Advanced Financial Reporting

(One Paper – Three Hours – 100 Marks).

Advanced Financial Reporting is the first paper of CAP-III. It  covers 100 marks in total. It is the Group 1 paper. The syllabus you need to cover in CAP-III under “Advanced Financial Reporting” is as follows: 

Level of Knowledge : Expert

Course objectives :

— Enable the candidates to understand the purpose and context of “Nepal Financial Reporting Standards”,

— Prepare financial statements, including consolidated financial statements for limited liability companies and other specialized entities applying standards and to explain their presentations.

— Interpret financial statements and other data for the benefits of users.

Course contents for CAP-3

  • Accounting principles and concepts

—  Fundamental accounting concepts and their relevance in preparation of financial statements.

—  Conventional cost concept vis a vis fair value concept

  • Financial Reporting Standards

— Nepal Accounting Standards(NAS)/ Nepal Financial Reporting Standards (NFRS) interpretations by Standing Interpretation Committee (SICs) and International

Financial  Reporting  Standards  Interpretation  Committee  (IFRICs)  and  their application.

— Conceptual framework, recognition, measurement of elements and disclosures of financial statements and significant departure from current practices.

— Issues and problems associated in general purpose financial reporting with the convergence of NFRS.

—  Comparative study of national and international financial reporting standards/GAAPs.

  • Preparation and presentation of financial statements

a. Advanced problems in preparation and presentation of financial statements of limited liabilities companies, bank and financial institutions, mutual funds, merchant banker, insurance companies, stock broker and power development companies in accordance with applicable Financial Reporting Standards and relevant Acts and Rules.

b. Valuation of goodwill, shares and business.


c. Disclosure as per standards including

—  Accounting policies

—  Segment information

—  Related parties transactions

—  Earnings per Share

—  Current and deferred taxation

Other as  per the  relevant Acts,  rules  or directives  from regulating authorities.

d. Understanding recent development in accounting

—  Interim and group reporting

—  Value added statement

—  Economic value added statement

—  Human resource accounting

—  Corporate social responsibility reporting

—  Integrated Reporting

—  Environmental accounting

—  Corporate governance reporting


  1. Preparation of consolidated financial statements

—  Definitions of subsidiary and controlled companies

— Financial issues related to subsidiary and controlled companies for their inclusion and exclusion like intra-group transactions, fair value adjustments, minority interest

—  Preparation of consolidated accounts of holding and group companies

—  Accounting for associates

  1. Accounting for business combinations

—  Acquisition, absorptions, amalgamation, merger, de-merger and reconstruction

  1. Statement of Cash Flows

—  Preparation (direct and indirect method) and interpretations

  1. Accounting for foreign currency transactions


  1. Analysis and interpretation of financial statements and related information

— Appraisal of financial and related information by vertical and horizontal analysis, ratio analysis, common size statement

  1. Accounting treatments for specialized transactions

— Accounting treatment of transactions under lease, contract, intangible assets, financial instruments including hedge accounting, taxes, share based payment, employee benefits plan as per financial reporting standards

  1. Public Financial Management and Government Accounting

—  Concept of public financial management

—  Process of budget formulation and approval; content of the budget

—  Government accounting system and implementation of NPSAS

— Role of financial comptroller general to improve government accounting and public financial management system -treasury single account, PEFA, action plan to improve PFM

— Role of office of the auditor general to improve government accounting and public financial management system-implementation of ISA, ISSAI, auditing, audit follow up

— Role of public accounts committee to improve government accounting and public financial management system


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