CA ANZ Core 5 cheat sheet

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; equity is the residual interest.

Recognition criteria: relevance and faithful representation - probability of inflow/outflow of economic benefits and reliable measurement of cost or value.

Accrual basis: revenue is recognised when performance obligations are satisfied (IFRS 15 five-step model), not when cash is received; expenses are matched to the periods they relate to.

Depreciation methods: straight-line = (cost − residual value)/useful life; reducing balance applies a constant rate to the opening carrying amount; units of production allocates by usage.

Impairment (IAS 36): carrying amount is compared with the higher of fair value less costs of disposal and value in use; an impairment loss is recognised when recoverable amount is lower.

Leases (IFRS 16): a lessee recognises a right-of-use asset and a lease liability at the present value of future lease payments discounted at the incremental borrowing rate if the implicit rate is unknown.

Consolidation: control exists where the parent has power over the investee, exposure to variable returns, and the ability to use its power to affect those returns; intragroup balances and unrealised profits are eliminated.

Revenue over time is recognised using a measure of progress (input or output method) when the entity's performance creates or enhances an asset the customer controls or creates an asset with no alternative use and an enforceable right to payment.

Contribution margin = sales − variable costs; contribution margin ratio = contribution/sales; break-even units = fixed costs/contribution per unit.

Target profit volume = (fixed costs + target profit)/contribution per unit; margin of safety = (budgeted sales − break-even sales)/budgeted sales.

Relevant costs are future, incremental and differ between alternatives; sunk costs and allocated common fixed costs are irrelevant to the decision.

Absorption costing includes fixed production overhead in product cost; variable costing expenses it in the period, so profit differences equal the change in inventory multiplied by the fixed overhead rate per unit.

Variance analysis: material price variance = (standard price − actual price) × actual quantity purchased; labour efficiency variance = (standard hours − actual hours) × standard rate.

Activity-based costing assigns overhead using cost drivers reflecting resource consumption, reducing cross-subsidisation between high-volume and low-volume products.

Residual income = divisional profit − (required rate of return × invested capital); EVA = NOPAT − (WACC × invested capital); ROI = profit/invested capital.

Balanced scorecard perspectives: financial, customer, internal process, and learning and growth; each perspective carries objectives, measures, targets and initiatives.

Audit risk model: audit risk = inherent risk × control risk × detection risk; detection risk is managed by the auditor through the nature, timing and extent of procedures.

Assertions tested include occurrence, completeness, accuracy, cut-off, classification, existence, rights and obligations, valuation and allocation.

Risk assessment procedures comprise inquiries of management, analytical procedures and observation and inspection; they inform the design of further audit procedures.

Substantive procedures include tests of detail and substantive analytical procedures; tests of controls are used when reliance on internal controls is planned.

Materiality is set at overall financial statement level and performance materiality at a lower amount to reduce the probability that uncorrected aggregate misstatements exceed materiality.

Independence: an auditor must be free of interests that a reasonable third party would perceive as compromising objectivity; safeguards cannot eliminate all threats such as self-interest or familiarity.

Audit opinions: unmodified, qualified (material but not pervasive), adverse (material and pervasive misstatement) and disclaimer (inability to obtain sufficient appropriate evidence, material and pervasive).

Written representations and a management representation letter are obtained near the date of the auditor's report and do not substitute for other audit evidence.

Australian resident individuals are taxed on worldwide income; non-residents are taxed on Australian-sourced income only, generally without the tax-free threshold.

Progressive marginal rates apply to taxable income; Medicare levy is generally 2% of taxable income, with surcharge and low-income thresholds modifying the outcome.

Assessable income = ordinary income (s 6-5) plus statutory income; deductions = general deductions (s 8-1) plus specific deductions; taxable income = assessable income − deductions.

Capital gains: a net capital gain is included in assessable income; individuals and some trusts may apply the 50% CGT discount on assets held at least 12 months.

GST: registered entities remit 10% GST on taxable supplies, claim input tax credits on creditable acquisitions, and lodge activity statements; GST-free and input-taxed supplies differ in credit entitlement.

Company tax is levied on taxable income at the applicable company rate; franking credits represent company tax paid and are attached to dividends distributed to shareholders.

Fringe benefits tax is levied on employers at the FBT rate on the grossed-up value of benefits provided to employees; the type 1 and type 2 gross-up factors differ.

Trading stock may be valued at cost or market value, or by a lower-of-cost-and-market method; depreciation for tax uses effective life and the diminishing value or prime cost methods.

Time value of money: PV = FV/(1+r)^n; NPV = sum of discounted cash flows − initial outlay; accept projects with positive NPV.

IRR is the discount rate setting NPV to zero; a project is acceptable if IRR exceeds the cost of capital, but IRR can mislead for non-conventional cash flows or mutually exclusive projects.

WACC = (E/V × Ke) + (D/V × Kd × (1 − t)); use market values and after-tax cost of debt.

CAPM: Ke = Rf + β(Rm − Rf); beta measures systematic risk; unsystematic risk is diversified away and is not rewarded.

Dividend growth model: Ke = D1/P0 + g; g can be estimated as retention ratio × return on equity.

Working capital: current ratio = current assets/current liabilities; quick ratio excludes inventory; cash conversion cycle = inventory days + receivable days − payable days.

Treasury risk: transaction exposure affects known foreign currency cash flows; translation exposure affects reported financial statements; economic exposure affects long-run competitiveness.

Hedging instruments include forward contracts, futures, options and swaps; a forward locks a rate and removes both downside and upside, while an option preserves upside at the cost of a premium.

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

Porter's generic strategies: cost leadership, differentiation and focus; being stuck in the middle typically produces below-average performance.

SWOT combines internal strengths and weaknesses with external opportunities and threats; TOWS converts the analysis into matching strategies.

PESTLE analyses political, economic, social, technological, legal and environmental macro-environment factors.

Ansoff matrix: market penetration, product development, market development and diversification, ordered by increasing risk.

Value chain analysis separates primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) from support activities.

BCG matrix classifies business units as stars, cash cows, question marks and dogs based on market growth and relative market share.

ASX Corporate Governance Principles and Recommendations are applied on an if-not-why basis: entities disclose whether they follow each recommendation and explain departures.

Board composition: independence is assessed by factors such as material supplier or customer relationships, advisory fees, employment history and family ties; independent directors should form a majority of the board.

Committees commonly include audit, risk and remuneration committees; the audit committee should consist of independent non-executive directors with financial expertise and an independent chair.

COSO ERM components: governance and culture, strategy and objective-setting, performance, review and revision, and information, communication and reporting.

Risk treatment options: avoid, reduce (mitigate), transfer (insurance, contracts) and accept; residual risk is the risk remaining after controls.

Risk assessment combines likelihood and consequence to derive a risk rating; inherent risk is assessed before controls and residual risk after controls.

Three lines model: management owns and manages risk (first line), risk and compliance functions monitor and advise (second line), internal audit provides independent assurance (third line).

A conflict of interest is managed by disclosure, removal from decision-making, or divestment; a related-party transaction requires arm's-length terms and disclosure.

A contract requires offer, acceptance, consideration, intention to create legal relations and capacity; breach gives rise to damages, specific performance or injunction.

Corporations Act duties: s 180 care and diligence, s 181 good faith and proper purpose, s 182 proper use of position, s 183 proper use of information; s 588G covers insolvent trading.

Business judgment rule (s 180(2)) protects directors who make informed judgments in good faith, without material personal interest, and with rational belief of best interests.

Negligence requires a duty of care, breach of the standard of care, causation and damage; the Civil Liability Acts contain proportionate liability and professional standards provisions.

Agency: an agent binds a principal where actual authority (express or implied) or apparent authority exists; ratification can also bind the principal.

APES 110 fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

Threats to ethical compliance include self-interest, self-review, advocacy, familiarity and intimidation; safeguards must be evaluated and, if insufficient, the engagement declined or terminated.

Insider trading prohibits dealing in securities while in possession of inside information not generally available and which, if available, would materially affect price.

COSO internal control components: control environment, risk assessment, control activities, information and communication, and monitoring activities.

IT general controls cover access management, change management, IT operations and program development; application controls cover input, processing and output.

Segregation of duties in systems separates custody of assets, authorisation, recording and reconciliation; incompatible combinations include creating a vendor and approving payment.

Data analytics techniques: descriptive (what happened), diagnostic (why), predictive (what will happen) and prescriptive (what should be done).

Data quality dimensions include completeness, accuracy, validity, consistency, timeliness and uniqueness; poor input data undermines analytical conclusions.

CAATs include data extraction, re-performance, trend analysis and exception reporting; completeness and accuracy of the source data must be tested before reliance.

Cybersecurity CIA triad: confidentiality, integrity and availability; controls include access controls, encryption, logging and backup and recovery plans.

Key performance indicators should be specific, measurable, achievable, relevant and time-bound, and linked to the entity's strategic objectives.

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; equity is the residual interest.

Recognition criteria: relevance and faithful representation - probability of inflow/outflow of economic benefits and reliable measurement of cost or value.

Accrual basis: revenue is recognised when performance obligations are satisfied (IFRS 15 five-step model), not when cash is received; expenses are matched to the periods they relate to.

Depreciation methods: straight-line = (cost − residual value)/useful life; reducing balance applies a constant rate to the opening carrying amount; units of production allocates by usage.

Impairment (IAS 36): carrying amount is compared with the higher of fair value less costs of disposal and value in use; an impairment loss is recognised when recoverable amount is lower.

Leases (IFRS 16): a lessee recognises a right-of-use asset and a lease liability at the present value of future lease payments discounted at the incremental borrowing rate if the implicit rate is unknown.

Consolidation: control exists where the parent has power over the investee, exposure to variable returns, and the ability to use its power to affect those returns; intragroup balances and unrealised profits are eliminated.

Revenue over time is recognised using a measure of progress (input or output method) when the entity's performance creates or enhances an asset the customer controls or creates an asset with no alternative use and an enforceable right to payment.

Contribution margin = sales − variable costs; contribution margin ratio = contribution/sales; break-even units = fixed costs/contribution per unit.

Target profit volume = (fixed costs + target profit)/contribution per unit; margin of safety = (budgeted sales − break-even sales)/budgeted sales.

Relevant costs are future, incremental and differ between alternatives; sunk costs and allocated common fixed costs are irrelevant to the decision.

Absorption costing includes fixed production overhead in product cost; variable costing expenses it in the period, so profit differences equal the change in inventory multiplied by the fixed overhead rate per unit.

Variance analysis: material price variance = (standard price − actual price) × actual quantity purchased; labour efficiency variance = (standard hours − actual hours) × standard rate.

Activity-based costing assigns overhead using cost drivers reflecting resource consumption, reducing cross-subsidisation between high-volume and low-volume products.

Residual income = divisional profit − (required rate of return × invested capital); EVA = NOPAT − (WACC × invested capital); ROI = profit/invested capital.

Balanced scorecard perspectives: financial, customer, internal process, and learning and growth; each perspective carries objectives, measures, targets and initiatives.

Audit risk model: audit risk = inherent risk × control risk × detection risk; detection risk is managed by the auditor through the nature, timing and extent of procedures.

Assertions tested include occurrence, completeness, accuracy, cut-off, classification, existence, rights and obligations, valuation and allocation.

Risk assessment procedures comprise inquiries of management, analytical procedures and observation and inspection; they inform the design of further audit procedures.

Substantive procedures include tests of detail and substantive analytical procedures; tests of controls are used when reliance on internal controls is planned.

Materiality is set at overall financial statement level and performance materiality at a lower amount to reduce the probability that uncorrected aggregate misstatements exceed materiality.

Independence: an auditor must be free of interests that a reasonable third party would perceive as compromising objectivity; safeguards cannot eliminate all threats such as self-interest or familiarity.

Audit opinions: unmodified, qualified (material but not pervasive), adverse (material and pervasive misstatement) and disclaimer (inability to obtain sufficient appropriate evidence, material and pervasive).

Written representations and a management representation letter are obtained near the date of the auditor's report and do not substitute for other audit evidence.

Australian resident individuals are taxed on worldwide income; non-residents are taxed on Australian-sourced income only, generally without the tax-free threshold.

Progressive marginal rates apply to taxable income; Medicare levy is generally 2% of taxable income, with surcharge and low-income thresholds modifying the outcome.

Assessable income = ordinary income (s 6-5) plus statutory income; deductions = general deductions (s 8-1) plus specific deductions; taxable income = assessable income − deductions.

Capital gains: a net capital gain is included in assessable income; individuals and some trusts may apply the 50% CGT discount on assets held at least 12 months.

GST: registered entities remit 10% GST on taxable supplies, claim input tax credits on creditable acquisitions, and lodge activity statements; GST-free and input-taxed supplies differ in credit entitlement.

Company tax is levied on taxable income at the applicable company rate; franking credits represent company tax paid and are attached to dividends distributed to shareholders.

Fringe benefits tax is levied on employers at the FBT rate on the grossed-up value of benefits provided to employees; the type 1 and type 2 gross-up factors differ.

Trading stock may be valued at cost or market value, or by a lower-of-cost-and-market method; depreciation for tax uses effective life and the diminishing value or prime cost methods.

Time value of money: PV = FV/(1+r)^n; NPV = sum of discounted cash flows − initial outlay; accept projects with positive NPV.

IRR is the discount rate setting NPV to zero; a project is acceptable if IRR exceeds the cost of capital, but IRR can mislead for non-conventional cash flows or mutually exclusive projects.

WACC = (E/V × Ke) + (D/V × Kd × (1 − t)); use market values and after-tax cost of debt.

CAPM: Ke = Rf + β(Rm − Rf); beta measures systematic risk; unsystematic risk is diversified away and is not rewarded.

Dividend growth model: Ke = D1/P0 + g; g can be estimated as retention ratio × return on equity.

Working capital: current ratio = current assets/current liabilities; quick ratio excludes inventory; cash conversion cycle = inventory days + receivable days − payable days.

Treasury risk: transaction exposure affects known foreign currency cash flows; translation exposure affects reported financial statements; economic exposure affects long-run competitiveness.

Hedging instruments include forward contracts, futures, options and swaps; a forward locks a rate and removes both downside and upside, while an option preserves upside at the cost of a premium.

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

Porter's generic strategies: cost leadership, differentiation and focus; being stuck in the middle typically produces below-average performance.

SWOT combines internal strengths and weaknesses with external opportunities and threats; TOWS converts the analysis into matching strategies.

PESTLE analyses political, economic, social, technological, legal and environmental macro-environment factors.

Ansoff matrix: market penetration, product development, market development and diversification, ordered by increasing risk.

Value chain analysis separates primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) from support activities.

BCG matrix classifies business units as stars, cash cows, question marks and dogs based on market growth and relative market share.

ASX Corporate Governance Principles and Recommendations are applied on an if-not-why basis: entities disclose whether they follow each recommendation and explain departures.

Board composition: independence is assessed by factors such as material supplier or customer relationships, advisory fees, employment history and family ties; independent directors should form a majority of the board.

Committees commonly include audit, risk and remuneration committees; the audit committee should consist of independent non-executive directors with financial expertise and an independent chair.

COSO ERM components: governance and culture, strategy and objective-setting, performance, review and revision, and information, communication and reporting.

Risk treatment options: avoid, reduce (mitigate), transfer (insurance, contracts) and accept; residual risk is the risk remaining after controls.

Risk assessment combines likelihood and consequence to derive a risk rating; inherent risk is assessed before controls and residual risk after controls.

Three lines model: management owns and manages risk (first line), risk and compliance functions monitor and advise (second line), internal audit provides independent assurance (third line).

A conflict of interest is managed by disclosure, removal from decision-making, or divestment; a related-party transaction requires arm's-length terms and disclosure.

A contract requires offer, acceptance, consideration, intention to create legal relations and capacity; breach gives rise to damages, specific performance or injunction.

Corporations Act duties: s 180 care and diligence, s 181 good faith and proper purpose, s 182 proper use of position, s 183 proper use of information; s 588G covers insolvent trading.

Business judgment rule (s 180(2)) protects directors who make informed judgments in good faith, without material personal interest, and with rational belief of best interests.

Negligence requires a duty of care, breach of the standard of care, causation and damage; the Civil Liability Acts contain proportionate liability and professional standards provisions.

Agency: an agent binds a principal where actual authority (express or implied) or apparent authority exists; ratification can also bind the principal.

APES 110 fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

Threats to ethical compliance include self-interest, self-review, advocacy, familiarity and intimidation; safeguards must be evaluated and, if insufficient, the engagement declined or terminated.

Insider trading prohibits dealing in securities while in possession of inside information not generally available and which, if available, would materially affect price.

COSO internal control components: control environment, risk assessment, control activities, information and communication, and monitoring activities.

IT general controls cover access management, change management, IT operations and program development; application controls cover input, processing and output.

Segregation of duties in systems separates custody of assets, authorisation, recording and reconciliation; incompatible combinations include creating a vendor and approving payment.

Data analytics techniques: descriptive (what happened), diagnostic (why), predictive (what will happen) and prescriptive (what should be done).

Data quality dimensions include completeness, accuracy, validity, consistency, timeliness and uniqueness; poor input data undermines analytical conclusions.

CAATs include data extraction, re-performance, trend analysis and exception reporting; completeness and accuracy of the source data must be tested before reliance.

Cybersecurity CIA triad: confidentiality, integrity and availability; controls include access controls, encryption, logging and backup and recovery plans.

Key performance indicators should be specific, measurable, achievable, relevant and time-bound, and linked to the entity's strategic objectives.