ICAB AL Case Study cheat sheet

IFRS conceptual framework: an asset is a present economic resource controlled by the entity as a result of past events; a liability is a present obligation to transfer an economic resource as a result of past events.

IFRS 15 five-step model: identify the contract, identify performance obligations, determine transaction price, allocate the price to obligations, and recognise revenue when each obligation is satisfied.

IFRS 15: variable consideration is included only to the extent it is highly probable that a significant reversal will not occur when the uncertainty resolves.

IFRS 16 lessee: recognise a right-of-use asset and a lease liability at the present value of lease payments discounted at the implicit rate, or the incremental borrowing rate if that rate is not readily determinable.

IAS 36 impairment: an asset is carried at no more than its recoverable amount, defined as the higher of fair value less costs of disposal and value in use.

IAS 37 provisions: recognise only when a present obligation exists, an outflow is probable (more likely than not), and the amount can be reliably estimated; a contingent liability is disclosed, not recognised.

IAS 12 deferred tax: measure at the tax rates expected to apply when the asset is realised or the liability settled, based on rates enacted or substantively enacted by the reporting date.

IFRS 9 expected credit loss: loss allowance equals the 12-month ECL unless credit risk has increased significantly since initial recognition, when lifetime ECL applies.

IAS 21 foreign operations: translate assets and liabilities at the closing rate, income and expenses at transaction-date rates, and present exchange differences in other comprehensive income.

ISA 200: the objective is reasonable assurance that financial statements are free from material misstatement, whether due to fraud or error, expressed as an opinion.

Audit risk model: audit risk = inherent risk x control risk x detection risk; detection risk is the only component the auditor controls directly through the nature, timing, and extent of procedures.

ISA 315 requires the auditor to obtain an understanding of the entity and its environment, including its internal control, to identify and assess risks of material misstatement.

ISA 500: audit evidence must be sufficient in quantity and appropriate in relevance and reliability; external documentary evidence is generally more reliable than internal evidence.

ISA 700: the opinion is modified as qualified, adverse, or disclaimer; a qualified opinion arises from a material but not pervasive misstatement or scope limitation.

ISA 570 going concern: if material uncertainty exists, the auditor includes a separate section headed material uncertainty related to going concern and still expresses an unmodified opinion.

ISA 240 fraud: the auditor is responsible for obtaining reasonable assurance that the financial statements are free from material misstatement, but not for preventing fraud.

ISA 600 group audits: the group engagement partner must be satisfied that the work of component auditors is adequate, and retains sole responsibility for the group opinion.

Bangladesh income tax: income is assessed under heads including salaries, interest on securities, income from house property, agricultural income, business or profession, capital gains, and other sources.

Bangladesh resident individual: the tax-free threshold depends on the assessment year and taxpayer category; a minimum tax may apply even where taxable income is below the threshold.

Bangladesh companies: the corporate income tax rate varies by type, with a higher rate for non-listed companies and a reduced rate for certain listed or specified entities.

Withholding tax: the deductor must deduct tax at source, deposit it with the government within the prescribed time, and furnish a certificate to the deductee.

Value added tax: VAT is a multi-stage tax collected at each stage of supply, with input tax credit allowed against output tax for registered persons.

Companies Act: directors owe fiduciary duties to the company, and related-party transactions require disclosure and, where material, approval under the specified provisions.

Companies Act: the auditor is appointed by shareholders at the annual general meeting, and the auditor must report on whether the accounts give a true and fair view.

Statutory filing: companies must file annual returns and audited financial statements with the registrar within the prescribed period after the annual general meeting.

Porter's five forces: competitive rivalry, threat of new entrants, threat of substitutes, bargaining power of buyers, and bargaining power of suppliers.

SWOT analysis maps internal strengths and weaknesses against external opportunities and threats; it informs strategy but does not by itself prioritise actions.

Porter's generic strategies: cost leadership, differentiation, and focus; being stuck in the middle without a clear advantage typically erodes returns.

Ansoff matrix: market penetration, product development, market development, and diversification, ordered from lowest to highest risk.

IFAC Code of Ethics: the five fundamental principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

Self-interest threat: arises from a financial or other interest that inappropriately influences judgement, such as a fee dependency on a single client.

Familiarity threat: arises when a close relationship with a client makes the auditor too sympathetic to the client's interests, such as a long association with the engagement partner.

Safeguards: where a threat cannot be eliminated, apply safeguards such as independent review, rotation of engagement personnel, or removal of the conflicting interest.

Confidentiality: client information may be disclosed only with consent, where required by law, or where there is a professional duty or right to disclose.

IFRS 15: contract modification is treated as a separate contract only if it adds distinct goods or services and the price increases by the standalone selling price of those goods or services.

IAS 2: inventory is measured at the lower of cost and net realisable value; cost includes purchase cost, conversion cost, and other costs to bring inventory to its present location and condition.

IAS 16: depreciation begins when an asset is available for use and continues until derecognition, even if the asset is idle; the residual value and useful life are reviewed at least annually.

IAS 38: research expenditure is expensed as incurred; development expenditure is capitalised only if technical feasibility, intention, ability, and probable future economic benefits are all demonstrated.

IFRS 3: goodwill is measured as consideration transferred plus non-controlling interest minus the net identifiable assets acquired, and is not amortised but tested annually for impairment.

IAS 10: adjusting events provide evidence of conditions existing at the reporting date and require adjustment; non-adjusting events are disclosed if material.

ISA 320: materiality is determined for the financial statements as a whole, and performance materiality is set lower to reduce the probability that uncorrected misstatements exceed materiality.

ISA 530 sampling: sampling risk is the risk that the auditor's conclusion based on a sample differs from the conclusion from the entire population.

ISA 505 external confirmations: if a positive confirmation is not returned, the auditor performs alternative procedures; non-response is not itself a misstatement.

ISA 560 subsequent events: the auditor performs procedures up to the date of the auditor's report and has no obligation to perform procedures after that date unless facts become known.

ISA 701 key audit matters: communicated for listed entities, selected from matters communicated with those charged with governance and significant to the audit.

ISA 220 quality management: the engagement partner must be satisfied that the engagement team collectively has the appropriate competence and capabilities.

Bangladesh capital gains: gains on transfer of capital assets are taxable, with the gain computed as consideration received less the cost of acquisition and allowable improvement costs.

Depreciation allowance: tax depreciation is generally computed on the written-down value of the block of assets at prescribed rates, separate from accounting depreciation.

Advance tax: certain companies must pay advance income tax in instalments during the year based on estimated income, with the balance settled at assessment.

VAT registration: a person exceeding the prescribed turnover threshold must register for VAT and charge VAT on taxable supplies.

Companies Act: the annual general meeting must generally be held within six months of the end of the financial year and within fifteen months of the previous one.

Companies Act: dividends may be declared only out of profits, and the company must comply with the prescribed rules on distributable reserves.

Intimidation threat: arises when an auditor is deterred from acting objectively by actual or perceived pressures, such as a threat of litigation or replacement.

Advocacy threat: arises when an auditor promotes a client's position, such as acting as an advocate in a dispute or promoting shares of the client.

Fee dependency: where recurring fees from one client are a large proportion of total fees, the self-interest and intimidation threats require disclosure and safeguards.

Contingent fees: an auditor should not accept an audit engagement on a contingent fee basis because it creates a self-interest threat to objectivity.

Independence in appearance: the auditor must avoid circumstances that a reasonable and informed third party would perceive as compromising objectivity.

Corporate governance: the audit committee oversees financial reporting and the external auditor, and should comprise independent non-executive directors.

IAS 7: cash flows are classified as operating, investing, or financing; interest paid and dividends paid may be classified as operating or financing, applied consistently.

IAS 33: basic earnings per share equals profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the period.

IFRS 13: fair value is the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

IAS 24: related party disclosures include the nature of the relationship, the amount of transactions, and outstanding balances, even where no price was charged.

ISA 230 documentation: the audit file must be assembled within a defined period after the auditor's report date, and must not be deleted before the retention period ends.

ISA 450: the auditor accumulates misstatements identified during the audit and evaluates whether they are material, individually or in aggregate, before forming the opinion.

ISA 265: significant deficiencies in internal control are communicated in writing to those charged with governance on a timely basis.

ISA 580 written representations: management confirms its responsibility for the financial statements and provides the representations the auditor considers necessary; they are not a substitute for other evidence.

Bangladesh tax return: an individual must file a return by the prescribed due date; late filing attracts penalties and possible additional tax.

Tax holiday and exemptions: certain sectors and locations qualify for tax exemption or reduced rates, subject to conditions on commencement and compliance.

Transfer pricing: transactions between associated enterprises must be at arm's length, and documentation supports the price charged.

Companies Act: the statutory auditor must be independent of the company and must not hold office beyond the prescribed consecutive term without rotation.

PESTLE analysis examines political, economic, social, technological, legal, and environmental factors affecting the entity.

Value chain analysis separates primary activities from support activities to identify where cost or differentiation advantage arises.

BCG matrix: stars, cash cows, question marks, and dogs, classified by market growth and relative market share.

Organisational culture and tone at the top: a strong ethical culture reduces the risk of fraud and supports the control environment under ISA 315.