Financial Reporting (FR) is the seventh exam of your ACCA journey that you will be required to appear in and the fourth exam of the ACCA skills level. Financial Reporting (FR) will introduce the students to the knowledge of financial frameworks and accounting standards upon which financial statements are based. This course builds upon the knowledge learned in the Financial Accounting (FA) course you studied earlier and will take the concepts introduced relating to financial reporting to greater a depth of understanding. NCFM Academy Hyderabad, one of the leading ACCA colleges in Hyderabad India, providing the ACCA Paper F7 Financial Reporting course in its Ameerpet center.
Financial reporting (FR) is a three-hour computer-based examination where all questions will be compulsory. All areas of the syllabus will be tested. The paper will be based on computational and discursive elements and some questions will have a scenario or case study like approach.
Section A of the computer-based exam comprises 15 objective test questions of 2 marks each plus additional content as per below.
Section B of the computer-based exam comprises three questions each containing five objective test questions plus additional content as per below.
Section C of the exam comprises two 20 mark constructed response questions. The 20 mark questions will examine the interpretation and preparation of financial statements for either a single entity or a group.
Section A questions and the other questions in section B can cover any areas of the syllabus.
Syllabus of ACCA Paper F7 Financial Reporting
The syllabus is divided into four sections with further sub-sections.
A- The conceptual and regulatory framework for financial reporting
This is the first section of this course and it introduces the students to the need for a conceptual framework for accounting and the characteristics of useful information. Students will understand why a conceptual framework is needed to underpin the rules upon which financial reporting is based and the characteristics of information which is used for financial statements. Students will learn about the timeliness, relevance, accuracy and other characteristics that they have briefly studied in earlier studies. Students will be introduced to the recognition criteria for assets, liabilities, income, and expenditure.
This section requires the students to explain and compute figures using the historical cost, current cost, a value in use and fair value.
This section will also allow the students to understand why accounting standards and regulatory frameworks such as IFRS are needed. Students will learn the role of national accounting standard setters and the role of IASB in regulating financial reporting.
This section will also introduce the concept of groups and consolidated financial statements. Students will learn about associates and subsidiaries and will be introduced to the accounting treatment of the consolidation of the financial statements of subsidiaries and associates.
B- Accounting for transactions in financial statements
This is the second section of this course and it introduces the students to the accounting treatment of various transactions arising in the course of business. This section will introduce the students to the accounting concepts, recognition, revaluation, disposal and disclosure criteria for tangible non-current assets. Intangible assets and their recognition, revaluation, measurement, disposal, and disclosure criteria. This section will also introduce the concept of impairment, its calculation and the effect of the impairment on a cash-generating unit.
Students will learn the recognition and valuation criteria for inventory and biological units. Financial instruments will also be introduced in this section. The students will be required to learn, understand and have technical proficiency in the identification, measurement, and valuation of different financial instruments.
The concept of leases will also be introduced to the students and they will be required to learn and understand different types of leases and how to recognize, account for and measure transactions related to leases.
Provisions and events after the reporting period will be covered under this section. Students will learn about provisions, contingencies, and their measurement, recognition, and disclosure in the financial statements.
The students will be introduced to the concept of taxation and they will learn about the computation and financial treatment of current and deferred taxation. The accounting treatment of discontinued operations and assets held for sale will also be covered in this section.
Students will be required to understand the nature of revenue, its recognition criteria, measurement, valuation and disclosure in the financial statements. This section will further cover the treatment of government grants and foreign currency transactions.
C- Analyzing and interpreting the financial statements of single entities and groups
This section builds upon knowledge about financial ratios and their interpretation and analysis gained in your earlier students. Students will get an in-depth understanding of the role of financial ratios to understand the financial performance of an entity and the inherent limitations of financial ratios to give a complete picture. In addition to using financial ratios, students will learn other analytical techniques.
This section also covers the difference in the financial analysis of specialized, not for profit and public sector entities.
D- Preparation of financial statements
This is the fourth and final section of this course; it will introduce the students to the preparation of the financial statements for a single entity and consolidated financial statements for simple groups.
For groups, the students will build upon the concepts introduced in study area A of the syllabus and will further study concepts of non-controlling interest and consolidated goodwill and its impairment and account for the fair value effect on assets and liabilities within the consolidated group. Students will also be required to explain and illustrate the effect of the disposal of a parent’s investment in a subsidiary in the parent’s.