entrance exam guide

8/13/2019 Entrance Exam Guide

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Chartered Accountants Program

Entrance exam

guide


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Chartered Accountants Program Entrance exam guide (July 2012) 1

Contents1 Background 3

1.1 Shortage of accounting professionals in Australia 3

1.2 How is the Institute responding? 4

1.3 Who will benefit? 4

2 About the entrance exam 5

2.1 Who is eligible to sit the exam? 5

2.2 What is the purpose of the exam? 5

2.3 How is the exam structured and set? 6

2.4 How often is the exam held? 6

2.5 Where is the exam held? 6

2.6 What are the fees? 6

2.7 How do I enrol? 7

2.8 What are the possible outcomes of the exam? 7

3 Preparing for the exam 9

3.1 How can I prepare for the exam? 9

4 About the self-assessment process 11

4.1 What is the self-assessment process? 11

4.2 Objective decision making 11

4.3 What to do 12

4.4 Core knowledge areas 12

4.5 Decision making 20

5 After sitting the entrance exam 21

5.1 How and when will I be advised of my results? 21

5.2 What if I am unsuccessful? 21

6 Frequently asked questions 23


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Entrance exam guide (July 2012) Chartered Accountants Program2


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1Background

1.1 Shortage of accounting professionals inAustralia

It is generally acknowledged that Australia is suering a critical shortage of accounting

professionals.

A number of factors have contributed to this shortage including:

> an ageing workforce

> at enrolment numbers in accounting degree courses

> increased demand for accounting services due to changes in the legislative and

regulatory environment and to growth in the Australian economy.

Ways of addressing this shortage have challenged, and continue to challenge, accounting

rms, organisations, educational institutions and professional bodies. A variety of strategies

have been proposed, including the development of pathways into the profession for

people who hold undergraduate degrees in non-accounting disciplines. The information

in this guide deals with this strategy.


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1.2 How is the Institute responding?

In response to the need for alternative pathways into the accounting profession, we have

changed our entry requirements for the Chartered Accountants Program.

Graduates with non-accounting degrees will now be accepted into the Program, providedthey successfully complete the Institutes Chartered Accountants Program entrance exam.

The purpose of the exam is to ensure that applicants have the required level of prerequisite

accounting knowledge to undertake the Program.

1.3 Who will benefit?

This initiative will deliver a number of benets to all involved. For example:

> individuals who are talented and motivated gain an alternative pathway into the

accounting profession

> employersobtain access to an increased pool of potential employees, many of whom

already possess a wealth of real world business and life experience

> the professionobtains a means of addressing a recognised skills shortage, and new

practitioners who are dynamic, motivated individuals possessing a diverse range of

skills and experience.


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2About the entrance exam

2.1 Who is eligible to sit the exam?Non-accounting graduates who meet the following criteria can apply to sit the Institutes

entrance exam:

> Have an Institute accredited* sponsoring employer

> Hold an Australian or comparable overseas degree in a non-accounting discipline

> Have undertaken accounting-related work experience and some on-the-job training

> Have a genuine interest in pursuing a career in the Chartered Accounting profession.

* An accredited organisation has met the Institutes requirement to have employees in work experience mentored by a Chartered Accountant.

2.2 What is the purpose of the exam?

The exam tests applicants knowledge of six core areas of accounting. An adequate level

of knowledge in these areas is critical to a persons ability to undertake the Chartered

Accountants Program.

The core knowledge areas are:

1. Financial accounting

2. Management accounting3. Corporate Finance

4. Auditing


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5. Commercial and corporations law

6. Australian taxation law.

For more information on these core knowledge areas, refer to Section 4.4.

The exam can also be used as a diagnostic tool. The Institute will provide results that

allow applicants to identify gaps in their knowledge. The gaps can then be addressed byfollowing the pathways set out in Section 4.5.

The Institute does not provide training to ll identied knowledge gaps. This is the

responsibility of applicants and their employers.

2.3 How is the exam structured and set?

The exam is a closed-book exam consisting of six exam papers. Each paper corresponds to

one core knowledge area and contains 20 multiple-choice questions. The entire exam will

comprise approximately 120 questions.The exam questions reect the undergraduate knowledge required in the six specied

core knowledge areas.

What are multiple-choice questions?A multiple-choice question consists of a short scenario which presents the problem, one

correct answer, and plausible incorrect answers.

Multiple-choice questions are one of the most widely used formats for objective testing.

When properly constructed, multiple-choice questions are valid and reliable tests of

knowledge.

2.4 How often is the exam held?

The exam is oered at six-monthly intervals. Exam dates and locations will be

communicated via email to applicants when their enrolment has been conrmed.

2.5 Where is the exam held?

The exam is held in the Institute oce locations listed at

Contact Us Institute Oces.

2.6 What are the fees?

The exam fee is a two-tier scale: 1 to 3 core knowledge areas A$375; 4 to 6 core knowledge

areas A$645. This fee ensures coverage of all costs associated with the development and

delivery of the entrance exam. The entrance exam fees are GST exempt.

Should you need to resit the exam, the same fee structure will apply.


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2.7 How do I enrol?

To enrol in the entrance exam, download and complete the application form from

Education Chartered Accountants Program

Requirements

How to become a Chartered Accountant

A graduate with a non-accounting degree Entrance exam Application form, and send with required

aachments to the address on the form.

How do I get more information?If you have any questions that are not answered in this guide, you may refer to our website,

email us at or call 1300 137 322.

2.8 What are the possible outcomes of the

exam?

There are two possible outcomes of undertaking the exam:

> a pass result in all core knowledge areas, which will be deemed to meet the academic

entry requirements of the Chartered Accountants Program

> an unsuccessful result in some or all core knowledge areas, and identication of the

knowledge gaps that need to be addressed.


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3Preparing for the exam

3.1 How can I prepare for the exam?The Institute does not oer an exam preparation program. However, to assist you in

making the decision about whether or not to aempt the exam, we strongly encourage

you to ask yourself the following questions.

Do I have the required level of competence in the core knowledge areas?

This may not be an easy question for you to answer, even with the help of your employer,

colleagues and friends. In order to assist you in determining if you have the required level

of knowledge, we have prepared a self-assessment questionnaire on the six required core

knowledge areas. This will help to highlight potential gaps in your required knowledge.

The self-assessment questionnaire and instructions on how to complete it can be found in

Section 4.

Do I have the level of commitment required to successfully undertake

the Program?

The Chartered Accountants Program is a rigorous postgraduate course and requires a

high level of commitment and dedication on the part of candidates to ensure success.

You will need to set aside at least 10 hours per week for self-study, including the completion

of activities and assignments. You will need discipline and the ability to sustain an

intensive study load.

Full details of the Chartered Accountants Program and the level of commitment expected

are available on our website .


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4About the self-assessmentprocess

4.1 What is the self-assessment process?

The self-assessment process will help you to determine if you have the required level of

knowledge in the core knowledge areas in order to aempt the Chartered Accountants

Program entrance exam, and, if not, what you might do in order to ll any knowledge

gaps you identify before undertaking the exam.

Following the self-assessment questionnaire, refer to Section 4.5 for help in interpreting

your self-assessment and determining the course of action to take based on the results.

4.2 Objective decision making

It is oen dicult to be objective about your own capabilities and make decisions based

on opinions about yourself. This self-assessment is one tool that will help you to arrive at

a decision that is as objective as possible.

If you are currently employed in an accounting rm, we also recommend that, if you have

any doubt about your knowledge of the core areas presented in this self-assessment, you

seek the help of your manager, supervisor or a more experienced colleague who you think

will oer an informed and objective opinion.


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4.3 What to do

Under each of the core knowledge areas, you will nd the following:

> Summary This provides a brief overview of what you should be able to do to be

deemed competent in this area.

> Key assessment topics These provide further, more detailed guidance and criteria

to help you assess your knowledge of the core knowledge area. These are the same

criteria against which the exam questions are set and assessment will be made.

Follow these steps to complete the self-assessment:

1. Read the summary to gain an overall appreciation of each of the core knowledge

areas, in turn.

2. Move on to the key assessment topicsand read each criterioncarefully.

3. As objectively as possible, assess your knowledge against each criterion. Use the

following key to note your self-assessment decision: = Yes. Im sure I can do this.

= No. I know I cant do this.

? = Im not sure if I can do this.

4. Use the notes column to record any thoughts or ideas that might be useful later.

For example, how you might address any gaps you identify, or how you might

determine if you really can do something or not.

5. When you have worked through all the core knowledge areas, go to Section 4.5

decision-making .

4.4 Core knowledge areas

Financial accounting

Summary

You should be able to demonstrate an understanding of:

> the form and function of nancial statements and how nancial transactions are

recorded> a critical awareness of nancial accounting and nancial analysis issues within

Australian and international contexts

> the conceptual and theoretical concepts underlying accounting practice.


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Key assessment topics

1. Current legal and financial reporting standards in Australia

Criteria

You should be able to:

? Notes

a. define the current characteristics of accounting, and explain its role

in society and the economic sphere

b. describe the process and framework for developing and

implementing accounting standards in Australia

c. identify and explain the current legal, ethical, societal and

professional requirements and expectations of financial reporting

standards

d. apply the above to issues as they are identified, both in accounting

and in wider contexts.

2. Organisation and recording of financial information

Criteria


? Notes

a. demonstrate an understanding of the nature of an accounting

entity, the accounting equation, and the double entry system

b. demonstrate a basic understanding of the Statements of

Accounting Concepts and, in particular, the definition and

recognition criteria for the various elements of financial statements

c. record various types of business transactions, demonstrating an

understanding of their effect in terms of the accounting equation

and the accounting system

d. demonstrate an understanding of the accounting processes

relating to company formation, dividends, and issues of

shareholder capital.

3. Preparation of financial reports

Criteria


? Notes

a. prepare financial reports for entities (incl. limited liability

companies) in accordance with generally accepted accounting

practice, including current financial reporting standards and other

external reporting requirements

b. demonstrate an understanding of the fundamental accounting

principles and practices in accounting for basic business

combinations, including consolidated financial statements.

4. Contemporary developments in financial reporting in Australia and overseas

Criteria


? Notes

a. identify international accountancy standard-setting bodies and

describe their activities in relation to Australian standard setting

b. critically assess contemporary national and international issues

related to the treatment that key financial reporting standards

mandate

c. describe and explain the evolution of accounting thought and of

theories of accounting

d. describe and explain alternative contexts of accounting

e. describe and explain current research issues in financial

accounting

f. have awareness of newly developing areas of interest (such as

social and environmental accounting and reporting)


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5. Analysis and interpretation of financial statements

Criteria


? Notes

a. calculate a range of commonly used ratios and percentages from

financial statements

b. critically analyse the strengths and weaknesses of ratio analysis,

cross-sectional and time-series analysis, and other tools of financial

analysis

c. draw inferences about financial performance and position based

on the ratios and percentages, using cross-sectional and time-

series comparisons

d. analyse and interpret financial accounting information from

complex entities and critically appraise financial reports in relation

to the use made of them by various users

Management accounting

Summary

You should be able to demonstrate an understanding of developments in management

accounting, including:

> budgeting

> product and service costing

> control and performance evaluation

> strategic management accounting

by applying relevant numerical and analytical skills, and demonstrating current theoretical

knowledge in the application of these skills.


1. Development of management accounting

Criteria


? Notes

a. explain the role of management accounting

b. describe and critically evaluate the major developments in

management accounting practice and research

2. Budgeting

Criteria You should be able to:

? Notes

a. critically evaluate the nature and purpose of budgeting, including

organisational behaviour aspects

b. describe the various types of budgets (e.g. operational, capital and

cash)

c. develop budgets and calculate, analyse and explain variances

d. evaluate competing capital expenditure proposals and make

recommendations


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3. Product and service costing

Criteria


? Notes

a. explain the principles and methods of a cost accounting system

b. explain the nature and characteristics of various cost

classifications, such as direct, indirect, fixed and variable costs

c. discuss cost behaviour issues

d. calculate costs according to various methods (e.g. full absorption

costing, marginal costing, or activity-based costing) and explain

their differences and effects

e. critique the nature and purpose of alternative costing techniques

for products and services

f. apply break-even analysis

g. demonstrate the relevant numerical and analytical skills for various

costing techniques

4. Control and performance evaluation

Criteria


? Notes

a. describe various financial and non-financial measures in assessing

an entitys performance

b. discuss issues in management control and performance

c. demonstrate relevant numerical skills, the use of financial,

non-financial and qualitative measures, and analytical skills in

interpreting the effects on the business unit

5. Strategic management accounting

Criteria


? Notes

a. critically evaluate the issues in strategic management accounting,

including cost control

b. demonstrate the relevant numerical and analytical skills in

evaluating the effects of strategic management on the business

unit

Finance

Summary


> the business nance and treasury function (in terms of fundamental capital, investment,

funding, and risk decision concepts)> the analysis and management of an entitys nancial position

> recent developments in the Australian and international nancial/treasury scene.


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1. Essentials of financial management in organisations

Criteria


? Notes

a. identify the basic financial decisions of:

> how investment decisions are made

> how the entity is financed

> how the performance of the entity is evaluated

> how decisions about distributions (particularly dividends) are

made

b. explain the principles of valuation and apply these principles to the

items listed above

2. Application of financial mathematical techniques

Criteria


? Notes

a. calculate percentages, ratios, interest rates, present and future

values, and annuitiesb. apply financial formulas to data

c. develop projections and analyse time series

d. apply a range of project appraisal techniques (e.g. payback,

net present value, and internal rate of return) and explain their

strengths and weaknesses

3. Application of the principles of financial management

Criteria


? Notes

a. explain the meaning of cost of capital and analyse the issues

associated with its calculation

b. outline the main sources of debt and equity finance and identify

the advantages and risks associated with each

c. analyse the issues associated with the calculation of relevant

cash flows in various decision contexts, particularly with regard to

capital expenditure decisions

d. analyse the primary considerations in determining optimal capital

structures and optimal dividend decisions

4. Risk management

Criteria


? Notes

a. explain and apply the concepts of financial return and risk and the

relationships between those concepts

b. identify the types of risk to which an entity might be exposed

c. explain how those risks can be identified

d. identify the types of risk that an entity should try to manage

e. identify and explain risk management products (e.g. options,

futures, forwards and swaps)

5. Current issues in financial management in Australia and internationally

Criteria


? Notes

a. analyse and evaluate the effects and outcomes on the activities of

an entity of:

> developments in the Australian and international financial

markets

> changes in regulatory structures and regulations

> increased accountability of the treasury function and increased

levels of sophistication in the technology used in treasury work


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Auditing

Summary


>

the nature and purpose of auditing> the accountability of external auditors under statutory and professional

requirements

> the conduct of an audit according to regulatory and professional requirements

and to apply this understanding to current issues.


1. Nature and purpose of auditing, including the regulatory and professional requirements of auditors

Criteria


? Notes

a. identify and explain the framework and boundaries of auditing

b. identify and explain the reasons for auditing and the various types

of audits

c. identify and explain the objectives of an audit, the role of an

auditor, and key components of the audit process

d. describe and explain the auditors professional, ethical and legal

responsibilities

e. identify and explain the application of professional judgment in

auditing

2. Application of professional standards within the auditing process

Criteria


? Notes

a. demonstrate an awareness of generally accepted audit practice

with reference to current audit standards and guidelines

b. plan audits to meet objectives

c. apply auditing procedures and processes including:

> describing the concept of audit risk and materiality and key

factors influencing risk identification and assessment

> reviewing internal control systems and explaining the

techniques by which a review can be accomplished

> explaining the specific techniques for tests of controls and

substantive testing for gathering sufficient and appropriate

audit evidence

> being aware of the importance of analytical review and

assessment of going concern in the overall audit process

d. describe audit reporting requirements including explaining the

statutory requirements for audit reporting and distinguishing the

types of audit reports

3. Current auditing practice issues in a computer-based environment

Criteria


? Notes

a. ensure the integrity of data within computerised data-processing

systems

b. apply appropriate auditing principles and techniques within the

range of existing technological systems


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4. Current research issues in auditing

Criteria


? Notes

a. identify problems and issues within the auditing function (e.g. audit

independence, fraud detection, and the expectation gap)

b. analyse problems and issues

c. propose solutions

d. critically evaluate the proposed outcomes

Commercial and corporations law

SummaryYou should be able to demonstrate a general legal knowledge relating to the businessenvironment and to understand the responsibilities and risks that arise in business, withparticular regard to the law relating to corporate entities.


1. The legal system in Australia

Criteria


? Notes

a. identify and describe basic legal concepts and the structure of the

Australian legal system

b. explain how laws are enacted by the State and federal Parliaments

and how the common law has developed through the hierarchy of

the courts and have the ability to read and understand statutes

c. identify and explain the law of torts and how it differs from criminal

law

d. identify and explain the laws of property, including intellectual

property, and their practical applications (e.g. franchises and

licences)

e. identify and analyse relevant issues

2. Principles of the law of contracts

Criteria


? Notes

a. identify and explain the principles of the law of contract, the law of

principal and agent, and the law relating to the sale of goods and

services

b. describe the main aspects of consumer protection law, including

trade practices law

c. analyse relevant cases

d. apply these principles and current legislation to relevant issues


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3. Legal regulation of commercial entities

Criteria


? Notes

a. explain the essential nature of, and differences between,

proprietorships, partnerships and corporations

b. identify and explain the current law (including statute, regulation

and common law) relating to corporate entities

c. identify and explain the current law and legal issues relating to

equity and debt capital

d. identify and explain the statutory and administrative requirements

relating to record keeping, accounting, auditing, and reporting

and disclosure, including the obligations of public issuers and the

duties of directors

e. explain the reasons and procedures for the administration and/or

winding up of companies

f. apply current law to relevant issues

Taxation lawSummary

You should be able to demonstrate an understanding of taxation compliance within

statutory and professional requirements, and apply this understanding to current issues.


1. Determination and administration of Australian taxation

Criteria


? Notes

a. identify the various types of taxation and tax bases applicable in

Australia

b. describe the general principles of direct and indirect taxation

c. distinguish assessable from non-assessable income and deductible

from non-deductible expenditure with an awareness of timing

issues

d. determine taxation obligations relating to individuals, partnerships,

trusts and companies, including company taxation liabilities with

reference to dividend payments and imputation credits

e. describe the administration of taxation in Australia

2. Special types of taxation

Criteria You should be able to:

? Notes

a. explain the nature and incidence of fringe benefits tax

b. explain the nature and incidence of capital gains tax

c. explain the nature and incidence of goods and services tax

3. Legal and ethical issues of taxation in Australia and internationally

Criteria


? Notes

a. analyse situations, identify whether they are cases of avoidance or

evasion, and substantiate your decision with reference to current

law and practice

b. demonstrate an awareness of tax as an instrument of fiscal policy

c. demonstrate an awareness of the potential tax implications for an

Australian entity operating or trading internationally


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4.5 Decision-making

Review and reect on your self-assessment. Following are some questions you might

consider and actions you might take:

Question Possible action

What do I do about the

topics Im uncertain

about?

Decide how you can confirm whether you know enough about the topic to

attempt the exam. To do this you might:

> review available texts

> review relevant regulations or legislation

> discuss the topic with a manager, supervisor or colleague at work.

What do I do about the

topic(s) I dont know at

all?

Decide how you can acquire sufficient knowledge of the topic(s) to attempt the

exam. This is best done in consultation with your employer. It might involve:

> identifying and undertaking a relevant course of study

> identifying and reading relevant texts, regulations or legislation

> receiving on-the-job training and mentoring.

Should I attempt the

exam or not?

Reflect on your entire self-assessment paying particular attention to the topics you

are unsure of or do not know well.

Carefully consider how you might fill any knowledge gaps you have identified.

We recommend that you consider your level of knowledge in all the topic areas

and only attempt the exam if you consider that you currently have a satisfactory

level of knowledge, or can acquire that knowledge before the exam.


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5After sitting the entrance exam

5.1 How and when will I be advised of myresults?

Your results will be mailed to you approximately eight to ten weeks aer the exam.

Included with your results will be a report identifying any knowledge gaps, together with

options to address those gaps.

5.2 What if I am unsuccessful?

When you receive your results and report, you should discuss the outcome with your

employer. The discussion should include ways in which your knowledge gaps can be

addressed.

Options to address gaps are discussed in Section 4.5.

The two pathways available if you are unsuccessful are:

1. You undertake the required conversion courses identied in your individual gap

report. When you have successfully completed the specied conversion course, you

may enrol in the Chartered Accountants Program. There is no need to resit the entrance

exam.


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2. You develop a training plan with your employer using your gap report. When you

are ready to resit the entrance exam, access and complete the enrolment form from

Education Chartered Accountants Program

Requirements A graduate with a non-accounting degree Entrance exam

application form. You will need to wait a minimum of six months before reaempting

the exam. The number of aempts for each exam paper is limited to two (this includes

your rst aempt). You will only need to resit the paper(s) that you have not passed.


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6Frequently asked questions

Will industry standards be compromised by the introduction of this alternative pathway into the

accounting profession?

No, the standards for entry into membership remain unchanged. This exam provides an

alternative entry pathway into the Chartered Accountants Program. An Australian or

overseas comparable degree is still required along with evidence of competence in the six

core knowledge areas of accounting.

What undergraduate degrees are acceptable for enrolment in the exam?

Any Australian or comparable overseas degree in a non-accounting discipline that is not

listed on the Institutes current Accredited Tertiary Course list. For a full list of accredited

tertiary courses, refer to Education Chartered

Accountants Program Entry requirements Requirements to join Australian

University Accredited Tertiary Courses 2010.

I have a degree from another country. Can I enrol?

Yes, if your overseas degree has been formally assessed by the Institute as being comparable

to an Australian bachelors degree. Further information regarding the assessment of

overseas qualications can be found on our website .

I got my non-accounting degree years ago and now want to move into the accounting

profession. Will my degree still be recognised?

Yes, if it is an Australian or comparable overseas degree. No time limit applies with regardto when the qualication was awarded.


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If I fail the exam, can I sit it again?

Refer to Section 5.2.

I only failed part of the exam. Do I need to resit the whole exam, or only the part I failed?

Refer to Section 5.2.

Can I appeal an exam result? If so, on what grounds and how do I do it?

No appeals process is available for the entrance exam.

entrance exam guide

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