’in financial statements and discussthe recognition criteria.[2]b) Apply the recognition criteria to: [2]i) assets and liabilities.ii) income and expenses.c) Explain and compute amounts usingthe following measures : [2]i) historical costii) current costiii) net realisable valueiv) present value of future cashflowsv) fair valued) Discuss the advantages anddisadvantages of historical costaccounting.e) Discuss whether the use of currentvalue accounting overcomes theproblems of historical costaccounting.[2]f)Describe the concept of financialand physical capital maintenanceand how this affects thedetermination of profits.[1]3. Regulatory frameworka) Explain why a regulatory frameworkis needed including the advantagesand disadvantages of IFRS over anational regulatory framework.[2]b) Explain why accounting standardson their own are not a completeregulatory framework.[2]c) Distinguish between a principlesbased and a rules based frameworkand discuss whether they can becomplementary.[1]d) Describe the IASB’s Standardsetting process including revisions toand interpretations of Standards.[2]e) Explain the relationship of nationalstandard setters to the IASB in ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)respect of the standard settingprocess.[2]4. The concepts and principles ofgroups and consolidated financialstatementsa) Describe the concept of a group as asingle economic unit.[2]b) Explain and apply the definition of asubsidiary within relevant accountingstandards.[2]c) Using accounting standards andother regulation, identify and outlinethe circumstances in which a groupis required to prepare consolidatedfinancial statements. [2]d) Describe the circumstances when agroup may claim exemption from thepreparation of consolidated financialstatements.[2]e) Explain why directors may not wishto consolidate a subsidiary andwhen this is permitted by accountingstandards and other applicableregulation.[2]f)Explain the need for usingcoterminous year ends and uniformaccounting polices when preparingconsolidated financial statements.[2]g) Explain why it is necessary toeliminate intra group transactions. [2]h) Explain the objective of consolidatedfinancial statements. [2]i)Explain why it is necessary to usefair values for the consideration foran investment in a subsidiarytogether with the fair values of asubsidiary’s identifiable assets andliabilities when preparingconsolidated financial statements. [2]j)Define an associate and explain theprinciples and reasoning for the useof equity accounting. [2]B Accounting fortransactions in financialstatements1. Tangible non-current assetsa) Define and compute the initialmeasurement of a non-current asset(including borrowing costs and anasset that has beenself-constructed).[2]b) Identify subsequent expenditure thatmay be capitalised, distinguishingbetween capital and revenueitems.[2]c) Discuss the requirements of relevantaccounting standards in relation tothe revaluation of non-currentassets.[2]d) Account for revaluation and disposalgains and losses for non-currentassets.[2]e) Compute depreciation based on thecost and revaluation models and onassets that have two or moresignificant parts (complex assets).[2]f)Discuss why the treatment ofinvestment properties should differfrom other properties.[2]g) Apply the requirements of relevantaccounting standards to aninvestment property.[2]2. Intangible non-current assetsa) Discuss the nature and accountingtreatment of internally generated andpurchased intangibles.[2] ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)b) Distinguish between goodwill andother intangible assets.[2]c) Describe the criteria for the initialrecognition and measurement ofintangible assets.[2]d) Describe the subsequent accountingtreatment, including the principle ofimpairment tests in relation togoodwill.[2]e) Indicate why the value of purchaseconsideration for an investment maybe less than the value of theacquired identifiable net assets andhow the difference should beaccounted for.[2]f)Describe and apply the requirementsof relevant accounting standards toresearch and developmentexpenditure.[2]3. Impairment of assetsa) Define, calculate and account for animpairment loss.[2]b) account for the reversal of animpairment loss on an individualassetc) Identify the circumstances that mayindicate impairments to assets.[2]d) Describe what is meant by a cashgenerating unit.[2]e) State the basis on which impairmentlosses should be allocated, andallocate an impairment loss to theassets of a cash generating unit.[2]b) Apply the requirements of relevantaccounting standards for biologicalassets.[2]5Financial instrumentsa) Explain the need for an accountingstandard on financial instruments.[1]b) Define financial instruments in termsof financial assets and financialliabilities.[1]c) Explain and account for the factoringof receivables.d) Indicate for the following categoriesof financial instruments how theyshould be measured and how anygains and losses from subsequentmeasurement should be treated inthe financial statements: [1]i) amortised costii) fair value through othercomprehensive income( including where an irrevocableelection has been made forequity instruments that are notheld for trading)iii) fair value through profit or loss [2]e) Distinguish between debt and equitycapital.[2]f)Apply the requirements of relevantaccounting standards to the issueand finance costs of: [2]i) equityii) redeemable preference sharesand debt instruments with noconversion rights (principle ofamortised cost)iii) convertible debt4. Inventory and biological assets6. Leasinga) Describe and apply the principles ofinventory valuation.[2]a) Account for right of use assets andlease liabilities in the records of thelessee.[2] ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)b)Explain the exemption from therecognition criteria for leases in therecords of the lessee.[2]c) Account for sale and leasebackagreements.[2]7. Provisions and events after thereporting perioda) Explain why an accounting standardon provisions is necessary.[2]8. Taxationa) Account for current taxation inaccordance with relevant accountingstandards.[2]b) Explain the effect of taxabletemporary differences on accountingand taxable profits.[2]c) Compute and record deferred taxamounts in the financialstatements.[2]b) Distinguish between legal andconstructive obligations.[2]9. Reporting financial performancec) State when provisions may and maynot be made and demonstrate howthey should be accounted for.[2]a) Discuss the importance of identifyingand reporting the results ofdiscontinued operations.[2]d) Explain how provisions should bemeasured.[1]b) Define and account for non-currentassets held for sale anddiscontinued operations.[2]e) Define contingent assets andliabilities and describe theiraccounting treatment and requireddisclosures.[2]f)Identify and account for:[2]i) warranties/guaranteesii) onerous contractsiii) environmental and similarprovisionsiv) provisions for future repairs orrefurbishments.g) Events after the reporting periodi) distinguish between and accountfor adjusting and non- adjustingevents after the reportingperiod [2]ii) Identify items requiring separatedisclosure, including theiraccounting treatment andrequired disclosures.[2]c) Indicate the circumstances whereseparate disclosure of material itemsof income and expense is required.[2]d) Account for changes in accountingestimates, changes in accountingpolicy and correction of prior perioderrorse) Earnings per share (eps)i) calculate the eps in accordancewith relevant accountingstandards (dealing with bonusissues, full market value issuesand rights issues) [2]ii) explain the relevance of thediluted eps and calculate thediluted eps involving convertibledebt and share options(warrants) [2] ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)10. Revenue12. Foreign currency transactionsa) Explain and apply the principles ofrecognition of revenue:(i) Identification of contracts(ii) Identification of performanceobligations(iii) Determination of transactionprice(iv) Allocation of the price toperformance obligations(v) Recognition of revenuewhen/as performanceobligations are satisfied.a) Explain the difference betweenfunctional and presentation currencyand explain why adjustments forforeign currency transactions arenecessary.b) Explain and apply the criteria forrecognising revenue generated fromcontracts where performanceobligations are satisfied over time orat a point in time.[2]c) Describe the acceptable methods formeasuring progress towardscomplete satisfaction of aperformance obligation.[2]d) Explain and apply the criteria for therecognition of contract costs. [2]e)f)Apply the principles of recognitionof revenue, and specifically accountfor the following types oftransaction:[2]i) principal versus agentii) repurchase agreementsiii) bill and hold arrangementsiv) consignmentsPrepare financial statement extractsfor contracts where performanceobligations are satisfied over time.[2]b) Account for the translation of foreigncurrency transactions andmonetary/non-monetary foreigncurrency items at the reporting date.C Analysing and interpretingthe financial statements ofsingle entities and groups1. Limitations of financialstatementsa) Indicate the problems of usinghistoric information to predict futureperformance and trends.[2]b) Discuss how financial statementsmay be manipulated to produce adesired effect (creative accounting,window dressing).[2]c) Explain why figures in a statement offinancial position may not berepresentative of average valuesthroughout the period for example,due to:[2]i) seasonal tradingii) major asset acquisitions near theend of the accounting period.d) Explain how the use of consolidatedfinancial statements might limitinterpretation techniques11. Government grants2a) Apply the provisions of relevantaccounting standards in relation toaccounting for government grants.[2]Calculation and interpretation ofaccounting ratios and trends toaddress users’ and stakeholders’needsa) Define and compute relevantfinancial ratios.[2] ACCA 2018-2019 All rights reserved.
Financial Reporting (FR)b) Explain what aspects ofperformance specific ratios areintended to assess.[2]information) to assess theperformance and financial position ofan entity.[2]c) Analyse and interpret ratios to givean assessment of an entity’s/group’sperformance and financial position incomparison with: [2]i) previous period’s financialstatementsii) another similar entity/group forthe same reporting periodiii) industry average ratios.f)d) Interpret financial statements to giveadvice from the perspectives ofdifferent stakeholders.[2]4. Specialised, not-for-profit andpublic sector entitiese) Discuss how the interpretation ofcurrent value based financialstatements would differ from thoseusing historical cost basedaccounts.[1]3. Limitations of interpretationtechniquesa) Discuss the limitations in the use ofratio analysis for assessingcorporate performance.[2]b) Discuss the effect that changes inaccounting policies or the use ofdifferent accounting polices betweenentities can have on the ability tointerpret performance.[2]c) Indicate other information, includingnon-financial information, that maybe of relevance to the assessment ofan entity’s performance.[1]d) Compare the usefulness of cashflow information with that of astatement of profit or loss or astatement of profit or loss and othercomprehensive income.[2]e) Interpret a statement of cash flows(together with other financiali) explain why the trend of eps maybe a more accurate indicator ofperformance than a company’sprofit trend and theimportance of eps as astock market indicator [2]ii) discuss the limitations of usingeps as a performancemeasure.[3]a) Explain how the interpretation of thefinancial statement of a specialised,not-for-
Financial Accounting (FA), and develops and applies this further and in greater depth. The syllabus begins with the conceptual framework for financial reporting with reference to the qualitative characteristics of useful information and the fundamental bases of accounting introduced in the Financial
