Algeria IESPC Accounting Contest cheat sheet

Fundamental accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality in at least two accounts.

SCF (Système Comptable Financier, Algeria's national framework) classifies accounts in classes 1-8: 1 equity and long-term financing, 2 non-current assets, 3 inventories, 4 third-party accounts, 5 financial accounts, 6 charges, 7 products, 8 special accounts.

Accrual basis: revenue is recognized when control of goods or services transfers, not when cash is received; expenses matched to the same period.

Depreciation of a fixed asset: straight-line = (cost − residual value) / useful life; declining balance applies a fixed rate to net book value.

Inventory valuation rule: lower of cost and net realizable value; cost includes purchase price plus directly attributable costs (transport, duties), excluding abnormal waste.

Closing entries transfer class 6 charges and class 7 products to the income statement; the result is then carried to equity (report à nouveau or réserves).

Provisions for liabilities are recognized only when an obligation exists at the reporting date, outflow is probable, and the amount can be reliably estimated.

A statement of cash flows splits flows into operating, investing, and financing activities; non-cash transactions are disclosed separately.

Full cost = direct costs + allocated indirect costs; allocation uses a driver (labor hours, machine hours, quantities) as the allocation base.

Contribution margin = sales revenue − variable costs; contribution margin ratio = contribution margin / sales revenue.

Break-even point in units = fixed costs / unit contribution margin; in revenue = fixed costs / contribution margin ratio.

Activity-based costing assigns overhead to activities, then to products via cost drivers; it reduces distortion when products consume overhead differently.

Standard costing variance: price variance = (standard price − actual price) × actual quantity; quantity variance = (standard quantity − actual quantity) × standard price.

Absorption costing includes fixed production overhead in product cost; variable costing treats fixed overhead as a period cost, so profit differs by the change in inventory.

Relevant cost for a decision excludes sunk costs and allocated fixed costs; it includes opportunity cost and incremental cash flows.

Process costing: equivalent units = units completed + (ending work in progress × percentage of completion); cost per equivalent unit = total cost / equivalent units.

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

Materiality is set at planning and revised during the engagement; performance materiality is lower than overall materiality to cover undetected misstatements.

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

Segregation of duties separates authorization, custody of assets, recording, and reconciliation; combining them concentrates fraud risk.

Audit evidence is more reliable when obtained from independent external sources, from original documents, and from the auditor's own inspection.

Subsequent events review covers the period from the reporting date to the audit report date; adjusting events provide evidence of conditions existing at year-end.

Types of audit opinion: unmodified, qualified, adverse, and disclaimer; scope limitation leads to qualification or disclaimer, misstatement to qualification or adverse.

Going concern assessment: the auditor evaluates management's plan for at least 12 months from the reporting date and considers material uncertainty disclosure.

Algeria applies a territorial system: taxable income covers activities carried out in Algeria; foreign-source income is generally outside the net unless specific rules apply.

Corporate income tax (IBS) is levied on the annual profit at the standard rate set by the annual finance law, with reduced rates for certain sectors and investment-promotion regimes.

VAT (TVA) is a multi-stage tax on consumption; the standard rate is 19%, with a reduced rate of 9% for specified goods and services.

Withholding tax (retenue à la source) applies to certain payments such as services and royalties at rates set by the tax code; the payer remits to the tax administration.

Taxable profit = accounting result adjusted for non-deductible expenses, exempt income, and timing differences under the tax code.

The tax return (déclaration fiscale) is filed annually with supporting schedules; provisional installments (acomptes) are paid during the year.

Tax audit (contrôle fiscal) and the tax administration's statute of limitations define the period within which the administration can reassess.

Taxes on payroll include social security contributions and the tax on salaries (IRG) withheld by the employer.

Algerian commercial law recognizes the commercial register (registre de commerce); registration is a condition for exercising commercial activity.

Types of commercial companies include SARL, SPA, and SNC; the SARL has a minimum capital and a manager (gérant), while the SPA is governed by a board or management board.

A commercial company acquires legal personality upon registration in the commercial register; before registration it is a company in formation.

Contract validity requires consent, capacity, object, and lawful cause; vitiated consent (error, fraud, duress) can lead to rescission.

Commercial obligations may be evidenced by any means unless the law requires a writing; commercial prescription periods differ from civil ones.

Insolvency proceedings in Algeria include preventive settlement, judicial reorganization, and judicial liquidation, ordered by the commercial court.

Negotiable instruments: a bill of exchange (lettre de change) involves drawer, drawee, and payee; acceptance by the drawee creates the payment obligation.

The commercial lease (bail commercial) grants the tenant renewal rights and requires a written contract with a defined term.

Time value of money: present value = future cash flow / (1 + r)^n; net present value = present value of inflows − initial investment.

Weighted average cost of capital = (E/V) × cost of equity + (D/V) × cost of debt × (1 − tax rate).

Capital asset pricing model: cost of equity = risk-free rate + beta × market risk premium.

Internal rate of return is the discount rate at which NPV = 0; accept a project when IRR exceeds the required rate of return.

Payback period is the time to recover the initial investment; it ignores cash flows after the payback and the time value of money.

Working capital = current assets − current liabilities; the cash conversion cycle = days inventory + days receivable − days payable.

Financial leverage increases return on equity when the return on assets exceeds the after-tax cost of debt, and increases financial risk.

Dividend policy: cash dividends reduce retained earnings and cash; a stock dividend reclassifies equity without changing total equity.

An accounting information system comprises people, procedures, data, software, and hardware; the general ledger is the core repository of transactions.

ERP systems integrate accounting, purchasing, inventory, and payroll modules on a shared database, reducing duplicate data entry.

Internal controls in IT: segregation of duties, access controls, audit trails, and change management over software modifications.

Data integrity controls include input validation, batch totals, and reconciliation between subsidiary ledgers and the general ledger.

Electronic invoicing and digital archiving must preserve the audit trail and comply with record-retention requirements of the tax code.

Business continuity: backup schedules, off-site storage, and disaster recovery plans protect accounting data from loss.

XBRL and standardized reporting formats enable automated exchange of financial statements with tax and regulatory authorities.

Cybersecurity controls for accounting systems include multi-factor authentication, encryption, and periodic access reviews.

Fundamental ethical principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behavior.

Independence applies to audit engagements: the auditor must be free from relationships that a reasonable third party would see as compromising.

Confidentiality continues after the engagement ends; disclosure is permitted only when required by law or with client consent.

A conflict of interest must be disclosed and managed; if it cannot be managed, the engagement should be declined or terminated.

Contingent fees based on the outcome of an audit are prohibited because they impair objectivity.

Professional skepticism means questioning evidence and not accepting management representations without corroboration.

Continuing professional education maintains competence; failure to keep skills current is a breach of due care.

Advertising and solicitation by auditors are restricted by professional bodies to preserve the profession's reputation.

Gross domestic product measures the market value of final goods and services produced within a country's borders in a period.

Inflation erodes purchasing power; central banks raise policy rates to reduce aggregate demand and contain price growth.

Demand curve slopes downward; a movement along the curve follows a price change, while a shift follows income, preferences, or prices of substitutes.

Elasticity of demand = percentage change in quantity demanded / percentage change in price; demand is elastic when the absolute value exceeds 1.

Opportunity cost is the value of the next best alternative forgone when a choice is made.

Algeria's economy relies heavily on hydrocarbons; diversification policy targets agriculture, industry, and services to reduce export concentration.

Exchange rate movements affect import costs and export competitiveness; depreciation makes exports cheaper and imports more expensive.

Fiscal policy uses government spending and taxation; expansionary policy raises aggregate demand and may widen the budget deficit.

Public accounting follows budgetary accounting rules: expenditure is recorded at the commitment (engagement), liquidation, and payment stages.

The public accountant (comptable public) is personally and financially liable for payments made without valid supporting documents.

Budget principles: annuality, universality, unity, and specification; the budget authorizes revenue and expenditure for one year.

Public procurement follows competitive tendering rules; thresholds determine whether open or restricted procedures apply.

Not-for-profit entities record resources without ownership interest; surplus is retained for the mission, not distributed to members.

Fund accounting separates restricted and unrestricted resources so donors can verify use of their contributions.

Financial statements of public entities include budget execution statements comparing authorized and actual amounts.

Internal control in public entities includes the separation between the authorizing officer (ordonnateur) and the paying accountant.