Description

Principles of Accounting and Taxation

Principles of Accounting and Taxation is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to prepare and interpret financial statements and compute taxes for various entities in a non-complex environment.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

• Prepare books of original entry and basic ledger accounts under the double entry system
• Prepare basic financial statements of corporations and not for profit organisations
• Prepare non-complex tax computations for individuals and corporations
• Interpret information in financial and tax statements for decision

CONTENT

1. Introduction to Accounting
   • The nature and purpose of accounting
   • Users of accounting information and their respective needs
   • Accounting Standards and their purposes (IFRS, IASs, IPSAS)
   • Regulatory framework (ICPAK, IASB, IAESB, IPSASB), the Companies Act
   • Professional ethics
   • Principles, concepts and conventions underlying the preparation of accounting statements

2.                   Accounting Procedures and Techniques

• Accounting Cycle
• Double entry book-keeping
• Books of original entry (journals, ledgers, cashbooks)
• Balancing accounts and preparing the trial balance
• Depreciation of non-current assets including their disposal (by part exchange; ordinary sale; accident)
• Preparation of movement of property, plant equipment (as per International Financial Reporting Standards)
• Trade receivables, bad debts write-offs and provision for bad and doubtful debts
• Accruals, prepayments, reserves and provisions necessary adjustments in statements of financial performance
• Introduction to simple statements of financial performance
• Statements of financial position
• Final accounting statements of a sole trader
• Financial statements of a partnership business reflecting changes in partnerships such as admission, retirement and dissolution

3.                   Introduction to Simple Company Accounts

• Company Formation – Documents
• Share capital and reserves
• Issue of shares at par; premium; discount
• Over and under subscriptions
• Allotment and calls on shares, forfeiture of shares
• Preparation of statements of financial performance and appropriation account and the statement of financial position
• Published accounts: Components of a complete set of published financial statements only

4.                   Accounting for Non-Profit Making Organisations

• Features of Non-profit making organisations
• Types of funds and their accounting treatment
• Income and expenditure account
• Statement of financial position
• Public Sector Accounting and Financial System
• Features of public sector entities (as compared to private sector)
• Structure of the public sector (National and county governments, State Corporations, Departments and Agencies)
• Regulation and oversight [International Public Sector Accounting Standards Board, Director of Accounting Services, National Treasury, Parliamentary Committees, Accounting Officers at national and county levels, Current PFM Acts
• Objectives of public sector financial statements and Standards (IPSAS)
• Accounting techniques in public sector such as budgeting, cash, accrual, commitment and fund accounting) (Preparation of financial statements excluded)

5.                   Introduction to Taxation

• History of taxation
• Types of taxation
• Principles of an optimal tax system
• Single versus multiple tax systems
• Classification of tax systems
• Tax shifting
• Factors that determine tax shifting
• Tax evasion and tax avoidance
• Taxable capacity
• Fiscal policies
• The Revenue Authority; history, structure and mandate

6.                   Investment Allowances

• Rationale for investment allowances
• Investment allowance: Ordinary manufacturers
• Industrial building deductions
• Wear and tear allowances
• Farm works deductions
• Shipping investment deduction
• Other deductions

7.                   Customs Taxes and Excise Taxes

• Customs procedure
• Import and export duties
• Prohibitions and restriction measures
• Transit goods and bond securities
• Purposes of customs and excise duties
• Goods subject to customs control
• Import declaration form, pre-shipment inspection, clean report of findings
• Excisable goods and services
• Application for excise duty (licensing)
• Use of excise stamps
• Offences and penalties
• Excisable goods management system