Studying Financial Reporting (FR) – Where to Start?
Previously for the CA Final old syllabus, the paper for financial reporting was categorized and there were a few chapters such as consolidation, an easy question of 16 marks and limited AS. We prefer to not comment on the level of difficulty of ICAI regarding the question papers and say Financial Reporting is easy. Although based on the new syllabus of FR, it is quite obvious that it is fairly difficult for the students, particularly, the amount of content of the new syllabus is what’s scary to them with a content of 2,500+ pages. Most students will are not able to fully read and understand the content of the syllabus, thus making it hard for them to have an exemption score in Financial Reporting.
When starting to study the syllabus, make sure to have your notes in an orderly arrangement and only write and take note of the important key points which are required to write down in exams. This will allow you to get the attention of the proctor as well as catch up the marks easily. It will also help you in remembering and digesting the key words and concepts in the future. Aside from this, it can also help you readily organize and revise your notes in a small amount of time. This will come handy for smaller IND AS particularly 8,10,40,41,36, and will also be helpful for other IND AS such as 110,102,103, which are the easier questions asked in the exam. This will also help in remembering the revisions and notes that you have taken. It is important to keep these notes with you for easy access while reviewing, taking more notes and revising your notes as well. Another technique you can do is to have a voice recorder and record your voice as you tell the revisions of the notes. This is especially useful if you want auditory recall of your notes and the syllabus.
Main Topics to Review for CA Final Financial Reporting
Here are important topics to focus on in reviewing:
|Value Added Statements -Economic Value Added -Market Value Added -Shareholders’ Value Added|
|Share-Based Payments – Sums on ESOP, ESPS and others|
|Other Topics -Financial Reporting by Mutual funds -Non-banking finance companies -Merchant bankers -Stock and commodity market intermediaries plus Human Resource Accounting|
|Valuation of Goodwill – Shares – Business – Brands -Others ( V.IMP)|
|Corporate Restructuring – this is the sums on the capital demerger, reduction, buyback, and others|
|Accounting for Financial Instruments (AS 30,31,32) – this is the sums on derivative, forex, call /put options and others|
|8. Consolidated Financial Statements (Holding Company)|
CA Final Financial Reporting Accounting Standards
For your first steps, you can also check out more practical topics such as corporate restructuring, for example, mergers, internal structure, amalgamations, sale, take over, a spin-off and others. While doing so, be mindful of the Accounting Standards as it is also one of the more important topics to review. Up to 30 percent of the “Financial Reporting” exam will be coming this, as well as of the “Auditing and Assurance” paper 3.
All of the Accounting Standards are to be carefully studied. Never underestimate other topics and rank them as less important or more important than others. Never skip AS and make sure to study each part. One important aspect to take note of in this paper is Accounting Standards. Based on previous data, this takes up 25-30 marks in the exam. To guide you better, here is an analysis of Accounting Standards:
- Category A : AS 15-20, 22,25, 26 and 28
- Category B: AS 2, 11-13, 24, 29-32
- Category C: AS 1,3-7, 9, 10
CA Final Financial Reporting – How to study?
- The first step is to revise the Accounting standards indicated in Category A. After this, you can give attention to other smaller topics such as NBFC, Value Added Statement and Share-based Accounting, which will give you a better understand and confidence on the topics. Then proceed to the next topics indicated in the subsequent categories.
- Next step is to take on the Holding Chapter and partition it in a one week time table. Answer a chunk of the questions per day until you finish all the questions.
- Manage your time with Accounting Standards and work on it daily (longer time may be needed for harder AS such as AS 22,15,19) together with practical case studies on AS. As much as it is important, you can give lesser attention on IPCC level AS.
- For Financial Reporting, the questionnaire is easier to digest as it is in the more practical side. Because of this, it is advisable to practice answering a lot of questions per topic. As much as possible, answer the questions by yourself. Avoid looking at answers from audit solutions or your notes. Make it a routine to answer a lot of questions and veer away from looking for the solutions on your notes.
CA Final Financial Reporting – Topics to Prepare for
- Remember to use the given formatting for the accounts presentation. Always do the Balance Sheet in the given revised schedule formatting together with the notes. Indicate the currency if needed particularly in costing and accounts. Remember to put columns in double lines if you have the time.
- Remember to give working notes to support your answers and write the assumptions legibly.
- For your answers, give importance to the provisions of Accounting Standards.
- Read and analyze each topic and make sure to understand all the conceptual points related to the topics.
- Make it a point to answer and solve as many questions as possible. You can also check out Revision Test papers, Practice Manual, Suggested answers and Mock test papers.
- Never underestimate topics like Human Resource Accounting, Value Added Statements, Mutual Funds and the likes.
- To assess your preparedness for the exam, try answering exam papers from the previous batch. This also works with revision test papers and mock test papers while imitating the actual examination conditions. After doing the practice exams and checking the result, you can infer which topics you have to study more as well as adjust your reviewing technique.
- A good tip is to try to answer the mock exams and older exams. Do this each day for better results.
- If after trying the practice exams you find that you have a lot of wrong answers or if you failed, you can try using newer books with new authors.
- Give a good impression to the valuator with your Starting answers. This will show that you have the capability to provide quality answers in terms of content, presentation and neatness.
- Veer away from overwriting. If you cannot avoid it, you can remove by crossing out or striking off and then rewrite. Remember that the clarity is above neatness of your answers.
- Remember to leave the left-hand page clear for notes, assumptions and showing workings. It is important to show and elaborate on the workings as it is required for the answers to be considered valid. You can write this next to the question and use the last page for other writings.
- If you encounter a question that you have an answer for but not enough time, you can opt to write a short synopsis of the answer instead. If necessary, you can do this in the last part of the answer sheet.
- If needed and applicable, please include Total columns in accounts and costing. For journal entries, it is imperative to include narrations in the case of accountancy.
- You can use the principle of double-entry in case the balance sheet is not tallying in accounts. Do this by checking off each entry. For tallied statement, any figure must only appear one time, and for the rest, two times on the opposite side. Lastly, remember to go back and recheck you concluded total.
Please do not attempt to deceive the evaluator in another subject. They are more knowledgeable than you and you might incur a penalty.
- You may write with either a blue or a black pen for the test. The black pen is for underlining keywords, making columns and headings.
- A good strategy is doing the consolidation at the end, after going over all the questions. Consolidation may take up to 60 mins and can take up a lot of time. If you prefer answering other questions, it is your choice to do the consolidation. A lot of exam-takers take too much time on the consolidation and have lesser time finishing the entire paper.
Your professional strategy and effort is the secret to passing the CA examination. Having a better understand and knowing how to analyze published financial statements and annual report of companies is a must in becoming a successful accountant.
Remember to finish all the topics in the subject because it is absolute and we cannot know what will be included. What we can do is adjust and adapt our techniques in reviewing and know which topics to give more importance to. These here are some proven techniques that will allow you to have a better chance at scoring high and acing the exam.