1. FINANCIAL REPORTING | | | | | | | | | |
1.1 Financial Reporting Needs and Systems | | | | | | | | | |
1.1.1 Evaluates financial reporting needs | | | | | | | | | |
B | — | A | — | — | — | — | — | — | — |
| — | ENTRY:Identifies the key stakeholders in the financial reporting environment and their information needs in a decision-making context Identifies conflicts/biases within a reporting environment | — | — | C1:Analyzes the economic and fiscal context in which the entity operates and its impact on financial reporting Assesses and prioritizes stakeholders in a financial reporting environment and their information needs in a decision-making context Determines and resolves conflicts/biases within a reporting environment | — | — | — | — | — |
Knowledge list
- Objectives and fundamental accounting concepts and principles (qualitative characteristics of accounting information, basic elements)
- Ethical professional judgement
- Objectives of financial reporting
- Methods of measurement
- Difference between accrual accounting and cash accounting
- Standard setting process
- Financial statement users and their broad needs, standard setting, and requirement for accountability
- Accounting information systems
- Data organization and distribution (systems and output)
- Types of systems organizations need to provide information to meet their objectives (examples only):
- AIS/ERP/transaction processing systems
- Business intelligence systems and analytics
- Distributed databases/ledgers (blockchain) and digital payment systems / cryptocurrencies
- Standards for data tagging and reporting (XML, XBRL)
- Systems reliability – privacy, confidentiality, security, integrity, availability
| | | | | | | | | |
1.1.2 Evaluates the appropriateness of the basis of financial reporting | | | | | | | | | |
B | — | A | — | — | — | — | — | — | — |
| — | ENTRY:Explains how accounting standards are set and evolve over time Based on financial reporting needs and the economic context of the entity, analyzes the appropriateness of alternative financial reporting frameworks | — | — | C1:Explains how accounting standards are set and evolve over time Based on financial reporting needs and the economic context of the entity, determines and justifies whether generally accepted accounting principles (GAAP) are a constraint Assuming a GAAP constraint, determines and justifies which GAAP should be applied, considering financial reporting needs and the economic context of the entity (IFRS, ASPE, NFP, PSAB) Assuming a non-GAAP environment, determines and justifies the basis for financial reporting, considering financial reporting needs and the economic context of the entity (e.g., cash flow versus accrual) Evaluates the impact of the basis of financial reporting on stakeholders in a decision-making context Explains the legislation that affects accounting (e.g., SOX, Bill 198) | — | — | — | — | — |
Knowledge list
- Objectives and fundamental accounting concepts and principles (qualitative characteristics of accounting information, basic elements)
- Ethical professional judgement
- Objectives of financial reporting
- Methods of measurement
- Difference between accrual accounting and cash accounting
- Standard setting process
- Financial statement users and their broad needs, standard setting, and requirement for accountability
- Accounting information systems
- Data organization and distribution (systems and output)
- Types of systems organizations need to provide information to meet their objectives (examples only):
- AIS/ERP/transaction processing systems
- Business intelligence systems and analytics
- Distributed databases/ledgers (blockchain) and digital payment systems / cryptocurrencies
- Standards for data tagging and reporting (XML, XBRL)
- Systems reliability, privacy, confidentiality, security, integrity, availability
| | | | | | | | | |
1.1.3 Evaluates reporting systems, data requirements and business processes to support reliable financial reporting | | | | | | | | | |
B | — | A | — | — | — | — | — | — | — |
| — | ENTRY:Analyzes an existing financial reporting structure Identifies the key internal controls that form part of the entity's financial reporting infrastructure Explains data integrity risks in data integration and aggregation processes | — | — | C1:Evaluates an existing financial reporting structure
Develops a robust financial reporting structure in the absence of an existing structure
Assesses appropriate internal controls over the financial reporting structure, giving recognition to the implications of an entity’s risk profile
Assesses the overall reliability of the financial reporting structure
Evaluates data integrity risks in data integration and aggregation processes | — | — | — | — | — |
Knowledge list
- Objectives and fundamental accounting concepts and principles (qualitative characteristics of accounting information, basic elements)
- Ethical professional judgement
- Objectives of financial reporting
- Methods of measurement
- Difference between accrual accounting and cash accounting
- Standard setting process
- Financial statement users and their broad needs, standard setting, and requirement for accountability
- Accounting information systems
- Data organization and distribution (systems and output)
- Types of systems organizations need to provide information to meet their objectives (examples only):
- AIS/ERP/transaction processing systems
- Business intelligence systems and analytics
- Distributed databases/ledgers (blockchain) and digital payment systems / cryptocurrencies
- Standards for data tagging and reporting (XML, XBRL)
- Systems reliability – privacy, confidentiality, security, integrity, availability
| | | | | | | | | |
1.1.4 Explains implications of current trends, emerging issues and technologies in financial reporting | | | | | | | | | |
C | — | C | — | — | B | — | — | — | — |
| — | ENTRY:Identifies current trends, and recent updates, in financial reporting standards
Explains shortcomings/limitations of current standards in the context of emerging issues
Explains the implications of exposure drafts, impending changes, their rationale, and their impact on an entity and its financial statements
Explains the potential impact of automated data capture, artificial intelligence technologies and real time reporting
NOTE: Knowledge expectation varies depending on the level of complexity of the standard.
| — | — | C1:Identifies current trends, and recent updates, in financial reporting standards
Explains shortcomings/limitations of current standards in the context of emerging issues
Explains the implications of exposure drafts, impending changes, their rationale, and their impact on an entity and its financial statements
Explains the potential impact of automated data capture, artificial intelligence technologies and real time reporting
NOTE: Knowledge expectation varies depending on the level of complexity of the standard. | — | — | — | — | AS:Understands and explains the implications of exposure drafts, impending changes, their rationale, and their impact on an entity and its financial statements Explains shortcomings/limitations of current standards in the context of emerging issues Understands the authoritative documents to refer to and to what extent they can be relied upon Analyzes the potential impact of automated data capture, artificial intelligence technologies and real time reporting |
Knowledge list
- Emerging trends in accounting standards and recent updates
- Impact of new/changing technologies on risk exposure
| | | | | | | | | |
1.1.5 Identifies financial reporting needs for the public sector | | | | | | | | | |
C | — | C | — | — | — | — | — | — | — |
| — | ENTRY:Recognizes the different reporting requirements for the public sector Recognizes the different reporting objectives for the public sector as they relate to different user objectives and information needs Explains the unique aspects of the PSA Handbook | — | — | C1:Recognizes the different reporting requirements for the public sector Recognizes the different reporting objectives for the public sector as they relate to different user objectives and information needs Explains the unique aspects of the PSA Handbook | — | — | — | — | — |
Knowledge list
- Unique concepts in the PSA Handbook
- Internal and external users of public sector accounting information and the uses of that information
- Objectives of public sector reporting and major reporting issues
| | | | | | | | | |
1.1.6 Identifies specialized financial reporting requirements for specified regulatory and other filing requirements | | | | | | | | | |
| — | — | C | — | — | — | — | — | — | — |
| — | — | — | — | C1:In situations where specialized financial reports are necessary, identifies components and information required for the report Considers the non-financial reporting components of specialized reporting requirements | — | — | — | — | — |
Knowledge list
- Legislation that has an impact on accounting (e.g. SOX, Bill 198)
| | | | | | | | | |
1.2 Accounting Policies and Transactions | | | | | | | | | |
1.2.1 Develops or evaluates appropriate accounting policies and procedures | | | | | | | | | |
B | — | A | — | — | A | — | — | — | — |
| — | ENTRY:Analyzes the economic substance of the transaction or event Discusses accounting policy choices and alternatives for specific transactions and events | — | — | C1:Explains the economic substance of the transaction or event Identifies, analyzes, and critically evaluates accounting policy choices and alternatives Selects or assesses the policy that most fairly presents the underlying economic reality of the entity within a decision-making context Applies a conceptual framework approach in situations involving choice of accounting policy and procedure Integrates any tax, audit, and finance implications into the evaluation of accounting policies and procedures | — | — | — | — | AS:Explains the policy decision with regard to the economic substance of the transaction or event Identifies, analyzes, and critically evaluates accounting policy choices and alternatives Applies a conceptual framework approach in situations involving a choice of accounting policy and procedure Selects and applies the policy that most fairly presents the underlying economic reality of the entity within a decision-making context |
Knowledge list
- Objectives and fundamental accounting concepts and principles (qualitative characteristics of accounting information, basic elements)
- Ethical professional judgement
- Objectives of financial reporting
- Methods of measurement
- Difference between accrual accounting and cash accounting
- Standard setting process
- Financial statement users and their broad needs, standard setting, and requirement for accountability
- Accounting information systems
- Data organization and distribution (systems and output)
- Types of systems organizations need to provide information to meet their objectives (examples only):
- AIS/ERP/transaction processing systems
- Business intelligence systems and analytics
- Distributed databases/ledgers (blockchain) and digital payment systems / cryptocurrencies
- Standards for data tagging and reporting (XML, XBRL)
- Systems reliability – privacy, confidentiality, security, integrity, availability
| | | | | | | | | |
1.2.2 Evaluates treatment for routine transactions | | | | | | | | | |
A | — | A | — | — | A | — | — | — | — |
| — | ENTRY:Identifies routine transactions by making reference to the business model and industry, knowing that a transaction that is routine in one environment may not be routine in another
Assesses a variety of source documents or information about routine events to determine accounting implications
Records or assesses treatment of routine transactions into an accounting system
Explains when accounting decisions have subsequent tax consequences
Integrates any tax, audit, and finance implications into the evaluation of treatment for routine transactions | — | — | C1:) Identifies routine transactions by making reference to the business model and industry, knowing that a transaction that is routine in one environment may not be routine in another Assesses a variety of source documents or information about routine events to determine accounting implications Records or assesses routine transactions into an accounting system Explains when accounting decisions have subsequent tax consequences Integrates any tax, audit, and finance implications into the evaluation of treatment for routine transactions | — | — | — | — | AS:Identifies routine transactions by making reference to the business model and industry, knowing that a transaction that is routine in one environment may not be routine in another Assesses a variety of source documents or information about routine events to determine the financial reporting implications Evaluates the treatment of routine transactions recorded in an accounting system Integrates the tax consequences into accounting decisions for routine transactions |
Knowledge listThe appropriate accounting treatment for the following:
- Cash and cash equivalents
- Receivables
- Inventories
- Property, plant, and equipment
- Goodwill and intangible assets
- Depreciation, amortization, impairment, and disposition/derecognition
- Provisions, contingencies, and current liabilities
- Long-term liabilities
- Owners’/shareholders’ equity
- Earnings per share (basic, diluted)
- Financial instruments
- Investments in associates/significant influence
- Investment property
- Revenue recognition/revenue from contracts with customers, and accounting for revenue and related expenses
- Government assistance
- Leases
- Changes in accounting policies and estimates, and errors
- Foreign currency transactions
- Accounting for income taxes
- Events after the reporting period
| | | | | | | | | |
1.2.3 Evaluates treatment for non-routine transactions | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Identifies non-routine transactions by making reference to the business model and industry, knowing that a transaction that is non-routine in one environment may be routine in another
Assesses a variety of source documents or information about non-routine events to determine accounting implications
Records non-routine transactions into an accounting system
Explains when accounting decisions have subsequent tax consequences
Integrates any tax, audit, and finance implications into the evaluation of treatment for non-routine transactions
NOTE: Examples of non-routine transactions could include measurement of share-based payment (including use of option-pricing model), discontinued operations, restructuring, and fair-value estimation. | — | — | C1:Identifies non-routine transactions by making reference to the business model and industry, knowing that a transaction that is non-routine in one environment may be routine in another Assesses a variety of source documents or information about non-routine events to determine accounting implications Records non-routine transactions into an accounting system Explains when accounting decisions have subsequent tax consequences Integrates any tax, audit, and finance implications into the evaluation of treatment for non-routine transactions NOTE: Examples of non-routine transactions could include measurement of share-based payment (including use of option-pricing model), discontinued operations, restructuring, and fair-value estimation. | — | — | — | — | AS:Identifies non-routine transactions by making reference to the business model and industry, knowing that a transaction that is non-routine in one environment may be routine in another Assesses a variety of documents or information about non-routine events to determine accounting implications Evaluates, calculates, and determines the proper accounting and disclosure for non-routine transactions Applies other critical principles when deciding on appropriate treatment (e.g., substance over form and measurement uncertainty) Interprets financial reporting standards in the context of the entity’s specific circumstances Considers the tax implications of accounting decisions for non-routine transactions |
Knowledge list
- Uncommon capital assets (e.g., natural resources, exchanges of assets, decommissioning costs)
- Pension plans and other employee future benefits
- Assets held for sale and discontinued operations
- Fair value and cash flow hedges
- Foreign currency translation
- Business combinations
- Consolidated financial statements
- Joint arrangements
- Share-based payments
- Related party transactions
- Non-monetary transactions
- Fund accounting
- Capital assets, and donated goods and services
- Contributions and restrictions
| | | | | | | | | |
1.2.4 Analyzes treatment for complex events or transactions | | | | | | | | | |
C | — | C | — | — | B | — | — | — | — |
| — | ENTRY:Identifies presence of complex transactions | — | — | C1:Identifies presence of complex transactions Examples of complex events could include wind-up, M&A, securitization of assets, curtailments of pensions, embedded derivatives, and financial reorganizations. | — | — | — | — | AS:Identifies presence of complex transactions (e.g., wind-up, merger and acquisition, securitization of assets, curtailment of pensions, embedded derivatives, and financial reorganizations) Analyzes and determines, on a preliminary basis, the proper accounting for complex transactions Researches appropriate standards and seeks authoritative guidance where the proper treatment is unclear Interprets, on a preliminary basis, the financial reporting standards in the context of the entity’s specific circumstances |
Knowledge list
- Complex financial instruments (e.g., perpetual debt, convertible debt, derivatives)
| | | | | | | | | |
1.3 Financial Report Preparation | | | | | | | | | |
1.3.1 Prepares financial statements | | | | | | | | | |
A | — | A | — | — | — | — | — | — | — |
| — | ENTRY:Prepares financial statements for various entities (e.g., partnership, sole proprietorship, private or public company, etc.) | — | — | C1:Prepares financial statements for various entities (e.g., partnership, sole proprietorship, private or public company, etc.) | — | — | — | — | — |
Knowledge list
- The accounting cycle
- Internal control and cash (bank reconciliation, control over cash receipts and disbursements)
| | | | | | | | | |
1.3.2 Prepares routine financial statement note disclosure | | | | | | | | | |
B | — | A | — | — | A | — | — | — | — |
| — | ENTRY:Prepares preliminary note disclosure for routine financial statement elements | — | — | C1:Prepares note disclosure for routine financial statement elements | — | — | — | — | AS:Prepares note disclosure for routine financial statement elements |
Knowledge list
- Routine disclosure requirements (notes to financial statements)
| | | | | | | | | |
1.4 Financial Statement Analysis | | | | | | | | | |
1.4.1 Analyzes complex financial statement note disclosure | | | | | | | | | |
C | — | C | — | — | B | — | — | — | — |
| — | ENTRY:Identifies and explains required information content for complex note disclosure | — | — | C1:Identifies and explains required information content for complex note disclosure | — | — | — | — | AS:Identifies and explains required information content for complex note disclosure Prepares, on a preliminary basis, the required note disclosure for complex items |
Knowledge list
- Complex disclosure requirements (notes to financial statements)
| | | | | | | | | |
1.4.2 Evaluates financial statements including note disclosures | | | | | | | | | |
B | — | A | — | — | A | — | — | — | — |
| — | ENTRY:Analyzes whether the financial statements are complete Analyzes whether the underlying economic reality is fairly presented | — | — | C1:Evaluates completeness, fair presentation, and transparency of financial statements Evaluates whether the underlying economic reality is fairly presented Integrates any finance, strategy, audit, and tax implications into the evaluation of financial statements | — | — | — | — | AS:Evaluates completeness, fair presentation, and transparency of financial statements Evaluates whether the underlying economic reality is fairly presented Understands and leverages underlying working papers/supporting documents to evaluate and/or develop the financial statements Integrates any finance, strategy, audit, and tax implications into the evaluation of financial statements |
Knowledge list
- Objectives and fundamental accounting concepts and principles (qualitative characteristics of accounting information, basic elements)
- Ethical professional judgement
- Objectives of financial reporting
- Methods of measurement
- Difference between accrual accounting and cash accounting
- Standard setting process
- Financial statement users and their broad needs, standard setting, and requirement for accountability
- Accounting information systems
- Data organization and distribution (systems and output)
- Types of systems organizations need to provide information to meet their objectives (examples only):
- AIS/ERP/transaction processing systems
- Business intelligence systems and analytics
- Distributed databases/ledgers (blockchain) and digital payment systems / cryptocurrencies
- Standards for data tagging and reporting (XML, XBRL)
- Systems reliability – privacy, confidentiality, security, integrity, availability
- Interim reporting
- Segment reporting
- Financial statements in accordance with applicable standards
| | | | | | | | | |
1.4.3 Analyzes and provides input in the preparation of management communications (e.g., management discussion and analysis (MD&A)) | | | | | | | | | |
C | — | B | — | — | B | — | B | — | — |
| — | ENTRY:Explains the purpose of an MD&A (or equivalent) | — | — | C1:Describes the main financial components of the MD&A (FSD&A in the public sector)
Assists in the preparation or evaluation of the financial components disclosed in management communications
Analyzes whether the financial information in management communications enhances the fair presentation of the entity’s financial performance | — | — | — | — | AS:Understands and describes the main financial components of the MD&A, or FSD&A in the public sector
Assists in the preparation or evaluation of the financial components disclosed in management communications
Analyzes whether the financial information in management communications enhances the fair presentation of the entity’s financial performance
Understands the obligation to consider whether the financial statements are consistent with the material in the MD&A and vice versa
Understands the importance of professional skepticism when using supporting documentation related to MD&A or FSD&A preparation PM:Assists in the preparation of the financial and non-financial components of management communications
Analyzes and evaluates the information contained in the MD&A to ensure it accurately reflects management’s activities |
Knowledge list
- Role and composition of the MD&A
| | | | | | | | | |
1.4.4 Interprets financial reporting results for stakeholders (external or internal) | | | | | | | | | |
B | — | A | — | — | — | — | — | — | — |
| — | ENTRY:Prepares and interprets financial statement analysis on a preliminary basis
Explains results using appropriate techniques (e.g. data visualization) | — | — | C1:Prepares and interprets financial statement analysis (e.g., ratios and trend analysis) to support decision-making
Analyzes, interprets, and explains financial statement information to or for stakeholders
Interprets and discusses results using appropriate techniques (e.g. data visualization) | — | — | — | — | — |
Knowledge list
- Objectives and fundamental accounting concepts and principles (qualitative characteristics of accounting information, basic elements)
- Ethical professional judgement
- Objectives of financial reporting
- Methods of measurement
- Difference between accrual accounting and cash accounting
- Standard setting process
- Financial statement users and their broad needs, standard setting, and requirement for accountability
- Accounting information systems
- Data organization and distribution (systems and output)
- Types of systems organizations need to provide information to meet their objectives (examples only):
- AIS/ERP/transaction processing systems
- Business intelligence systems and analytics
- Distributed databases/ledgers (blockchain) and digital payment systems/cryptocurrencies
- Standards for data tagging and reporting (XML, XBRL)
- Systems reliability – privacy, confidentiality, security, integrity, availability
- Vertical and horizontal analysis
- Ratios and benchmarking
- Financial statement results for various users
| | | | | | | | | |
1.4.5 Analyzes and predicts the impact of strategic and operational decisions on financial results | | | | | | | | | |
C | — | B | B | — | — | — | A | — | — |
| — | ENTRY:Explains the financial impact of strategic and operational decisions | — | — | C1:Analyzes and predicts the impact of strategic and operational decisions on an entity’s performance, financial position, and cash flow Explains the financial impact of strategic and operational decisions Explains the impact of tax planning on an entity’s financial statement reporting (e.g., replacement property, preferred shares, and related-party transactions) C2:Analyzes and predicts the impact of strategic and operational decisions on the entity’s performance, financial position, and cash flows Explains the financial impact of strategic and operational decisions Explains the impact of tax planning on an entity’s financial statement reporting (e.g., replacement property, preferred shares, and related party transactions) | — | — | — | — | PM:Determines and mitigates the impact on financial results of the strategic and operational decisions made Assesses the impact of decisions on the entity’s sustainability Recommends actions to take as a result of strategic and operational decisions |
Knowledge list
- Pro forma statements
- Impact of financial results on the whole organization
| | | | | | | | | |
2. STRATEGY AND GOVERNANCE | | | | | | | | | |
2.1 Governance | | | | | | | | | |
2.1.1 Evaluates the entity’s governance structure (policies, processes, codes) | | | | | | | | | |
C | — | — | B | — | B | — | A | — | — |
| — | ENTRY:Explains the various forms of entities Explains the board's structure considering its composition, legal liability and accountability, mandate, and leadership | — | — | C2:Explains that the form of the entity may impact the governance structure (e.g., public versus private company, for-profit versus public sector) Evaluates the effectiveness of the board’s structure, considering the following factors:
• the board’s composition
• the board‘s legal liability and accountability
• the mandate of the compensation committee
• the importance of the leadership processes implemented by the board or other governing body
• the importance of information systems’ reliability to strategic objectives
Explains the principles of good governance to stakeholders | — | — | — | — | AS:Explains how the form of the entity may have an impact on the governance structure (e.g., public versus private company, for-profit versus non-profit or public sector) Understands the criteria that characterize a good corporate governance structure Analyzes the entity’s governance structure and suggests improvements Analyzes the appropriateness of the composition of the board and related committees (diversity, independence) Advises on the general accountability of the entity’s board Identifies and analyzes key activities of the board and other governing bodies in relation to the engagement or project On a preliminary basis, evaluates the effectiveness of the key activities of the board and other governing bodies identified Discusses the extent to which the entity’s decision-making and accountability processes support management in meeting its stewardship responsibilities Understands the mandate of the compensation committee Analyzes the compensation and management incentive policies with regard to stakeholder interests Explains how the entity’s governance structure would have an impact on an assurance project or engagement (e.g., control environment and management credibility) PM:Assesses the appropriateness of the composition of the board and related committees (diversity, independence) and suggests improvements Evaluates the effectiveness of the board and its subcommittees in a governance context, considering the following factors:
• the board’s legal liability and accountability
• the mandate of the subcommittees
• the importance of information systems’ reliability to strategic objectives
Assesses the relevance of the information provided to the board and committees for effective governance of areas under their oversight Analyzes the compensation and management incentive policies with regard to stakeholder interests |
Knowledge listGovernance structure
- Roles, responsibilities, and duties of various levels of the organization in the strategic management process, including the board of directors, executive management, owners, and other stakeholders
- Board of director self-evaluation
- Role that ethics plays in good governance
| | | | | | | | | |
2.1.2 Evaluates the specific role of the audit committee in governance | | | | | | | | | |
C | — | — | B | — | A | — | — | — | — |
| — | ENTRY:Explains the mandate of the audit committee | — | — | C2:Explains the mandate of the audit committee Explains the legal liability and accountability of the audit committee Analyzes the audit committee composition | — | — | — | — | AS:Evaluates the extent to which the audit committee is meeting its responsibilities Assesses the independence of the audit committee in relation to its requirements and responsibilities Recommends improvements to the audit committee based on current best practices Understands the relationship between the audit committee and the external auditor (e.g., selection of auditors and communication |
Knowledge listAuditor and audit committee
- Role of the audit committee within the governance structure
- Role of the internal auditor in ensuring good internal governance
- Role of the external auditor (including audit risk model and audit liability)
- Audit report follow-up/decisions made
| | | | | | | | | |
2.1.3 Evaluates mechanisms used for compliance purposes | | | | | | | | | |
C | — | — | B | — | A | — | A | — | — |
| — | ENTRY:Explains the purpose of a code of conduct within an entity Explains the mechanisms used for information flow within an entity used for compliance purposes | — | — | C2:Examines and reviews the effectiveness of codes of conduct and various policies
Suggests control processes to ensure filing deadlines are met
Evaluates the mechanisms for information flow within the entity
Identifies the need for an independent audit function
Identifies the need for an accountability program
Identifies the need for a conflict of interest policy
| — | — | — | — | AS:Examines and reviews the effectiveness of codes of conduct and various policies
Suggests control processes to ensure filing deadlines are met
Evaluates the mechanisms for information flow within the entity
Identifies the need for an independent audit function
Identifies the need for an accountability program
Identifies the need for a conflict-of-interest policy PM:Evaluates the processes for ensuring compliance
Assesses the appropriateness of the policies and procedures used for compliance purposes and makes recommendations for improvement
Explains the need for ethical guidelines, codes of conduct, and regulatory requirements for compliance purposes
Assists in addressing compliance issues with outside regulators
Suggests improvements to the entity’s related reporting structures |
Knowledge listCompliance
- Role of regulatory bodies in ensuring good governance
- Sarbanes-Oxley Act of 2002, and Canadian Securities Administrators’ multilateral instruments on governance
| | | | | | | | | |
2.1.4 Analyzes the specific role of the board in an entity’s social responsibility strategy and sustainability | | | | | | | | | |
C | — | — | — | — | — | — | B | — | — |
| — | ENTRY:Explains the role of the board in an entity's social responsibility and sustainability strategy | — | — | — | — | — | — | — | PM:Determines alignment of an entity’s core values and board responsibilities with the entity’s strategies for sustainability and social responsibility |
Knowledge listCorporate social responsibility
- Role of social responsibility and ethics within strategic management
- Role of code of corporate conduct and ethical values with respect to governance issues
- Role management incentives play in maintaining organizational compliance
- Reporting mechanisms for compliance and risk issues
- Corporate social responsibility and the triple bottom line
- Sustainable organization and creation of sustainable stakeholder value
- Environmental reporting and the role environmental factors have on strategy (e.g., carbon accounting)
| | | | | | | | | |
2.1.5 Explains implications of current trends, emerging issues and technologies in strategy and governance | | | | | | | | | |
C | — | — | C | — | — | — | B | — | — |
| — | ENTRY:Identifies current trends, and recent updates, in strategy and governance Explains the potential impact of emerging issues, sustainability and technologies in strategy and governance | — | — | C2:Identifies current trends, and recent updates, in strategy and governance Explains the potential impact of emerging issues, sustainability and technologies in strategy and governance | — | — | — | — | PM:Describes current trends and anticipated changes in strategy and governance Analyzes the potential impact of emerging issues, sustainability and technologies on the entity |
Knowledge list | | | | | | | | | |
2.2 Mission, Vision and Values | | | | | | | | | |
2.2.1 Assesses whether management decisions align with the entity’s mission, vision, and values | | | | | | | | | |
B | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Explains that the entity’s context (e.g., private versus public sector) influences the definition of its overall objective: to provide sustainable value to the entity and its stakeholders Assesses the alignment of the entity’s mission, vision, values, and mandate with the overall objective defined Critiques the alignment of specific decisions and strategies with the entity’s mission, vision, values, and mandate (e.g., in areas such as taxation) Analyzes the role of the board in assuring effective information systems governance Explains the role of the board in an entity's strategic information systems plan | — | — | C2:Explains that the entity’s context (e.g., private versus public sector) influences the definition of its overall objective: to provide sustainable value to the entity and its stakeholders Assesses the alignment of the entity’s mission, vision, values, and mandate with the overall objective defined Critiques the alignment of specific decisions and strategies with the entity’s mission, vision, values, and mandate (e.g., in areas such as taxation) Analyzes the role of the board in assuring effective information systems governance Explains the role of the board in an entity's strategic information systems plan | — | — | — | — | PM:Evaluates compatibility of recommendations with the entity’s mission, vision, values, and mandate Evaluates the role of the board in assuring effective information systems governance Recommends improvements to an entity's strategic information systems plan and resource allocation to ensure the accomplishment of organizational strategy |
Knowledge listMission, vision, values, and objectives
- Nature, role, and characteristics of vision and mission statements
- Differences and relationships between vision, mission, and goals/objectives
- Development of vision and mission statements
- Financial and non-financial goals and objectives
- Alignment of organizational activities with vision, mission, goals, and objectives
- Alignment/integration of information systems with business objectives and success factors
- Alignment of information systems with organizational strategy
| | | | | | | | | |
2.3 Strategy Development | | | | | | | | | |
2.3.1 Evaluates the entity’s strategic objectives and related performance measures | | | | | | | | | |
B | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Recognizes that the form of the entity may have an impact on the measures chosen (e.g., public versus private company, public versus private sector) Analyzes the nature of the entity and identifies key financial and non-financial performance indicators (KPIs) that are in line with the entity’s strategies, including industry- or sector-specific tracking needs Identifies the leading and lagging KPIs that might be suitable for evaluating the entity’s effectiveness Uses accepted best practices in providing input on the formulation of KPIs that fit with long-term strategies Assists in developing an action plan to implement the various measurement and tracking methods (e.g., activity-baaed costing, balanced scorecard, and benchmarking) | — | — | C2:Recognizes that the form of the entity may have an impact on the measures chosen (e.g., public versus private company, public versus private sector) Analyzes the nature of the entity and identifies key financial and non-financial performance indicators (KPIs) that are in line with the entity’s strategies, including industry- or sector-specific tracking needs Identifies the leading and lagging KPIs that might be suitable for evaluating the entity’s effectiveness Uses accepted best practices in providing input on the formulation of KPIs that fit with long-term strategies Assists in developing an action plan to implement the various measurement and tracking methods, (e.g., activity-based costing, balanced scorecard, and benchmarking) | — | — | — | — | PM:Evaluates the alignment of performance measures with the entity’s strategy Identifies the relevant social performance measures needed by public sector entities |
Knowledge listStrategy formulation
- Nature and benefits of strategic management
- Corporate, business, and functional levels of strategy
- Alternative strategic vehicles, such as diversification (concentric, horizontal, conglomerate), defensive (divestiture, retrenchment), integration (forward, backward, horizontal), intensive (market penetration, market development, product development), and unbundling/outsourcing
- Strategies (cost leadership, differentiation, focused/niche, best value, and integration of low cost and differentiation)
- Business strategies at different stages of an industry’s life cycle
- Alternative approaches to growth (joint venture, alliance, merger, acquisition, and organic)
- Internationalism (entering international markets; risks of doing so; differences in cultural, demographic, and market conditions by market; and types of foreign country entry strategies)
- E-business in strategy
- Customer value proposition
- Performance measurement
- Advantages/disadvantages of organizational performance measurement systems from a strategic perspective
| | | | | | | | | |
2.3.2 Evaluates the entity’s internal and external environment and its impact on strategy development | | | | | | | | | |
B | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Analyzes the entity’s competitive position and its impact on strategy development Analyzes the implications of the entity’s ownership structure and its impact on strategy development Incorporates, where appropriate, entity-level and functional-level strategies in the evaluation of the entity’s internal and external environment Analyzes data requirements and the roles of reporting systems, business process and information systems in supporting strategic developments | — | — | C2:Evaluates the external part of competitive position (e.g., using analysis of value proposition, customers/target markets, and competitive offerings) Evaluates the implications of the entity’s ownership structure: legal form (e.g., corporation versus partnership, public versus private sector) and types of ownership Incorporates, where appropriate, entity-level and functional-level strategies in evaluation of the entity’s internal and external environment Analyzes data requirements and the roles of reporting systems, business process and information systems in supporting strategic developments | — | — | — | — | PM:Employs accepted methods to scan the external and internal environments Determines where the entity and/or product is positioned on its life cycle Determines value proposition Evaluates the significance of market analysis insights on existing operations and plans Determines key success factors Integrates functional-level and entity-level strategies with corporate-level strategy Assesses the impact of public sector strategies on the general public, regulators, and public sector entities Assesses data requirements and the roles of reporting systems, business process and information systems in supporting strategic developments |
Knowledge listEnvironmental scan
- External analysis (e.g. PESTEL, SWOT, etc.)
- Profit pool analysis
- External stakeholder analysis
- Macro forces affecting organizations (economic, social, cultural, demographic, environmental, political, governmental, legal, technological, competitive)
- Sources of external information (indexes, online databases, and library)
- Monitoring of external trends and events
- Internal structure, systems and processes, culture, financial capital, human capital, and intellectual capital of an organization
- Internal analysis (value chain analysis, resource/capability/core-competence analysis)
- Key success factors of the industry and forces driving industry competition
- Porter’s Five Forces competitive/industry analysis concepts: barriers to entry, substitute products/services, bargaining power of suppliers and buyers, rivalry
- Industry life-cycle theory
| | | | | | | | | |
2.3.3 Evaluates strategic alternatives | | | | | | | | | |
B | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Analyzes the strategic alternatives presented using a set of qualitative and quantitative criteria | — | — | C2:Analyzes the strategic alternatives presented using a set of qualitative and quantitative criteria | — | — | — | — | PM:Evaluates implications of ownership structure alternatives: legal form (e.g., corporation versus partnership) and types of ownership (e.g., private versus public) Evaluates relative merits of strategic investment or divestiture alternatives (e.g., alliance versus acquisition) In a public sector entity, evaluates the impact of alternatives on the well-being of society |
Knowledge listStrategy evaluation
- Practical framework for monitoring and evaluating financial and non-financial strategic objectives
- Contingency planning
| | | | | | | | | |
2.4 Strategy Implementation | | | | | | | | | |
2.4.1 Analyzes key operational issues including the use of information assets and their alignment with strategy | | | | | | | | | |
C | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Explains the roles of control systems and accountability structures in aligning resources with strategy Explains the key components of corporate culture and the potential impact on the entity Demonstrates the alternative reward and recognition systems that are available to an entity and understands their strengths and weaknesses Recognizes information assets as a corporate resource to be managed strategically | — | — | C2:Investigates the effectiveness of control systems and accountability structures in aligning resources with strategy Identifies the existence of tools such as a code of conduct, a code of ethics, and training and reward systems used to communicate, reinforce, and renew the entity’s stated strategies and values Analyzes the effectiveness of initiatives in addressing key human resource management issues Identifies the existence of the key components of corporate culture and the impact on the entity’s decision-making practices (e.g., tone of the entity’s leadership, human resource policies, management–union relationship, and corporate social responsibility) Evaluates the advantages and disadvantages of various reward and recognition systems and their effects on the entity’s decision-making policies and/or practices Identifies opportunities for more effective use of information assets | — | — | — | — | PM:Evaluates the effectiveness of the entity’s control systems (i.e., policies, directives, codes, and guidelines) in aligning operations with strategy and values Evaluates the entity’s decision-making processes and accountability structures Makes recommendations that flow from an analysis of the effectiveness of initiatives in addressing key human resource management issues Analyzes the effectiveness of the entity’s culture and structure for strategy implementation Applies best practices for managing strategy implementation (e.g., strategy mapping) Recommends strategies to better utilize information assets |
Knowledge listStrategy implementation
-
Strategic control
- Role of corporate governance
- Importance communication plays in strategy implementation
- Advantages and disadvantages of organizational structures for a strategy (simple, divisional, and matrix designs; centralized and decentralized designs; narrow and broad span of control)
- Employee recruitment, training, and retention
- Performance measurement, evaluation and incentive systems, and their link to strategy
- Role of belief systems and corporate values in supporting new strategies
- Role of organizational culture in strategy
- Specific behaviour systems (codes of conduct, policy manuals, and procedures)
- Change management
- Nature and roles of operations, human resources, finance, marketing, and information technology in strategy implementation
- Data visualization of financial and nonfinancial data
- Dashboards, graphs, tables, report design
- Communication of information for quality decision making
- Framing information recognizing uncertainty
- Value of information systems to organizations: alignment with organizational strategy
- IS architecture alignment with business strategy
- Information technology infrastructure
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Business intelligence, artificial intelligence and machine learning
- Interpretation and professional skepticism of models and analytics
| | | | | | | | | |
2.5 Enterprise Risk Management | | | | | | | | | |
2.5.1 Designs an effective risk management program and evaluates its impact on shareholder value | | | | | | | | | |
C | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Explains the risks that an entity may face and the various risk management policies and procedures that an entity may use | — | — | C2:Identifies the consistency of risk management policies and procedures with the entity’s stated mission and strategies Discusses the potential impact of significant changes in the entity’s environment on the entity’s risk profile Analyzes risks; risk tolerance and exposure; risk mitigation responses; and the risk monitoring process Discusses the possible consequences of having an ineffective risk management program Identifies and suggests courses of action to help manage risks | — | — | — | — | PM:Assesses the scope of the risk management program (e.g., classification of risks managed) and processes (e.g., identify, assess, mitigate, and monitor) Assesses risks using appropriate methodologies Advises on the entity’s risk tolerance approach and risk exposure Monitors environment (internal/external) and advises on potential implications for risk management Recommends risk management strategies (avoidance, transference, mitigation, acceptance) that align with the entity’s strategies, resources, and risk tolerance approach Maintains and monitors the risk management program |
Knowledge listManaging risk
- Different types of enterprise risk (strategic, operational, reporting, compliance)
- Techniques for risk measurement and evaluation (examples: benchmarking, probabilistic models, sensitivity models, scenario analysis)
- External risk and benefit analysis related to strategic objectives
- Risk response alternatives (accept, share, transfer, reduce/mitigate, avoid)
- Cost/benefit analysis of risk response alternatives
- Risk management policies and procedures
| | | | | | | | | |
2.5.2 Assesses the impact of IT/IS risks on enterprise risk and recommends appropriate risk management strategies | | | | | | | | | |
C | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Recognizes enterprise exposures (threats) arising from information systems activities Recognizes the impact of IT/IS risks on enterprise risk | — | — | C2:Identifies enterprise exposures (threats) arising from information systems activities Analyzes the impact of IT/IS risks on enterprise risk | — | — | — | — | PM:Evaluates enterprise exposures (threats) arising from information systems activities Analyzes the impact of IT/IS risks on enterprise risk and recommends appropriate risk management strategies |
Knowledge listInformation systems
- Stakeholders and their interests in systems
- Information technology costing, budgeting and chargeback models
- Professional skepticism regarding data
- Data life cycle
- Information systems architecture alignment with business strategy
- Information systems planning and management
- Information technology infrastructure considerations:
- Information technology infrastructure components
- Insourcing vs outsourcing
- Cloud computing (private, public, hybrid, Saas, PaaS, IaaS
- Vendor relationship management – service level agreements and integration challenges
- Information technology asset management
- Information technology project risk and business case development
- Artificial intelligence
- Robotic process automation
- Internet of things
- Audit implications
- Impact of information system risk on enterprise risk
- Threat and risk exposure identification (including, but not limited to, cyber and fraud risk)
- Fraud detection responsibilities
- Risk management objectives and strategies
- Systems reliability – privacy, confidentiality, security, integrity, availability
- Internal control mix – preventative, detective, corrective, and cost assessment
- Information technology governance and control frameworks (COSO-ERM, ITIL, COBIT, etc.)
- Compliance with regulatory requirements (including privacy, freedom of information, and anti-spam legislation)
- Impact of new/changing technologies on risk exposure
| | | | | | | | | |
3 MANAGEMENT ACCOUNTING | | | | | | | | | |
3.1 Management Reporting Needs and Systems | | | | | | | | | |
3.1.1 Evaluates management information requirements | | | | | | | | | |
B | — | — | A | — | — | — | — | — | — |
| — | ENTRY:Explains what information assets management needs to make decisions Identifies management and strategic uses of information assets and technology | — | — | C2:Determines or evaluates relevant data and information to support decisions made by management and the governing body
Interprets and discusses financial and non-financial information using appropriate techniques (e.g. data visualization)
Understands management and strategic uses of information assets and technology | — | — | — | — | — |
Knowledge list
- Systems life cycle
- Role of the accountant/business advisor/auditor and typical steps in the systems life cycle
- Acquisition, in-house development, customization, assembly and integration options – (buy vs. build)
- Vendor selection and management (especially user requirements, testing, change management and risk management)
- Impact on processes and risks of implementation on all users (e.g., external auditor, other vendors)
- Systems testing (internal audit function) and management of data conversion
- Project and change management principles
- System changes and system maintenance (including patch management)
- Information and decision making
- Data visualization of financial and non-financial data
- Dashboards, graphs, tables, report design
- Communication of information for quality decision making
- Framing information recognizing uncertainty
- What is the value of information in the decision making process?
- Transformation of data to decision relevant information
- Creation of intellectual property and knowledge development
- Ethical use of information
- Dimensions of information quality – relevance, ease of use, integrity, timeliness
- Types of data and their attributes (nature, sources, format, timing, extent and level of aggregation)
- Professional skepticism regarding data
- Information quality and the impact of processing models
- Data cleansing
- Data structure and standards
- Data extraction and import
- Data life cycle
- Database management systems
- Understanding user information requirements
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Business intelligence, artificial intelligence and machine learning
- Model versus data-driven decision making
- Model validation
- Interpretation and professional skepticism of models and analytics
| | | | | | | | | |
3.1.2 Documents and assesses business processes, systems and data requirements and recommends improvements to meet information needs | | | | | | | | | |
C | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Explains the types of information that management needs to make informed decisions Explains alternative approaches to documenting key business processes and control features Explains the importance of quality data, information and knowledge management practices within an organization | — | — | C2:Explains the importance of system control and feedback
Identifies the impact of IT on an organization’s decision-making and performance
Identifies the need for management information, accounting information or other systems
Evaluates the quality of the data and knowledge management within an organization (database management systems, data warehousing, data mining, knowledge management systems)
Utilizes systems and business process documentation to analyze business processes and controls
Analyzes the quality of the data, information and knowledge management practices within an organization (database management systems, data warehousing, data mining, knowledge management systems)
Assesses system reliability Evaluates ability of suggested information technology (IT) solutions to address management information requirements Identifies and evaluates decision criteria for alternative IT solutions Analyzes alternative IT solutions to meet the entity’s objectives Participates in system planning and analysis process (e.g., feasibility and cost-benefit analysis, selection criteria, financing options, and process re-engineering) Explains how an information system can be successfully implemented | — | — | — | — | PM:Evaluates alternatives for addressing gaps in information or for generating improvements to existing management information, and makes specific recommendations Develops an implementation plan and assesses the impact on current systems and processes |
Knowledge list
- Systems life cycle
- Role of the accountant/business advisor/auditor and typical steps in the systems life cycle
- Acquisition, in-house development, customization, assembly and integration options – (buy vs. build)
- Vendor selection and management (especially user requirements, testing, change management and risk management)
- Impact on processes and risks of implementation on all users (e.g., external auditor, other vendors)
- Systems testing (internal audit function) and management of data conversion
- Project and change management principles
- System changes and system maintenance (including patch management)
- Information and decision making
- Data visualization of financial and nonfinancial data
- Dashboards, graphs, tables, report design
- Communication of information for quality decision making
- Framing information recognizing uncertainty
- What is the value of information in the decision making process?
- Transformation of data to decision relevant information
- Creation of intellectual property and knowledge development
- Ethical use of information
- Dimensions of information quality – relevance, ease of use, integrity, timeliness
- Types of data and their attributes (nature, sources, format, timing, extent and level of aggregation)
- Professional skepticism regarding data
- Information quality and the impact of processing models
- Data cleansing
- Data structure and standards
- Data extraction and import
- Data life cycle
- Database management systems
- Understanding user information requirements
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Business intelligence, artificial intelligence and machine learning
- Model versus data-driven decision making
- Model validation
- Interpretation and professional skepticism of models and analytics
- Information systems
- Systems theory
- Data organization and distribution (systems and output)
- People, hardware/devices, software, data, networks, processes that make up the system
- Business process improvement
- Types of systems organizations need to provide information to meet their objectives (examples only):
- AIS/ERP/transaction processing systems
- Business intelligence systems and analytics
- Supply chain management
- Customer relationship management
- Distributed databases/ledgers (blockchain) and digital payment systems/cryptocurrencies
- Information technology infrastructure considerations:
- Information technology infrastructure components
- Insourcing vs outsourcing
- Cloud computing (private, public, hybrid, Saas, PaaS, IaaS
- Vendor relationship management – service level agreements and integration challenges
- Information technology asset management
- Information technology project risk and business case development
- Artificial intelligence
- Robotic process automation
- Internet of things
- Audit implications
- Cost-benefit analysis
- Business process re-engineering (BPR) (i.e., benefits and potential problems of re-engineering)
- Business planning for IT applications and how information systems can facilitate business process re-engineering
- Enterprise resource planning
| | | | | | | | | |
3.1.3 Identifies ethical and privacy issues related to information technology and its use | | | | | | | | | |
C | — | — | B | — | A | — | A | — | — |
| — | ENTRY:Understands the requirements of privacy legislation and its role in determining potential IT solutions for an entity | — | — | C2:Identifies the need to adhere to privacy legislation when evaluating or implementing an information technology system | — | — | — | — | AS:Assesses IT ethical and privacy issues PM:Addresses IT ethical and privacy issues by recommending an appropriate course of action |
Knowledge listData integrity, privacy, confidentiality, and security principles
- Compliance with regulatory requirements (including privacy, freedom of information and anti-spam legislation)
- Ethical use of information
| | | | | | | | | |
3.1.4 Explains implications of current trends, emerging issues and technologies in management accounting | | | | | | | | | |
C | — | — | C | — | — | — | B | — | — |
| — | ENTRY:Identifies current trends, and recent updates, in management accounting Explains the potential impact of emerging issues and technologies in management accounting | — | — | C2:Identifies current trends, and recent updates, in management accounting Explains the potential impact of emerging issues and technologies in management accounting | — | — | — | — | PM:Describes current trends and anticipated changes in management accounting Analyzes the potential impact of emerging issues and technologies on the entity |
Knowledge list | | | | | | | | | |
3.2 Planning, Budgeting, and Forecasting | | | | | | | | | |
3.2.1 Develops or evaluates data and information inputs for operational plans, budgets, and forecasts | | | | | | | | | |
B | — | — | A | — | — | — | — | — | — |
| — | ENTRY:Analyzes the reasonableness of assumptions underlying operational plans, budgets and forecasts
Identifies potential data quality issues | — | — | C2:Examines data and information inputs for the creation of operational plans, budgets, and forecasts Evaluates supporting data and information from internal and external sources and identifies gaps and anomalies Ensures that the data and information used to prepare budgets and forecasts is relevant, accurate, and timely | — | — | — | — | — |
Knowledge list
- Nature of the budgeting process
- Objectives of budgeting
- Budgeting process: functions, relationships, components, time frame, techniques
- Difference between forecasts, pro forma, and budgets
- Types of budgets
- Master budget and its components (sales, production, materials, labour and inventory, overhead and administration, cash)
- Activity-based budgeting
- Zero-based budgeting
- Adjustment to Plans and Budgets
- Cash budgeting (i.e., cash flow forecasts and short- and long-term sources and uses of funds)
- Benchmarking
- Professional skepticism regarding data
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Model versus data-driven decision making
- Model validation
- Interpretation and professional skepticism of models and analytics
- Standard cost systems
- Difference between actual, normal, and standard costing systems and their applications
- Establishment of standard costs
| | | | | | | | | |
3.2.2 Prepares, analyzes, or evaluates operational plans, budgets, and forecasts | | | | | | | | | |
B | — | — | A | — | — | — | — | — | — |
| — | ENTRY:Prepares various types of operational plans, budgets and forecasts | — | — | C2:Using the information supplied, prepares
• operating budgets (sales and marketing, production, procurement, and general and administrative) over an appropriate period of time;
• financial budgets (capital expenditures, working capital) over an appropriate period of time;
• short-term cash flow projections;
• long-term cash flow forecasts;
• financing and investing needs;
• tax-planning projections;
• special project budgets to be included in strategic plans or project proposals; and
• other forecasts
Critically reviews the information prepared in light of the entity’s strategies | — | — | — | — | — |
Knowledge list
- Nature of the budgeting process
- Objectives of budgeting
- Budgeting process: functions, relationships, components, time frame, techniques
- Difference between forecasts, pro forma, and budgets
- Types of budgets
- Master budget and its components (sales, production, materials, labour and inventory, overhead and administration, cash)
- Activity-based budgeting
- Zero-based budgeting
- Adjustment to Plans and Budgets
- Cash budgeting (i.e., cash flow forecasts and short- and long-term sources and uses of funds)
- Benchmarking
- Professional skepticism regarding data
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Model versus data-driven decision making
- Model validation
- Interpretation and professional skepticism of models and analytics
- Unique aspects of budgeting, pricing, and program evaluation
| | | | | | | | | |
3.2.3 Computes, analyzes, or assesses implications of variances | | | | | | | | | |
B | — | — | A | — | — | — | — | — | — |
| — | ENTRY:Analyzes actual performance against budget, or another relevant benchmark | — | — | C2:Analyzes actual performance against budget, or another relevant benchmark, including
• variances between budgeted revenue and realized revenue;
• variances between standard and actual costs; and
• variances between KPI targets and realized outcomes
Explains results of variance analysis to appropriate levels of management Provides insights based on findings and recommends courses of action | — | — | — | — | — |
Knowledge list
- Nature of the budgeting process
- Objectives of budgeting
- Budgeting process: functions, relationships, components, time frame, techniques
- Difference between forecasts, pro forma, and budgets
- Types of budgets
- Master budget and its components (sales, production, materials, labour and inventory, overhead and administration, cash)
- Activity-based budgeting
- Zero-based budgeting
- Adjustment to Plans and Budgets
- Cash budgeting (i.e., cash flow forecasts and short- and long-term sources and uses of funds)
- Benchmarking
- Professional skepticism regarding data
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Model versus data-driven decision making
- Model validation
- Interpretation and professional skepticism of models and analytics
- Budget variance analysis
- Cost and sales variances: price/rate, efficiency, denominator, spending, mix, yield, volume, quantity, market share, and market size
- Criteria used to select variances to investigate (e.g., materiality, cost/benefit, consistency of occurrence, ability to control, nature of item)
- Favourable and unfavourable variance analysis
- Standard cost systems
- Difference between actual, normal, and standard costing systems and their applications
- Establishment of standard costs
| | | | | | | | | |
3.3 Cost Management | | | | | | | | | |
3.3.1 Evaluates cost classifications and costing methods for management of ongoing operations | | | | | | | | | |
A | — | — | A | — | — | — | — | — | — |
| — | ENTRY:Classifies and compares various types of costs and describes their behaviour within the context of their respective classifications (e.g., fixed/variable, direct/indirect, and discretionary) Distinguishes and calculates the various types of operational costs and program costs (e.g., cost of goods sold, cost of capacity, and other costs related to ongoing expenses, overhead allocation) Distinguishes the various types of costs when researching and analyzing particular problems and issues Classifies and communicates cost information according to standard conventions and uses judgment to determine which costs are relevant to the decision at hand Analyzes cost data using established and cutting-edge costing systems and methods (e.g., standard costing, activity-based costing, process costing, joint cost allocation, departmental costing, and job costing) Identifies the need for innovative costing techniques: Just in time, LEAN, etc. Describes costing systems for for-profit, not-for-profit, and public sector entities, and explains how such systems are typically applied | — | — | C2:Classifies and compares various types of costs and describes their behaviour within the context of their respective classifications (e.g., fixed/variable, direct/indirect, and discretionary) Distinguishes and calculates the various types of operational costs and program costs (e.g., cost of goods sold, cost of capacity, and other costs related to ongoing expenses, overhead allocation) Distinguishes the various types of costs when researching and analyzing particular problems and issues Classifies and communicates cost information according to standard conventions and uses judgment to determine which costs are relevant to the decision at hand Analyzes cost data using established and cutting-edge costing systems and methods (e.g., standard costing, activity-based costing, process costing, joint cost allocation, departmental costing, and job costing) Identifies the need for innovative costing techniques: Just in time, LEAN, etc. Describes costing systems for for-profit, not-for-profit, and public sector entities, and explains how such systems are typically applied | — | — | — | — | — |
Knowledge list
- Nature of costs
- Cost behaviour patterns and their relevance to decision making
- Cost estimation: underlying assumptions, cost function parameters, difficulties encountered, approaches used: high-low, account analysis
- Classification of costs
- Various cost classifications (variable vs. fixed, step variable, step fixed, mixed, period vs. product, prime, conversion, opportunity, relevant, direct vs. indirect, sunk, controllable vs. non-controllable, committed vs. discretionary, attributed vs. allocated, relevant range)
- Product costing
- Flow of costs within a manufacturing environment and preparation of schedule of cost of goods sold and cost of goods manufactured
- Service department cost allocation (step, direct, reciprocal)
- Variable or direct versus full or absorption costing
- Cost of capacity (actual, normal, theoretical, and practical capacity)
- Joint product and by-product costing
- Process costing
- Process costing applied: weighted average and FIFO methods
- Treatment of normal and abnormal spoilage
- Other costing (e.g., hybrid costing, operations costing, kaizen costing, product life cycle costing)
- Standard cost systems
- Difference between actual, normal, and standard costing systems and their applications
- Establishment of standard costs
- Sourcing (insource, outsource, contracting) — also see relevant costing, (i.e., risks and costs associated with outsourcing/offshoring/contracting)
| | | | | | | | | |
3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions | | | | | | | | | |
B | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Applies methods such as activity-based costing, process costing, joint cost allocation, departmental costing, and job costing when appropriate to the specific costing decision (e.g., in make vs buy, acquisition vs sourcing decisions) | — | — | C2:Applies methods such as activity-based costing, process costing, joint cost allocation, departmental costing, and job costing when appropriate to the specific costing decision (e.g., in make vs buy, acquisition vs sourcing decisions) | — | — | — | — | PM:Recommends or selects the appropriate cost management technique to be used for planning and making a specific decision e.g., establishing a transfer price Creates, monitors, and improves cost management techniques with a view to maintaining a sustainable operation |
Knowledge list
- Nature of costs
- Cost behaviour patterns and their relevance to decision making
- Cost estimation: underlying assumptions, cost function parameters, difficulties encountered, approaches used: high-low, account analysis
- Classification of costs
- Various cost classifications (variable vs. fixed, step variable, step fixed, mixed, period vs. product, prime, conversion, opportunity, relevant, direct vs. indirect, sunk, controllable vs. non-controllable, committed vs. discretionary, attributed vs. allocated, relevant range)
- Product costing
- Flow of costs within a manufacturing environment and preparation of schedule of cost of goods sold and cost of goods manufactured
- Service department cost allocation (step, direct, reciprocal)
- Variable or direct versus full or absorption costing
- Cost of capacity (actual, normal, theoretical, and practical capacity)
- Joint product and by-product costing
- Process costing
- Process costing applied: weighted average and FIFO methods
- Treatment of normal and abnormal spoilage
- Job costing
- Job costing applied to various types of jobs
- Treatment of normal and abnormal spoilage
- Activity-based costing (ABC)
- Pros and cons of using activity-based costing, and application
- Activity-based management (process improvement, process value analysis, cost reduction, activity-based financial performance measurement)
- Relevant costing
- Make or buy (outsourcing), special order, sell or process further, add or drop a product/service/department/ customer decisions
- Standard cost systems
- Difference between actual, normal, and standard costing systems and their applications
- Establishment of standard costs
- Sourcing (insource, outsource, contracting) — also see relevant costing, (i.e., risks and costs associated with outsourcing/offshoring/contracting)
| | | | | | | | | |
3.3.3 Recommends changes identified by applying process improvement methodologies | | | | | | | | | |
B | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Explains the advantages and weaknesses of continuous improvement methodologies as they relate to profitability and performance Critically evaluates the effectiveness of continuous improvement methodologies in improving profitability and performance Calculates the cost of quality initiatives Recognizes that public sector and not-for-profit organizations’ process improvements may have different measures than profitability | — | — | C2:Explains the advantages and weaknesses of continuous improvement methodologies as they relate to profitability and performance Critically evaluates the effectiveness of continuous improvement methodologies in improving profitability and performance Calculates the cost of quality initiatives Recognizes that public sector and not-for-profit organizations’ process improvements may have different measures than profitability | — | — | — | — | PM:Develops recommendations for process improvements e.g., ERP Develops recommendations that improve quality control processes like TQM |
Knowledge list
- Costing strategies
- Generic strategies (cost leadership, differentiation, focused/niche, best value, and integration of low cost and differentiation)
- Target costing
- Continuous improvement
- Quality measurement systems and measures (e.g., Six Sigma)
- Concepts of quality, quality control, and quality assurance, for products and services
- Quality management tools: statistical process control, statistical quality control, Pareto analysis, process capability analysis, fishbone cause-and-effect diagram, scatter diagram, control chart
| | | | | | | | | |
3.3.4 Recommends cost management improvements across the entity | | | | | | | | | |
B | — | — | — | — | — | — | A | — | — |
| — | ENTRY:Discusses cost management processes with a view to maintaining a sustainable operation Analyzes operational processes based on operational cost considerations | — | — | — | — | — | — | — | PM:Creates, monitors, and improves cost management processes with a view to maintaining a sustainable operation Selects and adapts costing systems to the entity’s operations Recommends improvements to operational processes based on operational cost considerations e.g., supplier relationship management, ABM, etc. |
Knowledge list
- Costing strategies
- Generic strategies (cost leadership, differentiation, focused/niche, best value, and integration of low cost and differentiation)
- Target costing
- Continuous improvement
- Strategic supplier networks and relationships
- Supply chain, value chain
- Components and objectives of supply chain management (including the role of information technology)
| | | | | | | | | |
3.4 Revenue Management | | | | | | | | | |
3.4.1 Evaluates sources and drivers of revenue growth | | | | | | | | | |
C | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Explains alternative revenue model options and which best meet the entity’s objectives Identifies pricing alternatives | — | — | C2:Analyzes alternative revenue model options (e.g., asset sale, leasing, subscription) to assess which best meet the entity’s objectives
Analyzes financial and other information in support of pricing decisions:
• market sensitivity to price
• competitive structure of the industry
• short- versus long-term horizon
• relevant costs in the evaluation of revenue growth Identifies and evaluates pricing alternatives (e.g., cost-based and market-based) Assesses division and national multi-location transfer pricing options | — | — | — | — | PM:Determines the sources and drivers of the entity’s revenue growth Applies relevant analytical techniques and makes recommendations to improve revenue growth (e.g., pricing strategy, product and product-mix strategies, and distribution strategies, outsourcing, business alliances or other arrangements) |
Knowledge list
- Strategic supplier networks and relationships
- Supply chain, value chain
- Components and objectives of supply chain management (including the role of information technology)
- Industry structure
- Competitive markets and perfect competition
- Monopoly, oligopoly, and monopolistic competition
- Pricing strategies
- Factors that affect demand for a product or service and have an impact on pricing
- Various approaches to pricing (cost-based, demand-based, target-based, life cycle–based, and value-based; reverse engineering pricing strategy)
- Cost-plus compared to fixed price contract
- Product differentiation, mix, and marketing
- Customer relationship management (CRM)
- Product life cycle (stages, characteristics, market positioning, dimensions, domestic and international markets)
- Product line sales and profits calculations
- Sourcing (insource, outsource, contracting) — also see relevant costing, (i.e., risks and costs associated with outsourcing/offshoring/contracting)
- Objectives, advantages/disadvantages/ selection/ application of appropriate transfer pricing methods (market price, variable cost, full cost, negotiated), behavioural implications, and consideration of transfer pricing policies
- Transfer price calculations
- International transfer pricing considerations: differences from domestic transfer pricing, influencing factors (exchange rates, tax rate, duties, political climate, repatriation of profits), objectives, behavioural implications
- Unique aspects of budgeting, pricing, and program evaluation
| | | | | | | | | |
3.5 Profitability Management | | | | | | | | | |
3.5.1 Performs sensitivity analysis | | | | | | | | | |
B | — | — | A | — | — | — | — | — | — |
| — | ENTRY:Applies sensitivity analysis where appropriate and discusses the results and impact on the entity | — | — | C2:Performs sensitivity analysis where appropriate and discusses the results and impact on the entity Calculates cost-volume profit (CVP), undertakes a sensitivity analysis for a given entity, assesses the implications for profitability, and assesses the impact on operational decisions and strategic goals | — | — | — | — | — |
Knowledge list
- Cost-volume-profit analysis (C-V-P)
- Underlying assumptions, limitations, and information requirements of C-V-P
- Single- versus multiple-product C-V-P analysis
- C-V-P graphs
- Break-even analysis calculations with changing variables
- Trend and sensitivity analysis
- Sensitivity analysis as applied to C-V-P, contribution margin, relevant costing, etc.
- Contribution margin analysis
- Cost-benefit analysis
| | | | | | | | | |
3.5.2 Evaluates sustainable profit maximization and capacity management performance | | | | | | | | | |
B | — | — | A | — | — | — | — | — | — |
| — | ENTRY:Applies quantitative tools to analyze performance problems Identifies alternatives to solve potential performance problems | — | — | C2:Applies quantitative tools to analyze performance problems Incorporates the results into the entity’s profitability and capacity management objectives Designs investigative strategies to uncover root causes of performance issues | — | — | — | — | — |
Knowledge list
- Cost-volume-profit analysis (C-V-P)
- Underlying assumptions, limitations, and information requirements of C-V-P
- Single- versus multiple-product C-V-P analysis
- C-V-P graphs
- Break-even analysis calculations with changing variables
- Trend and sensitivity analysis
- Sensitivity analysis as applied to C-V-P, contribution margin, relevant costing, etc.
- Contribution margin analysis
- Scenario planning (business intelligence tool)
- Quantitative modeling (linear programming, regression analysis, cause and effect diagrams, etc.)
- Production planning in a scarce resources environment
- Theory of constraints
- Capacity requirements planning (CRP)/capacity management
| | | | | | | | | |
3.6 Organizational Performance Measurement | | | | | | | | | |
3.6.1 Evaluates performance using accepted frameworks | | | | | | | | | |
B | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Applies accepted frameworks and scorecards to assess performance Applies the measures, assesses the actual performance level against established objectives, and explains the differences Investigates the underlying factors that cause performance differences Concludes as to the financial or non-financial performance level | — | — | C2:Applies accepted frameworks and scorecards to assess performance Applies the measures, assesses the actual performance level against established objectives, and explains the differences Investigates the underlying factors that cause performance differences Concludes as to the financial or non-financial performance level | — | — | — | — | PM:Adapts framework to particular circumstances and clearly identifies differences to be explained further Distinguishes theoretical and realistic expectations of performance Analyzes significant variances and recommends remedial actions Monitors the ongoing suitability of the existing framework in light of changing circumstances Recommends alternatives for performance measurement frameworks |
Knowledge list
- Budget variance analysis
- Cost and sales variances: price/rate, efficiency, denominator, spending, mix, yield, volume, quantity, market share, and market size
- Criteria used to select variances to investigate (e.g., materiality, cost/benefit, consistency of occurrence, ability to control, nature of item)
- Favourable and unfavourable variance analysis
- Performance indicators
- Various performance indicators
- Efficiency and effectiveness performance measures for not-for-profit and public sector entities
- Cost management methodologies, such as Total Quality Management (TQM), Business Process Management (BPM), and Lean Management
- Business process re-engineering (BPR) (i.e., benefits and potential problems of re-engineering)
- Business planning for IT applications and how information systems can facilitate business process re-engineering
- Responsibility accounting
- Types of responsibility centres (revenue, cost, profit, investment)
- Responsibility accounting systems: controllability, performance reports, behavioural implications
- Differences in application to not-for-profit and public sector
- Decentralization versus centralization management
- Activity-based management, LEAN management
- Management by objectives (MBO)
- Capacity requirements planning (CRP)/capacity management
- Balanced scorecard
- Enterprise resource planning
- Advantages and disadvantages of various organizational performance measurement systems
| | | | | | | | | |
3.6.2 Evaluates performance of responsibility centres | | | | | | | | | |
B | — | — | — | — | — | — | A | — | — |
| — | ENTRY:Discusses the assignment of responsibility centre types Analyzes the performance of responsibility centres | — | — | — | — | — | — | — | PM:Creates guidelines for responsibility centres Participates in the establishment of responsibility centres and the choice of appropriate guidelines |
Knowledge list
- Objectives, advantages/disadvantages/ selection/ application of appropriate transfer pricing methods (market price, variable cost, full cost, negotiated), behavioural implications, and consideration of transfer pricing policies
- Transfer price calculations
- International transfer pricing considerations: differences from domestic transfer pricing, influencing factors (exchange rates, tax rate, duties, political climate, repatriation of profits), objectives, behavioural implications
- Responsibility accounting
- Types of responsibility centres (revenue, cost, profit, investment)
- Responsibility accounting systems: controllability, performance reports, behavioural implications
- Differences in application to not-for-profit and public sector
- Decentralization versus centralization management
| | | | | | | | | |
3.6.3 Evaluates root causes of performance issues | | | | | | | | | |
B | — | — | — | — | — | — | A | — | — |
| — | ENTRY:Identifies possible impacts of unusual circumstances on performance | — | — | — | — | — | — | — | PM:Analyzes the possible impact of unusual circumstances on performance |
Knowledge list
- Quality management tools: statistical process control, statistical quality control, Pareto analysis, process capability analysis, fishbone cause-and-effect diagram, scatter diagram, control chart
- Business process re-engineering (BPR) (i.e., benefits and potential problems of re-engineering)
- Business planning for IT applications and how information systems can facilitate business process re-engineering
- Balanced scorecard
| | | | | | | | | |
3.7 Individual Performance Measurement | | | | | | | | | |
3.7.1 Analyzes the implications of management incentive schemes and employee compensation methods | | | | | | | | | |
B | — | — | B | — | — | — | A | — | — |
| — | ENTRY:Identifies the strengths and weaknesses of applicable incentives Analyzes the effectiveness of incentive schemes in contributing to achievement of the entity’s objectives Identifies the tax consequences of the management incentive schemes; also considers the financial accounting and assurance implications Suggests the most appropriate scheme in the circumstances | — | — | C2:Identifies the strengths and weaknesses of applicable incentives Analyzes the effectiveness of incentive schemes in contributing to achievement of the entity’s objectives Identifies the tax consequences of the management incentive schemes; also considers the financial accounting and assurance implications Suggests the most appropriate scheme in the circumstances | — | — | — | — | PM:Provides oversight on incentives and compensation strategies, ensuring that practices are fair and sustainable Sets standards for measurement and analysis Assesses incentive schemes to highlight/avoid conflicts of interest, potential legal or tax liability, and measures contrary to shareholder interests Identifies ethical issues related to compensation and fair pay |
Knowledge list
- Types of performance measurement, evaluation, and incentive systems
| | | | | | | | | |
4. AUDIT AND ASSURANCE | | | | | | | | | |
4.1 Internal Control | | | | | | | | | |
4.1.1 Assesses the entity’s risk assessment processes | | | | | | | | | |
B | — | A | — | — | A | — | — | — | — |
| — | ENTRY:Analyzes the impact of the entity's key risks and related controls on the financial reporting processes of the entity Documents and explains the actual operational processes in use Analyzes the impact of information system risks on the organization | — | — | C1:Assesses the operational or financial reporting implications arising from the identification of the entity’s key operations Assesses the operational or financial reporting implications of the entity’s risks and related controls Assesses and documents the actual operational processes in use | — | — | — | — | AS:Assesses the operational or financial reporting implications arising from the identification of the entity’s key operations Assesses the operational or financial reporting implications of the entity’s risks and related controls Assesses and documents the actual operational processes in use Understands the major activities that the entity uses to monitor internal control over financial reporting, including those related to those control activities relevant to the audit, and how the entity initiates remedial actions where there are deficiencies in its controls |
Knowledge list
- Risk assessment process
- Business risk
- Going concern (CAS 570)
- Risk of material misstatement (CAS 315)
- Responsibilities relating to fraud (CAS 240)
- Materiality (CAS 320)
- Internal control
- Control environment (CAS 260, 265)
- Control frameworks (e.g., COSO, COCO, ITGC, COBIT)
- Audit Considerations Relating to an Entity Using a Service Organization (CAS 402)
- Management of internal controls :
- Authorization of transactions/activities
- Segregation of duties
- Design and use of documentation and records
- Safeguards over access to and use of assets and records
- Preventive, detective, and corrective measures
- Objectives of internal controls:
- Optimizing the use of resources
- Preventing and detecting error and fraud
- Safeguarding assets
- Maintaining reliable control system
- IT functions and controls
- General computer controls versus application controls
- Automated controls versus manual controls
- Data entry and access controls
- Processing controls (within the process)
- End-user and business unit computing controls
- Specific controls (e.g., identification, authorization, authentication, non-repudiation, encryption, and monitoring
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.1.2 Evaluates the information system, including the related processes, using knowledge of data requirements and risk exposures | | | | | | | | | |
C | — | B | — | — | A | — | A | — | — |
| — | ENTRY:Explains the objectives of internal controls Explains the implications of identified deficiencies in internal control Identifies the controls needed to ensure reliable financial reporting Explains the importance of data integrity and systems reliability in supporting effective decision making Explains the underlying concepts of exposure and potential risks due to a weakness in internal control | — | — | C1:Identifies the controls needed to ensure reliable financial reporting Evaluates the design and effectiveness of internal controls Assesses the financial reporting implications of identified deficiencies in internal control Utilizes knowledge of an entity’s industry, business processes, existing infrastructure, historical performance, IT/IS risks, information system controls and governance practices to assess important data relationships from internal and external data sources to design appropriate plans to support effective assurance engagement outcomes Analyzes the quality of data, information and models being used to support managerial decision making | — | — | — | — | AS:Identifies the appropriate recognized framework to apply and evaluates internal control in the context of that framework Identifies, gains an understanding of, and evaluates the design and effectiveness of internal controls Documents the entity’s procedures for reporting compliance with approved internal controls Assesses the implications of control deficiencies identified (including any financial reporting implications) and recommends improvements Communicates weaknesses in internal controls to the appropriate level of management and/or the audit committee or equivalent Considers IT security requirements and tools Identifies and evaluates opportunities to enhance controls through the application of IT, and collaborates with specialists as needed to implement enhancement Utilizes knowledge of an entity’s industry, business processes, historical performance, information system controls and governance practices to assess important data relationships from internal and external data sources to design appropriate plans to support effective assurance engagement outcomes Evaluates the quality of data and information and models being used PM:Identifies the appropriate recognized framework to apply and evaluates internal control in the context of that framework Identifies, gains an understanding of, and evaluates the design and effectiveness of key controls Identifies and evaluates the adequacy of compensating controls Documents the entity’s procedures for reporting compliance with approved internal controls Assesses the implications of control deficiencies identified (including any financial reporting implications) and recommends improvements Communicates weaknesses in internal controls to the appropriate level of management and/or the audit committee or equivalent Integrates IT security requirements and tools Identifies and evaluates opportunities to enhance controls through the application of IT, and collaborates with specialists as needed to implement enhancements Evaluates the quality of data and information and models being used to support managerial decision making |
Knowledge list
- Risk assessment process
- Business risk
- Going concern (CAS 570)
- Risk of material misstatement (CAS 315)
- Responsibilities relating to fraud (CAS 240)
- Materiality (CAS 320)
- Internal control
- Control environment (CAS 260, 265)
- Control frameworks (e.g., COSO, COCO, ITGC, COBIT)
- Audit Considerations Relating to an Entity Using a Service Organization (CAS 402)
- Management of internal controls :
- Authorization of transactions/activities
- Segregation of duties
- Design and use of documentation and records
- Safeguards over access to and use of assets and records
- Preventive, detective, and corrective measures
- Objectives of internal controls:
- Optimizing the use of resources
- Preventing and detecting error and fraud
- Safeguarding assets
- Maintaining reliable control system
- IT functions and controls
- General computer controls versus application controls
- Automated controls versus manual controls
- Data entry and access controls
- Processing controls (within the process)
- End-user and business unit computing controls
- Specific controls (e.g., identification, authorization, authentication, non-repudiation, encryption, and monitoring
- Quality of information for decision making
- Dimensions of information quality – relevance, ease of use, integrity, timeliness
- Types of data and their attributes (nature, sources, format, timing, extent and level of aggregation)
- Professional skepticism regarding data
- Data and information modelling
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Business intelligence, artificial intelligence and machine learning
- Model validation
- Interpretation and professional skepticism of models and analytics
- Risks and controls
- Impact of information systems risk on enterprise risk
- Systems reliability – privacy, confidentiality, security, integrity, availability
- Internal control mix – preventative, detective, corrective, and cost assessment
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.2 Internal and External Audit Requirements | | | | | | | | | |
4.2.1 Advises on an entity’s assurance needs | | | | | | | | | |
B | — | — | — | — | A | — | — | — | — |
| — | ENTRY:Analyzes the various assurance requirements and options for an entity and explains the advantages and disadvantages to relevant stakeholders Discusses appropriate assurance projects or engagements for the entity | — | — | — | — | — | — | — | AS:Uses the entity’s mission, vision, strategies, and stakeholders’ needs in order to identify and evaluate assurance requirements and options for the entity Recommends appropriate assurance projects or engagements given the entity’s needs Explains the rationale for selecting a particular type of assurance project or engagement (e.g., statutory requirement and requirement by shareholders and/or creditors) Explains the assurance process to stakeholders (e.g., steps involved, best-practice guidelines, and effects of IT environment or other situational factors) Identifies engagements other than assurance engagements |
Knowledge list
- Concept of assurance
- Economic purposes of assurance engagement
- The expectation gap (i.e., gaps between the outcomes delivered by the assurance engagement and the expectations of the users)
- The audit concept
- Social and economic purposes of auditing
- Distinction between statutory and voluntary audits
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.2.2 Explains the implications of current trends, emerging issues and technologies in assurance standards and methodologies | | | | | | | | | |
C | — | C | — | — | B | — | — | — | — |
| — | ENTRY:Understands current trends in the industry and anticipated changes Explains the potential impact of emerging issues and technologies in assurance | — | — | C1:Understands current trends in the industry and anticipated changes Explains the potential impact of emerging issues and technologies in assurance | — | — | — | — | AS:Describes current trends in the industry and anticipates changes (e.g., current audit environment and public opinion) Explains shortcomings/limitations of current standards in relation to emerging standards, stakeholder needs, and how standards apply to a particular situation Understands and explains the implications of exposure drafts, impending changes, their rationale, and their impact on engagements or projects Suggests how assurance plans should be modified to reflect changes in requirements where applicable Explains the potential use of emerging technologies to conduct assurance procedures |
Knowledge list
- Auditing and assurance standard-setting process, including the following:
- Formulation of auditing and assurance standards in Canada
- Documents for comment/exposure drafts
- Directions in assurance research
- Monitoring of the auditing profession;
i.e., Canadian Public Accountability Board (CPAB): under Canadian Securities Administrators Rule 52-108, accounting firms that audit reporting issuers must be participants in CPAB’s oversight program
- Regulatory process in Canada;
i.e., the Canadian Securities Administrators (CSA), an umbrella organization of Canada’s provincial and territorial securities regulators, whose objective is to improve, coordinate, and harmonize regulation of the Canadian capital markets
- Implications of regulatory reporting and assurance
- Impact of new/changing technologies on risk exposure
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3 Internal Audit Projects and External Assurance Engagements | | | | | | | | | |
4.3.1 Assesses issues related to the undertaking of the engagement or project | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Integrates the implications of financial reporting issues into the assessment of the engagement or project Describes the planning and acceptance requirements for the engagement | — | — | C1:Integrates the implications of financial reporting issues into the assessment of the engagement or project Describes the planning and acceptance requirements for the engagement | — | — | — | — | AS:Assesses whether there are barriers to the acceptance of the engagement or project (considers ethical issues, issues of independence, competence, and objectivity) Evaluates the risk associated with accepting the engagement or project Understands the criteria to be used to determine whether acceptance or retention of the engagement or project is appropriate Evaluates internal resources to ensure sufficient expertise and time are available to properly perform the engagement or project For external assurance engagements, communicates with predecessor auditor where applicable to request information regarding any reason the client should not be accepted Concludes whether to undertake the engagement or project and documents the basis and terms of acceptance For external assurance engagements, prepares an engagement letter to ensure that expectations are aligned and engagement risk is managed |
Knowledge list
- Concept of assurance
- Economic purposes of assurance engagement
- The expectation gap (i.e., gaps between the outcomes delivered by the assurance engagement and the expectations of the users)
- Client acceptance and continuation (CAS 210)
- Use of practitioner’s communication or name (CSOA 5000)
- Audit planning (CAS 300)
- Risk assessment process
- Business risk
- Going concern (CAS 570)
- Risk of material misstatement (CAS 315)
- Responsibilities relating to fraud (CAS 240)
- Materiality (CAS 320)
- Internal control
- Control environment (CAS 260, 265)
- Control frameworks (e.g., COSO, COCO, ITGC, COBIT)
- Audit Considerations Relating to an Entity Using a Service Organization (CAS 402)
- Management of internal controls :
- Authorization of transactions/activities
- Segregation of duties
- Design and use of documentation and records
- Safeguards over access to and use of assets and records
- Preventive, detective, and corrective measures
- Objectives of internal controls:
- Optimizing the use of resources
- Preventing and detecting error and fraud
- Safeguarding assets
- Maintaining reliable control system
- IT functions and controls
- General computer controls versus application controls
- Automated controls versus manual controls
- Data entry and access controls
- Processing controls (within the process)
- End-user and business unit computing controls
- Specific controls (e.g., identification, authorization, authentication, non-repudiation, encryption, and monitoring)
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.2 Assesses which set of criteria to apply to the subject matter being evaluated | | | | | | | | | |
B | — | — | — | — | A | — | — | — | — |
| — | ENTRY:For financial statement assurance engagements or projects, analyzes the acceptability of the financial reporting framework | — | — | — | — | — | — | — | AS:For financial statement assurance engagements or projects, assesses the acceptability of the financial reporting framework:
• for general-purpose financial statements, the framework would be generally accepted accounting principles, which in Canada differs by type of entity (e.g., IFRS, ASPE)
• for special-purpose financial statements, assesses what financial reporting framework, criteria, set of acceptable rules, or policies best apply
For other assurance engagements or projects, identifies and assesses the appropriate framework or set of criteria to apply |
Knowledge list
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.3 Assesses or develops which standards or guidelines to apply based on the nature and expectations of the assurance engagement or project | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Integrates the audit implications of financial reporting issues into the assessment of the standards or guidelines | — | — | C1:Integrates the audit implications of financial reporting issues into the assessment of the standards or guidelines | — | — | — | — | AS:Assesses whether Canadian Auditing Standards (CAS) apply, and if so, how they apply to the decision-making needs of the users of the information For assurance engagements or projects where CAS do not apply, determines or develops appropriate guidelines to apply |
Knowledge list
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.4 Assesses materiality for the assurance engagement or project | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Assesses materiality with reference to financial statement users, acknowledging the decision-making context Applies the concept of materiality to financial reporting | — | — | C1:Assesses materiality with reference to financial statement users, acknowledging the decision-making context Applies the concept of materiality to financial reporting | — | — | — | — | AS:Identifies the users of the assurance engagement or project Assesses the materiality or significance level with reference to the users, acknowledging the decision-making and financial reporting context |
Knowledge list
- Risk assessment process
- Business risk
- Going concern (CAS 570)
- Risk of material misstatement (CAS 315)
- Responsibilities relating to fraud (CAS 240)
- Materiality (CAS 320)
- Internal control
- Control environment (CAS 260, CAS 265)
- Control frameworks (e.g., COSO, COCO, ITGC, COBIT)
- Audit Considerations Relating to an Entity Using a Service Organization (CAS 402)
- Management of internal controls:
- Authorization of transactions/activities
- Segregation of duties
- Design and use of documentation and records
- Safeguards over access to and use of assets and records
- Preventive, detective, and corrective measures
- Objectives of internal controls:
- Optimizing the use of resources
- Preventing and detecting error and fraud
- Safeguarding assets
- Maintaining reliable control system
- IT functions and controls
- General computer controls versus application controls
- Automated controls versus manual controls
- Data entry and access controls
- Processing controls (within the process)
- End-user and business unit computing controls
- Specific controls (e.g., identification, authorization, authentication, non-repudiation, encryption, and monitoring)
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.5 Assesses the risks of the project, or, for audit engagements, assesses the risks of material misstatement at the financial statement level and at the assertion level for classes of transactions, account balances, and disclosures | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Completes risk assessment procedures, obtaining sufficient understanding of the entity, its control environment, its industry, the economic environment, its objectives and strategies, and key stakeholders to accurately assess risk areas, fraud risk factors, and other issues (e.g., financial instability and/or debt covenants, intense competition, unstable supply or demand, and significant regulation) With repeat audit engagements or projects, reviews the results of prior audits for problem areas or potential issues that may have an impact on risk Completes risk assessment procedures, such as preliminary analysis of current financial statements and other information, to identify possible risk factors, including the appropriateness of the going concern assumption and the risk of fraud Assesses the risk of material misstatement or exception based on relevant risks and issues Assesses the risk of the assertion level for classes of transactions, account balances, and disclosure Evaluates the impact of the risk assessment on the nature, timing, and extent of assurance work to be performed Identifies risks related to tax assessments | — | — | C1:Completes risk assessment procedures, obtaining sufficient understanding of the entity, its control environment, its industry, the economic environment, its objectives and strategies, and key stakeholders to accurately assess risk areas, fraud risk factors, and other issues (e.g., financial instability and/or debt covenants, intense competition, unstable supply or demand, and significant regulation) With repeat audit engagements or projects, reviews the results of prior audits for problem areas or potential issues that may have an impact on risk Completes risk assessment procedures, such as preliminary analysis of current financial statements and other information, to identify possible risk factors, including the appropriateness of the going concern assumption and the risk of fraud Assesses the risk of material misstatement or exception based on relevant risks and issues Assesses the risk of the assertion level for classes of transactions, account balances, and disclosure Evaluates the impact of the risk assessment on the nature, timing, and extent of assurance work to be performed Identifies risks related to tax assessments | — | — | — | — | AS:Completes risk assessment procedures, obtaining sufficient understanding of the entity, its control environment, its industry, the economic environment, its objectives and strategies, and key stakeholders to accurately assess risk areas, fraud risk factors, and other issues (e.g., financial instability and/or debt covenants, intense competition, unstable supply or demand, and significant regulation) With repeat audit engagements and projects, reviews the results of prior audits for problem areas or potential issues that may have an impact on risk Assesses the risk of material misstatement or exception based on relevant risks and issues Assesses the risk at the financial statement level and the assertion level for classes of transactions, account balances, and disclosures Evaluates the impact of the risk assessment on the nature, timing, and extent of assurance work to be performed |
Knowledge list
- Risk assessment process
- Business risk
- Going concern (CAS 570)
- Risk of material misstatement (CAS 315)
- Responsibilities relating to fraud (CAS 240)
- Materiality (CAS 320)
- Internal control
- Control environment (CAS 260, 265)
- Control frameworks (e.g., COSO, COCO, ITGC, COBIT)
- Audit Considerations Relating to an Entity Using a Service Organization (CAS 402)
- Management of internal controls :
- Authorization of transactions/activities
- Segregation of duties
- Design and use of documentation and records
- Safeguards over access to and use of assets and records
- Preventive, detective, and corrective measures
- Objectives of internal controls:
- Optimizing the use of resources
- Preventing and detecting error and fraud
- Safeguarding assets
- Maintaining reliable control system
- IT functions and controls
- General computer controls versus application controls
- Automated controls versus manual controls
- Data entry and access controls
- Processing controls (within the process)
- End-user and business unit computing controls
- Specific controls (e.g., identification, authorization, authentication, non-repudiation, encryption, and monitoring)
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.6 Develops appropriate procedures, including Audit Data Analytics (ADA), based on the identified risk of material misstatement | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Identifies potential sources of evidence to support the reliability of financial reporting Identifies opportunities to deploy audit data analytics enabled procedures | — | — | C1:Identifies potential sources of evidence to support the reliability of financial reporting Identifies opportunities to deploy audit data analytics enabled procedures | — | — | — | — | AS:Identifies potential sources of evidence to support the reliability of the information Prepares appropriate procedures in terms of nature, timing, and extent, based on factors such as knowledge of the entity and preliminary risk assessment Evaluates the impact of the IT environment on the nature, extent, and timing of the work and the need to use computer-assisted techniques to gather evidence Determines the appropriate sampling approach Develops procedures to make use of the work of others (e.g., specialists/experts, internal auditors, external auditors of related entities, and external auditors of service providers) Modifies procedures in light of findings (e.g., ineffective controls, known errors, changes in circumstances, or the presence of fraud risk factors) Documents the planned procedures (e.g., prepares the audit program) Evaluates the need to revise audit procedures given fundamental changes to the entity’s operations or infrastructure or the results of procedures performed Determines the appropriate approach utilizing audit data analytics procedures where appropriate |
Knowledge list
- Audit procedures
- Nature, timing, and extent of procedures (CAS 510, 540, 550, 560, 600, 610, 620, 710)
- Test of controls, substantive tests (CAS 330)
- Analytical procedures (CAS 520)
- Sampling approach (CAS 530)
- Confirmation (CAS 505)
- Computer-assisted techniques
- Understanding user requirements
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Standards for data tagging and reporting (XML, XBRL)
- Business intelligence, artificial intelligence and machine learning
- Model versus data-driven decision-making
- Model validation
- Interpretation and professional skepticism of models and analytics
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.7 Performs the work plan | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Evaluates the financial reporting components of the audit work plan and documents and performs the work with due care Evaluates whether the work performed address the risks identified and comply with the accounting standards | — | — | C1:Evaluates the financial reporting components of the audit work plan and documents and performs the work with due care Evaluates whether the work performed address the risks identified and comply with the accounting standards | — | — | — | — | AS:Applies an appropriate level of professional skepticism, remaining alert to the possibility of fraud Performs and documents procedures with due care and an objective state of mind Ensures that all work is adequately supervised and reviewed Evaluates whether the procedures performed address the risks identified at both the overall level and the assertion level |
Knowledge list
- Audit procedures
- Nature, timing, and extent of procedures (CAS 510, 540, 550, 560, 600, 610, 620, 710)
- Test of controls, substantive tests (CAS 330)
- Analytical procedures (CAS 520)
- Sampling approach (CAS 530)
- Confirmation (CAS 505)
- Computer-assisted techniques
- Understanding user requirements
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Standards for data tagging and reporting (XML, XBRL)
- Business intelligence, artificial intelligence and machine learning
- Model versus data-driven decision-making
- Model validation
- Interpretation and professional skepticism of models and analytics
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.8 Evaluates the evidence and results of analysis | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Analyzes the sufficiency, reliability, and appropriateness of the evidence obtained and the significance of the results of the analysis Identifies inconsistencies, unexpected circumstances, unexpected findings, or findings that indicate possible fraud, error, or illegal acts Interprets the outcome of the audit findings on financial reporting | — | — | C1:Analyzes the sufficiency, reliability, and appropriateness of the evidence obtained and the significance of the results of the analysis Identifies inconsistencies, unexpected circumstances, unexpected findings, or findings that indicate possible fraud, error, or illegal acts Interprets the outcome of the audit findings on financial reporting | — | — | — | — | AS:Evaluates the sufficiency, reliability, and appropriateness of the evidence obtained and assesses the significance of the results of analysis Identifies inconsistencies, unexpected circumstances, unexpected findings, or findings that indicate possible fraud, error, or illegal acts
Determines whether the subject matter conforms with the standards, criteria, rules, or policies used for evaluation
Identifies the impact of findings on the nature of the engagement or project, determining whether it is necessary to modify the nature, timing, or extent of planned procedures |
Knowledge list
- Evidence (CAS 500, 501, 580)
- Sufficiency
- Reliability
- Appropriateness
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.9 Documents the work performed and its results | | | | | | | | | |
B | — | — | — | — | A | — | — | — | — |
| — | ENTRY:Drafts working papers to support the nature, timing, and extent of procedures performed | — | — | — | — | — | — | — | AS:Prepares working papers with sufficient detail to support the nature, timing, and extent of procedures performed and to support conclusions Ensures that the documentation provides a clear link to significant findings or issues that arose during the engagement or project and to the assessed risks Draws and documents conclusions as to whether the procedure meets its objective |
Knowledge list
- Use of practitioner’s communication or name (CSOA 5000)
- Documentation (CAS 230)
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.10 Draws conclusions and communicates results | | | | | | | | | |
B | — | — | — | — | A | — | — | — | — |
| — | ENTRY:Analyzes the reasonableness of the conclusions on the subject matter Reviews the unadjusted errors/exceptions in light of materiality or significance guidelines | — | — | — | — | — | — | — | AS:Analyzes and decides on the reasonableness of the conclusions on the subject matter, based on an understanding of the nature of the entity and its operations for the period and on the evidence gathered Analyzes the need to gather additional evidence or to extend the nature of procedures Reviews the unadjusted errors/exceptions in light of materiality or significance guidelines, and determines if corrections are required or further work is needed Assesses indicators of existence of fraud and assesses the implication to the engagement or project, including the impact on the communication Evaluates the reasonableness of the subject matter as a whole, considering the objectives of the engagement or project Evaluates the appropriateness of the conclusions being communicated in accordance with applicable criteria Develops an appropriate communication in accordance with the terms of the engagement or project, and if applicable, statutory or regulatory requirements (e.g., CPA Canada Handbook — Assurance) Evaluates whether quality control standards and/or guidelines were adhered to (e.g., CSQC 1) |
Knowledge list
- Use of practitioner’s communication or name (CSOA 5000)
- Audit conclusions (CAS 450, 700, 701, 705, 706, 710)
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.3.11 Prepares or interprets information and reports for stakeholders using data visualization where appropriate | | | | | | | | | |
B | — | B | — | — | A | — | — | — | — |
| — | ENTRY:Interprets assurance-related communications and their implications on financial reporting Analyzes representational faithfulness of information communicated via visual means (graphs) | — | — | C1:Interprets assurance-related communications and their implications on financial reporting Analyzes representational faithfulness of information communicated via visual means (graphs) | — | — | — | — | AS:Documents and/or facilitates debriefing of engagement or project results, issues, and stakeholder feedback to consider for the following year’s engagement or project (e.g., to improve the quality of service and effectiveness/efficiency of the engagement or project) Prepares a report or presentation to the audit committee or equivalent (those with oversight responsibility for the financial reporting process) as required to meet professional standards (e.g., reports on independence of the assurance team, related party issues, and significant unusual transactions) Prepares other reports to meet stakeholder needs (e.g., derived communication) Prepares information for timely communication with management, those in charge of governance, and other stakeholders on significant matters, including
• the results of procedures;
• recommendations for improvement to processes and controls;
• misstatements/exceptions arising from fraud, suspected fraud, error, and illegal or possibly illegal acts; and
• any other item required due to the nature of the engagement or project
Concludes on and prepares the appropriate report to issue Assesses to what extent recommendations for improvement can be made without jeopardizing independence Assesses opportunities to benchmark previous audits to reduce effort and fees of future audits Evaluates representational faithfulness of information communicated via visual means (graphs) |
Knowledge list
- Information representation for decision making
- Data visualization of financial and non-financial data
- Dashboards, graphs, tables, report design
- Communication of information for quality decision making
- Framing information recognizing uncertainty
- Assurance engagements related to financial statements:
- An audit of general-purpose financial statements (CAS 200, 220, 250, 720)
- An audit of financial statements prepared in accordance with special-purpose frameworks (CAS 800)
- An audit of single financial statements and specific elements of a financial statement (CAS 805)
- An engagement to report on summary financial statements (CAS 810)
- Other assurance engagements:
- Reporting on controls at a service organization (CSAE 3416)
- Assurance on other matters (not financial statements or financial information) (3000, 3001, 5021)
- An audit of internal controls over financial reporting that is integrated with an audit of financial statements (5925)
- Review engagements:
- Engagements to review historical financial statements (CSRE 2400)
- Auditor review of interim financial statements (7060)
- Other engagements:
- Attestation engagements other than audits or reviews of historical financial statements (CSAE 3000)
- Direct engagements (CSAE 3001)
- Attestation engagements to report on compliance (CSAE 3530)
- Direct engagements to report on compliance (CSAE 3531)
- Compilation engagements (CSRS 4200)
- Compilation of a financial forecast or projection (AUG 16)
- Agreed-upon procedures engagements (CSRS 4400)
- Reports on application of accounting principles (7600)
- Auditor’s involvement with offering documents, including assistance to underwriters and others, consent to use of report, etc. (7150, 7170, 7200, AUG 6)
- Reports on supplementary matters arising from an audit or review engagement (CSRS 4460)
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to)
- Related services (all specifically referred to)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned)
| | | | | | | | | |
4.4 Comprehensive Audit Projects | | | | | | | | | |
4.4.1 Applies comprehensive auditing techniques | | | | | | | | | |
C | — | — | — | — | B | — | — | — | — |
| — | ENTRY:Explains the need and purpose of comprehensive auditing Explains the nature of procedures involved in a comprehensive audit | — | — | — | — | — | — | — | AS:Detects the need for comprehensive auditing (value-for-money audits, government program evaluations, operational audits) based on the entity’s (including public sector entities) strategies and mission Identifies and analyzes the risks and determines project priority Preliminarily adjusts assurance strategy and procedures to plan and perform a comprehensive audit Identifies beneficial opportunities for economy, efficiency, and effectiveness in the use and management of the entity’s available resources |
Knowledge list
- Comprehensive audit engagements:
- Operational audits
- Continuous auditing engagements
- Forensic audits
- Comprehensive auditing, including value-for-money (VFM) audits
- Environmental audits
- Code of Professional Conduct
- Ethical Principles
- CPA Canada Handbook — Assurance:
- Canadian Standards on Quality Control (CSQM 1, CSQM 2)
- Canadian Auditing Standards (all specifically referred to above)
- Other Canadian standards
- General assurance and auditing (except for those specifically mentioned above)
- Specialized areas (see types of engagements)
- Review engagements (all specifically referred to above)
- Related services (all specifically referred to above)
- Public sector (PS 5000-6420)
- Assurance and related services guidelines (except for those specifically mentioned above)
| | | | | | | | | |
5. FINANCE | | | | | | | | | |
5.1 Financial Analysis and Planning | | | | | | | | | |
5.1.1 Evaluates the entity’s financial state | | | | | | | | | |
B | — | — | A | — | A | A | — | — | — |
| — | ENTRY:Performs financial analysis, including ratio analysis, industry benchmarking, trend analysis, and cash flow analysis Analyzes the individual calculations in the specific context of the entity | — | — | C2:Performs financial analysis, including ratio analysis, industry benchmarking, trend analysis, and cash flow analysis Determines the relevance of the tools to the evaluation of the entity’s financial state Draws conclusions as to the entity’s financial state | — | — | — | — | AS:Performs financial analysis, including ratio analysis, industry benchmarking, trend analysis, and cash flow analysis Determines the relevance of the tools to the evaluation of the entity’s financial state Draws conclusions as to the entity’s financial state FIN:Performs financial analysis, including ratio analysis, industry benchmarking, trend analysis, and cash flow analysis Determines the relevance of the tools to the evaluation of the entity’s financial state Draws conclusions as to the entity’s financial state |
Knowledge list
- Risk/return
- Financial leverage and risk (impact on residual return, interaction with operating leverage)
- Financial management goals and objectives
- Impact of inflation/deflation
- Income tax considerations
- Time value of money (including risk-adjusted discount rates)
- Free cash flow analysis
- Horizontal and vertical analysis
- Ratio analysis
- Trend analysis
- Sensitivity analysis
- Scenario/simulation analysis
- Payback
- Internal rate of return
- Net present value
- Inputs into determining cash flow needs
- Working-capital management
- Nature of working capital
- Role of liquidity
- Cash and marketable securities management
- Receivables, inventory, and payables management
- Sources of short-term financing (trade, factoring, lines of credit)
- Credit policy decisions (evaluating credit risk, determining collection policy and credit period, making use of cash discounts, organizing the credit function)
- Short-term versus long-term financial planning (objectives and process, forecasting, pro forma financial statements)
- Sources of medium- and long-term financing
- Bank loans
- Internally generated funds
- Initial public offerings
- Venture capital
- Securitization
- Government assistance
- Asset-based financing
- Lease financing (direct lease, sale and leaseback)
- Derivative financial instruments
- Project financing
| | | | | | | | | |
5.1.2 Develops or evaluates financial proposals and financing plans | | | | | | | | | |
C | — | — | B | — | — | A | — | — | — |
| — | ENTRY:Explains financial proposals and financing plans and the importance for the entity | — | — | C2:Identifies the intended purpose and audience and the underlying assumptions Develops a portion of a financial proposal or financing plan that is supported with well-reasoned assumptions and up-to-date information Identifies the strengths and weaknesses of the financial proposal or financing plans Reviews the alignment of proposal or plan with strategic objectives | — | — | — | — | FIN:Determines the intended purpose and audience Evaluates the validity of the underlying assumptions Evaluates the strengths and weaknesses of the various alternatives Performs a sensitivity analysis, scenario analysis, and/or simulation analysis Evaluates the risk/return profile of the various alternatives Determines the alignment of various alternatives with strategic objectives Develops the financing aspects of the plan or proposal from start to finish, pulling together the various components Recommends an appropriate course of action based on the analysis |
Knowledge list
- Nature of and accessibility to capital markets (financial markets, public offerings and underwriters, private placements, secondary markets)
- Capital market efficiency (efficient market hypothesis)
- Other factors in market pricing
- Risk/return
- Financial leverage and risk (impact on residual return, interaction with operating leverage)
- Financial management goals and objectives
- Impact of inflation/deflation
- Income tax considerations
- Time value of money (including risk-adjusted discount rates)
- Free cash flow analysis
- Horizontal and vertical analysis
- Ratio analysis
- Trend analysis
- Sensitivity analysis
- Scenario/simulation analysis
- Payback
- Internal rate of return
- Net present value
- Inputs into determining cash flow needs
- Working-capital management
- Nature of working capital
- Role of liquidity
- Cash and marketable securities management
- Receivables, inventory, and payables management
- Sources of short-term financing (trade, factoring, lines of credit)
- Credit policy decisions (evaluating credit risk, determining collection policy and credit period, making use of cash discounts, organizing the credit function)
- Short-term versus long-term financial planning (objectives and process, forecasting, pro forma financial statements)
- Sources of medium- and long-term financing
- Bank loans
- Internally generated funds
- Initial public offerings
- Venture capital
- Securitization
- Government assistance
- Asset-based financing
- Lease financing (direct lease, sale and leaseback)
- Derivative financial instruments
- Project financing
| | | | | | | | | |
5.1.3 Assesses reporting systems, data quality and the analytical models used to support financial analysis and decision-making | | | | | | | | | |
C | — | — | B | — | — | A | — | — | — |
| — | ENTRY:Understands the inputs in analytical models Explains the objectives and output of the model | — | — | C2:Identifies and analyzes the underlying inputs in analytical models Analyzes the quality of the inputs in analytical models Develops simple analytical models Analyzes the output from the models in the context of the entity | — | — | — | — | FIN:Assesses the underlying alternative inputs in analytical models Evaluates the quality of the alternative inputs and determines the most appropriate inputs Develops analytical models Evaluates the outputs from analytical models in the context of the entity Explains the limitations of the specific analytical models used |
Knowledge list
- Information representation for decision making
- Data visualization of financial and nonfinancial data
- Dashboards, graphs, tables, report design
- Communication of information for quality decision making
- Framing information recognizing uncertainty
- Quality of information for decision making
- Dimensions of information quality – relevance, ease of use, integrity, timeliness
- Types of data and their attributes (nature, sources, format, timing, extent and level of aggregation)
- Professional skepticism regarding data
- Information quality and the impact of processing models
- Data cleansing
- Data and information modelling
- Analytics and model building (descriptive, diagnostic, predictive, prescriptive)
- Standards for data tagging and reporting (XML, XBRL)
- Model validation
- Interpretation and professional skepticism of models and analytics
| | | | | | | | | |
5.1.4 Explains implications of current trends, emerging issues and technologies in finance | | | | | | | | | |
C | — | — | C | — | — | B | — | — | — |
| — | ENTRY:Identifies current trends, and recent updates, in finance Explains the potential impact of emerging issues and technologies in finance | — | — | C2:Identifies current trends, and recent updates, in finance Explains the potential impact of emerging issues and technologies in finance | — | — | — | — | FIN:Describes current trends and anticipated changes in finance Analyzes the potential impact of emerging issues and technologies on the entity |
Knowledge list | | | | | | | | | |
5.2 Treasury Management | | | | | | | | | |
5.2.1 Evaluates the entity’s cash flow and working capital | | | | | | | | | |
B | — | — | A | — | — | A | — | — | — |
| — | ENTRY:Identifies problems with the entity's working capital management Analyzes working capital balances on an ongoing basis and identifies concerns Explains the effects on the entity of changes to working capital policies | — | — | C2:Monitors cash flow to ensure the entity’s needs are met Develops strategies for working capital management and monitors working capital Manages working capital levels, including bank balances, receivable balances, inventory levels, and payable balances (i.e., the cash investment cycle) Formulates policies for granting credit to customers, determining appropriate inventory levels, and making payments to suppliers | — | — | — | — | FIN:Monitors cash flow to ensure the entity’s needs are met Develops strategies for working capital management and monitors working capital Manages working capital levels, including bank balances, receivable balances, inventory levels, and payable balances (i.e., the cash investment cycle) Formulates policies for granting credit to customers, determining appropriate inventory levels, and making payments to suppliers |
Knowledge list
- Inputs into determining cash flow needs
- Working-capital management
- Nature of working capital
- Role of liquidity
- Cash and marketable securities management
- Receivables, inventory, and payables management
- Sources of short-term financing (trade, factoring, lines of credit)
- Credit policy decisions (evaluating credit risk, determining collection policy and credit period, making use of cash discounts, organizing the credit function)
- Short-term versus long-term financial planning (objectives and process, forecasting, pro forma financial statements)
- Sources of medium- and long-term financing
- Bank loans
- Internally generated funds
- Initial public offerings
- Venture capital
- Securitization
- Government assistance
- Asset-based financing
- Lease financing (direct lease, sale and leaseback)
- Derivative financial instruments
- Project financing
| | | | | | | | | |
5.2.2 Evaluates the entity’s investment portfolio | | | | | | | | | |
C | — | B | — | — | — | A | — | — | — |
| — | ENTRY:Explains the various financial instruments available for an entity when developing an investment portfolio Explains the differences in the financial instruments | — | — | C1:Compares various types and features related to financial instruments, for example:
• Forward and future contracts (including swaps)
• Put and call options (including warrants) and other derivatives
• Securitization, investor or creditor rights, conversion, or other features
Describes the suitable use of the various types of financial instruments and, in general, their impact on risks Assesses the risks associated with an investment portfolio of financial instruments Explains the appropriate accounting treatments, including all disclosures | — | — | — | — | FIN:Evaluates the entity’s investments in debt and equity using accepted methods and benchmarks Assesses the entity’s more sophisticated financial instruments (e.g., derivatives, swaps, future and forward contracts, warrants, options, and convertible securities) using accepted methods and benchmarks, and understands the suitable uses and the risks associated with such instruments Evaluates the entity’s other investments (e.g., real estate, other businesses, and life insurance assets) using accepted methods and benchmarks Evaluates the relationship between the investments in the investment portfolio and the associated risk and return profile |
Knowledge list
- Nature of and accessibility to capital markets (financial markets, public offerings and underwriters, private placements, secondary markets)
- Capital market efficiency (efficient market hypothesis)
- Other factors in market pricing
- Forms of ownership and extent of ownership (direct, outsourcing, strategic partnerships)
- Nature and use of financial instruments
- Debt instruments
- Equity instruments
- Derivative financial instruments (options, rights, warrants, futures, forwards, swaps, other derivatives)
- Convertible securities
- Stock-based compensation (options, appreciation rights)
- Tools to hedge exposures (e.g., interest rate swap, foreign currency hedge)
- Other types of investments
- Portfolio diversification and optimal investment decision making
- Macro-economic risk assessment
| | | | | | | | | |
5.2.3 Evaluates sources of financing | | | | | | | | | |
C | — | — | B | — | — | A | — | — | — |
| — | ENTRY:Explains possible sources of financing Explains the advantages and disadvantages of the financing options | — | — | C2:Identifies possible sources of financing Compares the advantages and disadvantages of the financing options identified Identifies the tax implications of the financing options Identifies suitable options based on the objectives of the entity (whether private or public sector) | — | — | — | — | FIN:Evaluates an entity’s financing needs, based on its strategic and operating environment Analyzes capital markets (e.g., availability of project finance and the role of ratings) and the feasibility of particular financing alternatives Evaluates financing alternatives considering the consequences, relative costs and benefits, and implications for operational and future financing decisions (including any tax implications) Recommends an appropriate financing source based on the analysis Determines the key milestones in the process leading to a successful financing outcome |
Knowledge list
- Inputs into determining cash flow needs
- Working-capital management
- Nature of working capital
- Role of liquidity
- Cash and marketable securities management
- Receivables, inventory, and payables management
- Sources of short-term financing (trade, factoring, lines of credit)
- Credit policy decisions (evaluating credit risk, determining collection policy and credit period, making use of cash discounts, organizing the credit function)
- Short-term versus long-term financial planning (objectives and process, forecasting, pro forma financial statements)
- Sources of medium- and long-term financing
- Bank loans
- Internally generated funds
- Initial public offerings
- Venture capital
- Securitization
- Government assistance
- Asset-based financing
- Lease financing (direct lease, sale and leaseback)
- Derivative financial instruments
- Project financing
- Forms of ownership and extent of ownership (direct, outsourcing, strategic partnerships)
- Nature and use of financial instruments
- Debt instruments
- Equity instruments
- Derivative financial instruments (options, rights, warrants, futures, forwards, swaps, other derivatives)
- Convertible securities
- Stock-based compensation (options, appreciation rights)
- Tools to hedge exposures (e.g., interest rate swap, foreign currency hedge)
- Other types of investments
- Portfolio diversification and optimal investment decision making
- Macro-economic risk assessment
| | | | | | | | | |
5.2.4 Evaluates decisions affecting capital structure | | | | | | | | | |
C | — | — | B | — | — | A | — | — | — |
| — | ENTRY:Describes the capital structure of an entity Explains the relationship between an entity's capital structure, its debt-to-equity ratio and its financial risk | — | — | C2:Discusses the capital structure of the entity and how to maximize value Quantitatively analyzes the capital structure of an entity Discusses the appropriate debt-to-equity ratio Provides input into the advice on public share offerings, debt structure, and asset securitization strategy Assesses lease versus buy decisions | — | — | — | — | FIN:Evaluates the capital structure of an entity (quantitatively and qualitatively) Determines the optimal debt-to-equity ratio Evaluates the entity’s ability to access the capital markets Provides supporting information for decisions regarding corporate investments and for actions influencing capital structure |
Knowledge list
- Nature of and accessibility to capital markets (financial markets, public offerings and underwriters, private placements, secondary markets)
- Capital market efficiency (efficient market hypothesis)
- Other factors in market pricing
- Optimal capital structure
- Ownership and control considerations
- Financial leverage
- Tax considerations (tax shield, etc.)
- Effects of bankruptcy costs
| | | | | | | | | |
5.2.5 Evaluates the entity’s cost of capital | | | | | | | | | |
C | — | — | B | — | — | A | — | — | — |
| — | ENTRY:Explains the concept and the components of the cost of capital | — | — | C2:Calculates the cost of capital Explains the use of the cost of capital in capital budgeting decisions | — | — | — | — | FIN:Determines an entity’s cost of capital using a range of methodologies Evaluates the sensitivity of an entity’s cost of capital to potential changes in its operations, underlying risk factors, and capital structure |
Knowledge list
- Risk/return
- Financial leverage and risk (impact on residual return, interaction with operating leverage)
- Financial management goals and objectives
- Impact of inflation/deflation
- Income tax considerations
- Time value of money (including risk-adjusted discount rates)
- Capital components and cost
- Capital asset pricing model (CAPM)
- Weighted average cost of capital (WACC)
- Marginal cost of capital
| | | | | | | | | |
5.2.6 Evaluates decisions related to distribution of profits | | | | | | | | | |
C | — | — | B | — | — | A | — | — | — |
| — | ENTRY:Explains the various methods that an entity may use to distribute profits | — | — | C2:Analyzes the most appropriate method to distribute profits | — | — | — | — | FIN:Evaluates the manner in which an entity distributes profits to shareholders, following accepted best practices Incorporates tax considerations Recommends the most appropriate method to distribute profits |
Knowledge list
- Dividend policy
- Alternatives to cash dividends (stock dividend, stock split, share repurchase, dividend reinvestment)
| | | | | | | | | |
5.3 Capital Budgeting | | | | | | | | | |
5.3.1 Develops or evaluates capital budgeting processes and decisions | | | | | | | | | |
B | — | — | B | — | — | A | — | — | — |
| — | ENTRY:Classifies and applies various methods of evaluating capital projects Applies accepted tools and benchmarks in analyzing capital projects, incorporating the tax considerations Discusses an appropriate course of action, considering the entity’s objectives | — | — | C2:Classifies and applies various methods of evaluating capital projects Applies accepted tools and benchmarks in analyzing capital projects, incorporating the tax considerations Discusses an appropriate course of action, considering the entity’s objectives | — | — | — | — | FIN:Identifies situations where the use of a formal capital budgeting process would assist in decision-making Applies various tools, benchmarks, and methods to evaluate and critique capital projects based on accepted practices Evaluates the feasibility of a capital project, incorporating the tax considerations Recommends an appropriate course of action, considering the entity’s objectives |
Knowledge list
- Free cash flow analysis
- Horizontal and vertical analysis
- Ratio analysis
- Trend analysis
- Sensitivity analysis
- Scenario/simulation analysis
- Payback
- Internal rate of return
- Net present value
- Role and nature of capital budgeting
- Discount versus capitalization rate
- Investment in working capital
- Evaluation criteria (capital rationing, abandonment decisions)
- Tax effects
- Post-audit of capital investments
- Tax effects
- Effects of non-cash items
- Discounting
| | | | | | | | | |
5.4 Valuation | | | | | | | | | |
5.4.1 Determines the value of a tangible asset | | | | | | | | | |
C | — | B | — | — | B | A | — | — | — |
| — | ENTRY:Explains the various methods that are appropriate to value a tangible asset | — | — | C1:Explains the valuation methods that apply for financial reporting of tangible assets Identifies the acceptable valuation alternatives Understands the pros and cons of each valuation alternative Identifies the critical assumptions and facts that underlie the valuation estimate Applies the appropriate valuation alternative | — | — | — | — | AS:Explains the valuation methods that apply for financial reporting of tangible assets Identifies the acceptable valuation alternatives Understands the pros and cons of each valuation alternative Identifies the critical assumptions and facts that underlie the valuation estimate Applies the appropriate valuation alternative FIN:Determines the various methods that are appropriate for valuation of a tangible asset Evaluates the pros and cons of each valuation alternative Evaluates the critical assumptions and facts that underlie the valuation Determines the most appropriate value for an asset based on the analysis |
Knowledge list
- Purpose and nature of the valuation
- Fair market value concept
- Common inputs to valuation techniques (credit risk, market price, marketability, volatility, etc.)
- Approaches to valuation (for fixed income securities and/or equity instruments):
- Asset based (adjusted book value, liquidation value, replacement cost)
- Transaction based (capitalization of earnings, capitalization of cash flows, discounted earnings, discounted cash flow)
- Market based (multiples)
- Approaches to the valuation of intangible assets
| | | | | | | | | |
5.4.2 Applies appropriate methods to estimate the value of a business | | | | | | | | | |
C | — | B | — | — | B | A | — | — | — |
| — | ENTRY:Explains the various methods that are appropriate to value a business | — | — | C1:Applies different valuation methods to analyze, calculate, or forecast a plausible range of values for a business for review by others. Methods include the following:
• Asset-based approaches
• Transaction-based approaches (e.g., discounted cash flow)
• Market-based approaches
Identifies the critical assumptions and facts that underlie the valuation estimate Identifies the need for business valuation techniques in the preparation of financial statements Describes the use of financial statements for the purposes of business valuation | — | — | — | — | AS:Applies different valuation methods to analyze, calculate, or forecast a plausible range of values for a business for review by others. Methods include the following:
• Asset-based approaches
• Transaction-based approaches (e.g., discounted cash flow)
• Market-based approaches
) Identifies the critical assumptions and facts that underlie the valuation estimate Identifies the need for business valuation techniques in the preparation of financial statements Describes the use of financial statements for the purposes of business valuation FIN:Determines the critical assumptions and facts that underlie valuation methodologies and estimates Determines the appropriate data sources for valuation methodologies after performing a full analysis of all available alternatives Evaluates which valuation method(s) are appropriate for entities in different contexts (e.g., ownership, tax, regulation, and competition) after critiquing the various alternatives Applies the appropriate valuation method(s) to obtain a plausible range of values for the business |
Knowledge list
- Purpose and nature of the valuation
- Fair market value concept
- Common inputs to valuation techniques (credit risk, market price, marketability, volatility, etc.)
- Approaches to valuation (for fixed income securities and/or equity instruments):
- Asset based (adjusted book value, liquidation value, replacement cost)
- Transaction based (capitalization of earnings, capitalization of cash flows, discounted earnings, discounted cash flow)
- Market based (multiples)
- Approaches to the valuation of intangible assets
| | | | | | | | | |
5.4.3 Estimates the value of an intangible asset | | | | | | | | | |
C | — | — | — | — | B | B | — | — | — |
| — | ENTRY:Explains the various methods that are appropriate to value an intangible asset | — | — | — | — | — | — | — | AS:Explains the various methods that are appropriate for valuation of an intangible asset Analyzes the pros and cons of each valuation alternative Estimates the value for an intangible asset based on acceptable methods FIN:Explains the various methods that are appropriate for valuation of an intangible asset Analyzes the pros and cons of each valuation alternative Estimates the value for an intangible asset based on acceptable methods |
Knowledge list
- Purpose and nature of the valuation
- Fair market value concept
- Common inputs to valuation techniques (credit risk, market price, marketability, volatility, etc.)
- Approaches to valuation (for fixed income securities and/or equity instruments):
- Asset based (adjusted book value, liquidation value, replacement cost)
- Transaction based (capitalization of earnings, capitalization of cash flows, discounted earnings, discounted cash flow)
- Market based (multiples)
- Approaches to the valuation of intangible assets
| | | | | | | | | |
5.5 Financial Risk Management | | | | | | | | | |
5.5.1 Develops or evaluates financial risk management policies | | | | | | | | | |
C | — | B | — | — | — | A | — | — | — |
| — | ENTRY:Explains the basics of hedging Describes potential hedging instruments | — | — | C1:Explains the basics of hedging Describes the suitable use of the various types of financial instruments and, in general, their impact on risks Evaluates the risk associated with an investment portfolio of financial instruments (for advice on policies, not on financial reporting issues) | — | — | — | — | FIN:Develops and evaluates financial risk management policies (e.g., hedging policy, investment policy, and insurance coverage) and monitors exposure in order to manage the level of financial risk Monitors changes in the economy (e.g., changes in interest rates, foreign exchange, employment, and fiscal and monetary policy) and changes within the entity, assessing their impact on the entity’s finances Recommends changes to risk management policies in line with the assessment of the impact on the entity’s finances |
Knowledge list
- Inputs into determining cash flow needs
- Working-capital management
- Nature of working capital
- Role of liquidity
- Cash and marketable securities management
- Receivables, inventory, and payables management
- Sources of short-term financing (trade, factoring, lines of credit)
- Credit policy decisions (evaluating credit risk, determining collection policy and credit period, making use of cash discounts, organizing the credit function)
- Short-term versus long-term financial planning (objectives and process, forecasting, pro forma financial statements)
- Sources of medium- and long-term financing
- Bank loans
- Internally generated funds
- Initial public offerings
- Venture capital
- Securitization
- Government assistance
- Asset-based financing
- Lease financing (direct lease, sale and leaseback)
- Derivative financial instruments
- Project financing
- Forms of ownership and extent of ownership (direct, outsourcing, strategic partnerships)
- Nature and use of financial instruments
- Debt instruments
- Equity instruments
- Derivative financial instruments (options, rights, warrants, futures, forwards, swaps, other derivatives)
- Convertible securities
- Stock-based compensation (options, appreciation rights)
- Tools to hedge exposures (e.g., interest rate swap, foreign currency hedge)
- Other types of investments
- Portfolio diversification and optimal investment decision making
- Macro-economic risk assessment
| | | | | | | | | |
5.5.2 Analyzes the use of derivatives as a form of financial risk management | | | | | | | | | |
| — | — | C | — | — | — | B | — | — | — |
| — | — | — | — | C1:Describes the significant risks, including interest rate risks, foreign exchange risks, and commodity risks Identifies appropriate derivative instruments that mitigate risks | — | — | — | — | FIN:Identifies the significant risks within an entity, including interest rate risks, foreign exchange risks, and commodity risks Understands the possibility of compounding risks Analyzes various derivative instruments that are available to mitigate risks Suggests appropriate derivative instruments to mitigate risks |
Knowledge list
- Inputs into determining cash flow needs
- Working-capital management
- Nature of working capital
- Role of liquidity
- Cash and marketable securities management
- Receivables, inventory, and payables management
- Sources of short-term financing (trade, factoring, lines of credit)
- Credit policy decisions (evaluating credit risk, determining collection policy and credit period, making use of cash discounts, organizing the credit function)
- Short-term versus long-term financial planning (objectives and process, forecasting, pro forma financial statements)
- Sources of medium- and long-term financing
- Bank loans
- Internally generated funds
- Initial public offerings
- Venture capital
- Securitization
- Government assistance
- Asset-based financing
- Lease financing (direct lease, sale and leaseback)
- Derivative financial instruments
- Project financing
- Forms of ownership and extent of ownership (direct, outsourcing, strategic partnerships)
- Nature and use of financial instruments
- Debt instruments
- Equity instruments
- Derivative financial instruments (options, rights, warrants, futures, forwards, swaps, other derivatives)
- Convertible securities
- Stock-based compensation (options, appreciation rights)
- Tools to hedge exposures (e.g., interest rate swap, foreign currency hedge)
- Other types of investments
- Portfolio diversification and optimal investment decision making
- Macro-economic risk assessment
| | | | | | | | | |
5.6 Corporate Finance Transactions | | | | | | | | | |
5.6.1 Evaluates the purchase, expansion, or sale of a business | | | | | | | | | |
C | — | B | — | — | — | A | — | — | — |
| — | ENTRY:Describes alternative forms of ownership | — | — | C1:Explains how alternative forms of ownership (e.g., public versus private corporations, proprietorships, and partnerships) can be used Recognizes that there are tax and legal considerations when evaluating a transaction Explains issues that can arise from a change in control or ownership structure (e.g., tax, due diligence, governance, and strategic issues) | — | — | — | — | FIN:Evaluates all assets, both tangible and intangible, involved in a transaction, including trademarks, research and development, and the value of tax loss carry-forwards Evaluates all liabilities, existing and potential, involved in the transaction Evaluates the risks, opportunities, and financial implications of the transaction Analyzes the ways in which both public and private entity ownership can change Assesses issues that can arise from change-in-control transactions Evaluates how a change-in-control transaction can create value for an entity Based on the analysis, recommends a suitable course of action and a suitable form for the transaction |
Knowledge list
- Forms of expansion and divestiture (mergers, acquisitions, strategic alliances, joint ventures, spin-offs)
- Transaction considerations
- Key risks and rewards in corporate finance
- Synergies involved in the combination of entities
- International considerations (exchange risks, political risks, economic risk, international sources of capital)
| | | | | | | | | |
5.6.2 Advises a financially troubled entity | | | | | | | | | |
C | — | — | B | — | — | A | — | — | — |
| — | ENTRY:Explains indicators of financial difficulty for an entity | — | — | C2:Analyzes the entity to determine the severity of the situation Analyzes the factors that contributed to the situation Examines the possible courses of action to rectify the situation Identifies the tax implications of the possible courses of actions Suggests an appropriate course of action | — | — | — | — | FIN:Identifies a financially troubled entity through an assessment of its financial health Prepares an analysis of
• the sources and causes of financial difficulty;
• the potential for the success or failure of various proposed recovery plans; and
• the net realizable value of the assets if disposition/liquidation is an option
Develops a preliminary business recovery plan, including future-oriented recommendations, and provides direction for the entity’s long-term health |
Knowledge list
- Free cash flow analysis
- Horizontal and vertical analysis
- Ratio analysis
- Trend analysis
- Sensitivity analysis
- Scenario/simulation analysis
- Payback
- Internal rate of return
- Net present value
- Forms of expansion and divestiture (mergers, acquisitions, strategic alliances, joint ventures, spin-offs)
- Transaction considerations
- Key risks and rewards in corporate finance
- Synergies involved in the combination of entities
- International considerations (exchange risks, political risks, economic risk, international sources of capital)
| | | | | | | | | |
6. TAXATION | | | | | | | | | |
6.1 General Income Tax Concepts | | | | | | | | | |
6.1.1 Discusses general concepts and principles of income taxation | | | | | | | | | |
C | — | B | — | — | — | — | — | B | — |
| — | ENTRY:Describes the Federal Canadian tax system Explains the concept of integration and the mechanisms in place to support it Explains tax advantages and disadvantages of various legal forms and structures | — | — | C1:Analyzes the impact of integration in actual or planned transactions | — | — | — | — | TAX:Discusses income tax advantages and disadvantages of various legal forms and structures |
Knowledge list
- How and why tax legislation exists; various revenue sources; responsibilities of taxpayers, their advisors, and CRA
- Integration concept
- Legal forms and structures: Sole proprietorship, corporation, partnership, trust
- Existence and purpose of GAAR and anti-avoidance provisions
- Preparer penalties
- Tax research
| | | | | | | | | |
6.1.2 Assesses reporting systems, data requirements, and business processes to support reliable tax compliance | | | | | | | | | |
C | — | B | — | — | — | — | — | A | — |
| — | ENTRY:Explains the importance of reliable tax data obtained from transaction processing systems | — | — | C1:Identifies key tax data inputs and systems controls to ensure compliance with regulatory requirements | — | — | — | — | TAX:Assesses adequacy of data inputs and systems reliability controls to ensure tax compliance |
Knowledge list
- Types of systems organizations need to provide information to meet their objectives
- Dimensions of information quality – relevance, ease of use, integrity, timeliness
- Types of data and their attributes (nature, sources, format, timing, extent and level of aggregation)
- Tax compliance technologies
| | | | | | | | | |
6.1.3 Explains implications of current trends, emerging issues and technologies in taxation | | | | | | | | | |
C | — | C | — | — | — | — | — | B | — |
| — | ENTRY:Identifies current trends, and recent updates, in taxation Explains the implications of impending changes and their impact on an entity Explains the potential impact of emerging issues and technologies in taxation | — | — | C1:Identifies current trends, and recent updates, in taxation Explains the implications of impending changes and their impact on an entity Explains the potential impact of emerging issues and technologies in taxation | — | — | — | — | TAX:Describes current trends, recent updates, and anticipated changes in taxation Analyzes the implications of impending changes and their impact on an entity Analyzes the potential use of emerging technologies for the entity |
Knowledge list | | | | | | | | | |
6.2 Corporate Income Tax | | | | | | | | | |
6.2.1 Evaluates general tax issues for a corporate entity | | | | | | | | | |
B | — | B | — | — | — | — | — | A | — |
| — | ENTRY:Analyzes the corporation’s tax profile | — | — | C1:Analyzes the corporation’s tax profile | — | — | — | — | TAX:Evaluates the corporation’s tax profile |
Knowledge list
- Corporate types (private, CCPC, public)
- Corporate residency
- Basic stakeholder relationships (affiliated, associated, connected, non-arm's length, related)
| | | | | | | | | |
6.2.2 Advises on taxes payable for a corporation | | | | | | | | | |
B | — | B | — | — | — | — | — | A | — |
| — | ENTRY:Analyzes the tax impact of the different sources and types of income Analyzes transactions to prepare the reconciliation of accounting income to income for tax purposes Analyzes the impact of rules related to capital property Analyzes adjustments necessary to calculate taxable income Analyzes the elements of taxes payable Explains the tax implications of non-arm’s length transactions with corporations Analyzes the tax implications of dividends paid | — | — | C1:Analyzes the tax impact of the different sources and types of income Analyzes transactions to prepare the reconciliation of accounting income to income for tax purposes Analyzes the impact of rules related to capital property Analyzes adjustments necessary to calculate taxable income Analyzes the elements of taxes payable Explains the tax implications of non-arm’s length transactions with corporations Analyzes the tax implications of dividends paid | — | — | — | — | TAX:Advises on the tax impact of different sources and types of income for a corporation Advises on the reconciliation of accounting income to income for tax purposes Advises on the impact of rules related to capital property Advises on adjustments necessary to calculate taxable income Advises on the elements of taxes payable Analyzes the tax implications of non-arm’s length transactions with corporations Analyzes the tax implications of dividends paid |
Knowledge list
- Sources and types of income
- Business and property income (Active business income, aggregate investment income, specified investment business income, eligible and non-eligible dividends)
- Personal services business income
- Business income vs. capital gain
- Capital gains and losses
- Other income and deductions
- Reconciling income
- General principles of income from business or property
- Common Schedule 1 adjustments
- Partnership income flow-through
- Common SRED adjustments
- Capital property considerations
- General principles and definitions related to CCA (UCC, recapture, terminal loss)
- Acquisition and disposition of depreciable capital property
- Common CCA classes
- Separate CCA classes
- Replacement property
- Change in use
- Inducements
- Available for use
- Short taxation year
- Dispositions of land and building
- Adjusted cost base
- Proceeds of disposition
- Capital gains/losses
- Identical property
- Inadequate consideration
- Business investment loss
- Capital gains reserve
- Taxable income adjustments
- Donations
- Loss carry overs
- Dividends
- Elements of taxes payable
- General tax rate
- Provincial abatement
- Small business deduction
- General rate reduction
- Additional tax on personal services business income
- RDTOH
- Refundable Part 1
- Part IV
- Dividend refund
- Foreign tax credits
- M&P and SRED credits
- Non-arm’s length transactions
- Capital losses and terminal losses
- Transactions at other than FMV consideration
- Tax implications of dividends
- Capital dividends
- Eligible and non-eligible dividends
| | | | | | | | | |
6.3 Personal Income Tax | | | | | | | | | |
6.3.1 Evaluates general tax issues for an individual | | | | | | | | | |
B | — | B | — | — | — | — | — | A | — |
| — | ENTRY:Analyzes an individual’s tax profile | — | — | C1:Analyzes an individual’s tax profile | — | — | — | — | TAX:Evaluates an individual’s tax profile |
Knowledge list
- Individual residency
- Basic stakeholder relationships (affiliated, non-arm's length, related)
| | | | | | | | | |
6.3.2 Evaluates income taxes payable for an individual | | | | | | | | | |
B | — | B | — | — | — | — | — | A | — |
| — | ENTRY:Analyzes the different sources and types of income for an individual including deductions and inclusions for each type Analyzes the impact of rules related to capital property Analyzes adjustments necessary to calculate taxable income Analyzes the elements of taxes payable Analyzes the tax implications of non-arm’s length transactions | — | — | C1:Analyzes the different sources and types of income for an individual including deductions and inclusions for each type Analyzes the impact of rules related to capital property Analyzes adjustments necessary to calculate taxable income Analyzes the elements of taxes payable Analyzes the tax implications of non-arm’s length transactions | — | — | — | — | TAX:Evaluates the different sources and types of income for an individual including deductions and inclusions for each type Advises on the impact of rules related to capital property Evaluates the adjustments necessary to calculate taxable income Evaluates the elements of taxes payable Advises on the tax implications of non-arm’s length transactions |
Knowledge list
- Sources and types of income including deductions
- General principles of income from office or employment
- Common employment taxable benefits (automobiles, allowances and reimbursements, 6(1)(a) exclusions, group plans, stock options)
- Common employment income deductions (legal expenses, sales expenses, automobiles, meals, dues, home office)
- Business & property - see corporate
- Partnership income flow-through
- Dividends (eligible, non-eligible, capital)
- Indirect payments
- Interest free / low interest loans
- Other income and deductions (retiring allowances, support payments received and paid, pension income, moving expenses, child care expenses, RRSPs)
- Capital property - see corporate
- Personal-use and listed personal property
- Principal residence
- Taxable income adjustments
- Loss carry overs
- Capital Gains Deduction - availability, limits, basic computations
- Stock option deductions
- Elements of taxes payable
- Graduated tax rates
- Refundable tax credits
- Non-refundable tax credits including charitable donations
- Alternative minimum tax – purpose and when it applies
- Dividend tax credit (eligible and non)
- Foreign tax credits
- Political tax credits
- OAS clawback
- Non-arm’s length transactions
- Capital losses and terminal losses
- Transactions at other than FMV consideration
- Spousal rollovers
- Attribution (spouses and children)
- Tax on split income
| | | | | | | | | |
6.3.3 Analyzes specific tax-planning opportunities for individuals | | | | | | | | | |
B | — | B | — | — | — | — | — | B | — |
| — | ENTRY:Analyzes possible tax planning opportunities for individuals Explains the tax advantages and disadvantages of self-employed versus employee status | — | — | C1:Analyzes the individual’s profile to identify, evaluate and recommend possible tax-planning opportunities Analyzes the tax advantages and disadvantages of self-employed versus employee status | — | — | — | — | TAX:Analyzes the individual’s profile to identify, evaluate and recommend possible tax-planning opportunities Analyzes the tax advantages and disadvantages of self-employed versus employee status |
Knowledge list
- Income splitting opportunities with family members
- Tax deferral and saving opportunities with e.g. RRSPs, RRIFs, TFSAs
- Employed vs. self-employed status
| | | | | | | | | |
6.4 Income Tax Administration | | | | | | | | | |
6.4.1 Evaluates adherence to compliance requirements | | | | | | | | | |
B | — | B | — | — | — | — | — | A | — |
| — | ENTRY:Discusses adherence to compliance requirements including directors’ liability Discusses instalments and final tax payments and advises on due dates | — | — | C1:Discusses adherence to compliance requirements including directors’ liability Discusses instalments and final tax payments and advises on due dates | — | — | — | — | TAX:Evaluates adherence to compliance requirements including directors’ liability Advises on instalments, final tax payments and due dates |
Knowledge list
- Basic compliance requirements (e.g. T1, T2, T4, T5)
- Filing deadlines for income tax returns and objections
- Retention of books and records
- Directors liability
- Instalments and final tax payments
- Deadlines for instalments and final tax payments
- Interest and penalties
| | | | | | | | | |
6.5 Income Taxation of Non-Residents and Part-Year Residents | | | | | | | | | |
6.5.1 Analyzes residency of a taxpayer | | | | | | | | | |
C | — | C | — | — | — | — | — | B | — |
| — | ENTRY:Explains factors to determine residency status of an individual | — | — | C1:Explains factors to determine residency status of an individual | — | — | — | — | TAX:Analyzes factors to determine residency status of an individual |
Knowledge list
- Full year, part-year and deemed residents
| | | | | | | | | |
6.5.2 Analyzes the taxation of Canadian sources of income for non-residents and part-year residents | | | | | | | | | |
C | — | C | — | — | — | — | — | B | — |
| — | ENTRY:Explains the tax consequences of becoming or ceasing to be a Canadian resident | — | — | C1:Explains the tax consequences of becoming or ceasing to be a Canadian resident | — | — | — | — | TAX:Explains income taxable under Part I and Part XIII Analyzes the tax consequences of becoming or ceasing to be a Canadian resident |
Knowledge list
- Taxation of various types of income
- Purpose of tax treaties
- Compliance requirements (T1, T2, treaty based return)
- Deemed acquisition/disposition rules
- Availability of elections
| | | | | | | | | |
6.6 Other Income Tax Matters | | | | | | | | | |
6.6.1 Analyzes income tax implications of death | | | | | | | | | |
| — | — | C | — | — | — | — | — | B | — |
| — | — | — | — | C1:Explains tax implications of deceased individuals | — | — | — | — | TAX:Explains income tax payable for graduated rate estates and testamentary trusts Analyzes tax implications of deceased individuals |
Knowledge list
- Computation of income and taxable income
- Computation of taxes payable
- Returns - final return, elective returns
- Deemed disposition on death
- Spousal rollover
- Special carryback rules (capital losses, charitable donations)
- Capital distributions from estate to beneficiaries
| | | | | | | | | |
6.6.2 Analyzes income tax implications of compensation planning between a shareholder and a closely-held corporation | | | | | | | | | |
C | — | C | — | — | — | — | — | B | — |
| — | ENTRY:Explains tax implications of compensation planning between a shareholder and a closely-held corporation | — | — | C1:Explains tax implications of compensation planning between a shareholder and a closely-held corporation | — | — | — | — | TAX:Analyzes tax implications of compensation planning between a shareholder and a closely-held corporation |
Knowledge list
- Employment income vs. dividends
- Shareholder loans
- Alternative compensation options - stock options, bonuses, fringe benefits
- Inter-corporate management fees
| | | | | | | | | |
6.6.3 Analyzes income tax implications of the purchase and sale of a CCPC | | | | | | | | | |
C | — | B | — | — | — | — | — | B | — |
| — | ENTRY:Explains tax implications of asset sale Explains tax implications of share sale | — | — | C1:Analyzes tax implications of asset sale Analyzes tax implications of share sale Explains the tax consequences of an acquisition of control | — | — | — | — | TAX:Analyzes tax implications of asset sale Analyzes tax implications of share sale Explains the tax consequences of an acquisition of control |
Knowledge list
- Corporate income effect on sale of assets
- Corporate tax payable on sale of assets
- Vendor Shareholder tax payable on distribution
- Calculation of taxable capital gain on share sale
- Calculation of capital gains deduction
- Vendor Shareholder tax payable
- Acquisition of control issues:
- Deemed taxation year with tax return
- Automatic recognition of accrued losses
- Election to recognize accrued gains
| | | | | | | | | |
6.6.4 Explains the basic tax considerations of corporate reorganizations | | | | | | | | | |
| — | — | — | — | — | — | — | — | C | — |
| — | — | — | — | — | — | — | — | — | TAX:Explains potential uses, and the tax consequences of tax-deferred transactions that utilize sections 51, 85 and 86 |
Knowledge list
- Basic rules of sections 51, 85 and 86
- Paid-up Capital vs. Adjusted Cost Base
- Basic application of sections 51, 85 and 86
| | | | | | | | | |
6.7 GST Matters | | | | | | | | | |
6.7.1 Discusses the GST system in Canada | | | | | | | | | |
C | — | C | — | — | — | — | — | B | — |
| — | ENTRY:Explains GST and when it is applicable | — | — | C1:Explains GST and when it is applicable | — | — | — | — | TAX:Discusses GST and when it is applicable |
Knowledge list
- What the tax is and how it works (flowthrough nature)
- Basics of GST – key definitions
- Legislative framework – Regulations, legislation
- Entities subject to different rules
| | | | | | | | | |
6.7.2 Analyzes GST obligations of a person | | | | | | | | | |
C | — | C | — | — | — | — | — | B | — |
| — | ENTRY:Explains the transaction: (Who, What, Why, When and Where) Explains the different types of supplies Explains the GST obligations of a person | — | — | C1:Explains the transaction: (i.e. Who, What, Why, When and Where) Explains the different types of supplies Explains the GST obligations of a person | — | — | — | — | TAX:Analyzes the transaction: (i.e. Who, What, Why, When and Where) Analyzes the different types of supplies Discusses the GST obligations of a person |
Knowledge list
- Characterization of the supplier (Corporation, Individual)
- When registration is required
- When tax is recoverable and by whom
- Place of supply (for goods, services and other types of supplies)
- "Consideration" for GST purposes (barter, sale, exchange)
- Characterization of supply (Intangible Personal Property, Real Property, Services, Tangible Personal Property)
- Status of supplies (taxable, zero-rated, exempt)
- Collection and remittance obligations
- Eligibility for Input Tax Credits and rebates
| | | | | | | | | |
6.7.3 Calculates net tax for a person | | | | | | | | | |
C | — | C | — | — | — | — | — | B | — |
| — | ENTRY:Explains the components of net tax | — | — | C1:Explains the components of net tax | — | — | — | — | TAX:Calculates the components of net tax |
Knowledge list
- GST treatment for specific items (bad debts, allowances, reimbursements, volume rebates, club dues, meals & entertainment)
| | | | | | | | | |
6.7.4 Discusses GST compliance requirements | | | | | | | | | |
B | — | B | — | — | — | — | — | B | — |
| — | ENTRY:Discusses adherence to compliance requirements including directors’ liability Discusses instalments and final tax payments and advises on due dates | — | — | C1:Discusses adherence to compliance requirements including directors’ liability Discusses instalments and final tax payments and advises on due dates | — | — | — | — | TAX:Discusses adherence to compliance requirements including directors’ liability Discusses instalments and final tax payments and advises on due dates |
Knowledge list
- Basic compliance requirements
- Filing deadlines for returns and objections
- Retention of books and records
- Directors’ liability
- Instalments and final GST payments
- Deadlines for instalments and final GST payments
- Interest and penalties for late filed returns and payments
| | | | | | | | | |
6.7.5 Analyzes GST implications from tax planning for shareholders and a closely held corporation | | | | | | | | | |
C | — | — | — | — | — | — | — | B | — |
| — | ENTRY:Explains the GST implications associated with taxable benefits Explains the GST implications associated with purchase and sale of a business | — | — | — | — | — | — | — | TAX:Analyzes the GST implications associated with taxable benefits Identifies GST implications of intercompany transactions Analyzes the GST implications associated with purchase and sale of a business |
Knowledge list
- Intercompany transactions
- Purchase and sale of a business
- GST implications of taxable benefits
| | | | | | | | | |
6.7.6 Explains GST obligations arising from other transactions | | | | | | | | | |
| — | — | — | — | — | — | — | — | C | — |
| — | — | — | — | — | — | — | — | — | TAX:Explains when a supply is considered incurred in Canada when transacting with non-residents Explains the GST implications for real property transactions Explains possible scenarios / requirements to self-assess on imports and real property |
Knowledge list
- Impact of a supply being considered incurred in Canada when transacting with non-residents
- Real property transactions
- Self-assessment on imports and real property
| | | | | | | | | |