P ro fe s s io n a l E d u ca tio n - II (P E -II) S y lla b u s GROUP I P a p e r 1 : A c c o u n t in g

(O ne Paper Three hours 100 M arks) L evel o f K no w ledg e: W orking Knowledge

Objectives
a. To lay a theoretical foundation for the preparation and presentation of financial statem ents. b. To develop an understanding of the rules of m easurement and reporting relating to various com ponents of financial statem ents.

Contents
1. Partnership accounts including admission, retirement, dissolution and piecemeal distribution, amalgamation of partnership firms, conversion into a company, sale to a company. 2. Insolvency accounts of non-corporate entities. 3. Accounting Standards and Guidance Notes on various accounting aspects issued by the ICAI and simple problems based thereon. 4. Company accounts: a. Accounting for issue of shares including bonus issue; accounting for employees stock option plan; redemption of preference shares; issue, redemption, and conversion of debentures; underwriting of shares and debentures. b. Preparation of final accounts of companies as per the Company Law. c. Accounting involved in liquidation of companies: Statement of Affairs (including deficiency/surplus accounts) and liquidators statement of account of the winding up. d. Simple problems on business acquisition; amalgamation, absorption and reconstruction (internal and external) of companies. 5. Cash flow statement: objectives, direct and indirect methods. 6. Preparation of Final Accounts of Banking, Insurance, and Electricity Companies. 7. Accounting for lease, hire-purchase and instalment sale transactions; contract accounts; investment accounts; departmental and branch accounts (including foreign branches). 8. Preparation of accounts from incomplete records. 9. Agricultural farm accounting. 10. Introduction to Government accounts.

P a p e r 2 : A u d itin g
(O ne Paper Three hours 100 M arks) L evel o f kno w ledg e: W ork ing Knowledge

Objective
To gain working k nowledge of generally accepted auditing procedures and of techniques and skills needed to apply them in audit and attestation engagem ents.

Contents
1. Nature of Auditing: Scope of Audit, audit process, objectives of audit expression of opinion, detection and prevention of fraud and error; Basic principles governing an audit; Types of audit; Relationship of auditing with other subjects; Internal audit and External audit; Auditing and Investigation. 2. Introduction to Statements on Standard Auditing Practices. 3. Accepting audit engagement: Audit planning, audit programme, control of quality of audit work delegation and supervision of audit work. 4. Documentation: Audit working papers, Audit files permanent and current audit files; ownership and custody of working papers. 5. Audit evidence: Audit procedures for obtaining evidence; Sources of evidence; Reliability of audit evidence; Methods of obtaining audit evidence physical verification, documentation, direct confirmation, re-computation, analytical review techniques, representation by management, obtaining certificate. 6. Internal control: Elements of internal control; Review and documentation; Evaluation of internal control system, Internal control questionnaire, internal control check list; Tests of control; Application of concept of materiality and audit risk. 7. Elements of audit sampling: Test checking, Techniques of test checks. 8. Analytical review procedures. 9. Audit report: Qualifications, disclaimers, adverse opinion; Disclosures; Reports and certificates. 10. Audit of payments: General considerations, wages, capital expenditure, other payments and expense, petty cash payments; audit of payments into and out of the bank, reconciliation of bank statements with cash book. 11. Audit of receipts: General considerations, cash sales, receipts from debtors, other receipts. 12. Audit of purchases, vouching cash and credit purchases, forward purchases, purchases returns. 13. Audit of sales, cash and credit sales, goods on consignment, sale on approval basis, sale under hire-purchase agreement, returnable containers, various types of allowances given to customers, sale returns, sales ledger. 14. Audit of suppliers ledger and the debtors ledger: Self-balancing and the sectional-balancing system, total or control accounts, loose leaf and card ledgers, confirmatory statements from credit customers and suppliers, provision for bad and doubtful debts, writing off of bad debts. 15. Audit of impersonal ledger: Capital expenditure, deferred revenue expenditure and revenue expenditure, outstanding expenses and income; repairs and renewals; distinction between reserves and provisions; implications of change in the basis of accounting. 16. Audit of assets and liabilities. 17. Audit of share capital and transfer of shares. 18. Audit of incomplete records. 19. Audit of limited companies: Appointment of auditors, powers and duties of auditors, auditors report.

20. Special points in audit of different types of undertakings, i.e., educational institutions, hotels, clubs, hospitals, hire-purchase and leasing companies (excluding banks, electricity companies, cooperative societies, and insurance companies). 21. Features and basic principles of government audit, local bodies and non-governmental organizations, Comptroller and Auditor General and its constitutional role.

P a p e r 3 : B u s in e s s a n d C o rp o ra te La w s
(O ne Paper Three hours 100 M arks) L evel o f K no w ledg e: W orking Knowledge

Objective
To gain knowledge of those branches of l aws relating to business transactions, certain corporate bodies and related matters and their application to practical com m ercial situations.

Contents S e ctio n A : Business Law s

(60 Marks) 1. The Indian Contract Act, 1872, including indemnity, guarantee, bailment, pledge and agency. 2. The Sale of Goods Act, 1930. 3. The Indian Partnership Act, 1932. 4. The Negotiable Instruments Act, 1881. 5. The Payment of Bonus Act, 1965. 6. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 7. The Co-operative Societies Act, 1912, including Multi-State Co-operative Societies Act, 1984.

S e ctio n B : Corporate Law

(40 Marks) The Com panies Act, 1956 Sections 1 to 208.

GROUP II P a p e r 4 : C o s t A c c o u n t in g a n d F in a n c ia l M anagem ent

(O ne Paper Three hours 100 M arks) L evel o f K no w ledg e: W orking K nowledge

Objectives
a. To gain an understanding of costing concepts and the detailed procedure and documentation involved in cost ascertainment systems. b. To gain an understanding of the various basic concepts of decision -making process in financial managem ent.

Contents S e c tio n A : Cos t Accounting

(60 Marks) 1. Objectives, Importance and Advantages of Cost Accounting, cost concepts; Types of costing; Installation of a costing system; Essentials of a good Cost Accounting system; Difference between Cost Accounting and Financial Accounting; Elements of cost; Cost unit, Cost centre and Profit centre. 2. Cost ascertainment a. Material accounting: i. ii. iii. iv. Procurement procedures; Store procedures and Documentation in respect of receipts, Issues of stock, Stock verification. Inventory control; Conventional techniques such as fixing of minimum/maximum and re-order levels. Valuation of receipts, issues of inventories. Consumption; Identification with products of cost centres; Basis for consumption entries in financial accounts; Monitoring consumption. Attendance and Payroll procedures; Overview of statutory requirements; Overtime and incentives. Utilisation of labour; classification into direct and indirect as demanded by circumstances of the unit identifying with cost centres; labour booking procedures; identifying labour hours with work-orders or batches or capital jobs or overhead work-orders; absorption rates. Efficiency rating procedures.

b. Employee-related cost: i. ii.

iii. c.

Direct expenses: Sub-contracting; Control on material movements; identification with the main product or services; Documentation requirements. i. Functional analysis; Factory Administration, Selling, Distribution, Research and development. Behavioural analysis; Fixed, Variable, Semi-variable. ii. Factory overheads; Primary allocation to all cost centres; Secondary allocation of

d. Overheads:

service/utility cost centres to production cost centres; Criteria for choosing suitable basis for allotment; Activity-based cost allocations; Capacity cost adjustments; Fixed absorption rates for absorbing overheads to products or services. iii. iv. Administration overheads; Activity analysis for control; Method of allocation to cost centres or products. Selling and distribution overheads; Analysis and absorption of the expenses in products/customers; Impact of marketing strategies; Cost effectiveness of various methods of sales promotion; Segment-wise/customer-wise/region-wise cost analysis.

3. Methods of costing: Job/Contract costing system; Process costing system; operating costing system. 4. Cost accounts systems, Cost control accounts (non-integrated accounts), Reconciliation of cost and financial accounts. 5. General introduction to Cost Accounting records and rules (industry-wise details are not expected). 6. Cost system installation and operation; Structuring the organization into cost/activity centres; criteria and purpose. 7. Product cost sheets: a. Valuation of work-in-progress; Procedures in Job order method and in Process costing. b. Profitability statements; Product-wise/segment-wise/customer-wise profitability. 8. Uniform costing and inter-firm comparison. 9. Cost Reduction.

S e ctio n B : Financial Management

(40 Marks) 1. Meaning, Importance and Objectives of Financial Management; Time value of money; Conflicts in profit versus value maximization principle; Functions of chief financial officer. 2. Tools of Financial Analysis and Planning; Ratio Analysis to evaluate performance and financial health; Application of ratio analysis in financial decision-making; Analysis of cash flow and Funds Flow statements. 3. Management of working capital; Cash and Marketable securities management; Treasury management, Receivables management, Inventory management, Financing of working capital. 4. Investment decisions: Capital budgeting; Techniques for evaluation like payback method, accounting rate of return, Internal rate of return, Net present value and Profitability index simple problems; Relationship between risk and return. 5. Financing decisions: Cost of capital; Cost of different sources of finance, Weighted average cost of capital, Marginal cost of capital; Concepts of operating and financial leverage; Capital structure patterns; Designing optimum capital structure; Constraints; Various capital structure theories; Different sources of finance: Long, Medium, and Short-term finance.

P a p e r 5 : In c o m e T a x a n d C e n tra l S a le s Tax
(O ne Paper Three hours 100 M arks) L evel o f K no w ledg e: W orking K nowledge

Objectives
a. To gain knowledge of the basic principles underlying the substantive provisions of the Incom e Tax law and their application in com putation of incom e of an individual under various heads of incom e. b. To gain working knowledge of the basic principles of Central Sales Tax law.

Contents S e c t i o n A : In co m e T a x
(75 Marks) 1. Certain important definitions in the Income Tax Act, 1961. 2. Rates of taxes applicable for different types of assesses. 3. Concept of previous year and assessment year. 4. Basis of charge, residential status, and scope of total income. 5. Income deemed to be received/deemed to accrue or arise in India. 6. Incomes which do not form part of total income. 7. Heads of income and the provisions governing computation of income under different heads. 8. Income of other persons included in assessees total income. 9. Aggregation of income and set-off, or carry forward and set-off of losses. 10. Deductions from gross total income. 11. Computation of total income and tax payable and rebates and reliefs. 12. Income tax authorities appointment, control, jurisdiction, powers. 13. Basic provisions concerning procedure for assessment, appeals, and revisions. Students will be expected to broadly cover the above areas from Chapters I to VIII, XIII, XIV and XX of the Income Tax Act, 1961 and the relevant Rules and tackle simple problems concerning assessees with status of individual covering the above areas.

S e c tio n B : Central Sales Tax

(25 Marks) The Central Sales Tax Act, 1956 and the Rules thereunder.

P a p e r 6 : In fo rm a t io n T e c h n o lo g y
(O ne Paper Three hours 100 M arks) L evel o f K no w ledg e: W orking K nowledge

Objective
To develop understanding and appreciation of bro ad nature and application of inform ation technology.

Contents
1. Introduction to computers 2. Overview of technology architecture Hardware: Types of computers mainframes, minicomputers, microcomputers, advantages, and limitations Anatomy of computer functions and components of a computer

Software: System software Application software Other expert/specialized systems (decision support, artificial intelligence systems, etc.) Database Structure: What is database? Types of database structures comparison between the structures Database types and manner of data storage Data access control software Database management methods and techniques data dictionaries, Management through Data Center What is data center, features, how does it function?

Telecommunication and Networking: Types of network design structures LAN/WAN/SAN Suitability of network structures to different organization set ups Advantages and limitations Data transmission methods and their infrastructure requirements

3. Data Storage, Retrievals and Database Management Storage techniques Access control methods and best policies depending upon the frequency of access and volumes Usage of system software like program library management systems and tape and disk management systems features, functionalities, advantages Database performance monitoring methods



Current most frequently used management systems Data reporting methods and languages used

4. Data Processing Techniques in data processing online, batch mode, real time Processing software tools and applicability to organization set ups

5. Introduction to Internet and other Emerging Technologies 6. Office Productivity Tools Word processing Electronic spreadsheets Business project management and presentation tools

7. Development Tools Introduction to flowcharts system flow charts, run flow charts, program flow charts, illustrations and limitations Decision tables types, illustrations, benefits and limitations

8. Computer Assisted Audit Techniques (CAAT) Introduction to CAAT and usage in accounting/audit

9. Introduction to Accounting Packages 10. Cyber Laws and Information Technology Act, 2000