Myanmar CPA Part I key terms

An accounting method that records revenue when earned and expenses when incurred, regardless of when cash changes hands. It underpins financial statements prepared under MFRS and IFRS.

Cash received from a customer before goods or services are delivered, reported as a liability until the performance obligation is satisfied and revenue is recognised.

A promise in a contract with a customer to transfer a distinct good or service. Revenue is recognised when each obligation is satisfied, either at a point in time or over time.

The framework for recognising revenue: identify the contract, identify performance obligations, determine the transaction price, allocate it to obligations, and recognise revenue when obligations are satisfied.

The amount by which an asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of fair value less costs of disposal and value in use.

The amount at which an asset or liability is recognised in the statement of financial position, after deducting accumulated depreciation, amortisation, or impairment.

The present value of the future cash flows expected from an asset or cash-generating unit, used to test whether the asset is impaired.

The systematic allocation of a depreciable asset's cost less residual value over its useful life, reflecting consumption of economic benefits.

The estimated amount an entity would currently obtain from disposing of an asset at the end of its useful life, after deducting expected disposal costs.

The process of combining a parent's and its subsidiaries' financial statements into a single set, eliminating intra-group balances and recognising non-controlling interests.

An intangible asset arising on acquisition, measured as consideration transferred plus non-controlling interest less the fair value of identifiable net assets acquired.

The portion of a subsidiary's net assets and profits not attributable to the parent, presented separately within equity in consolidated financial statements.

Sales revenue minus variable costs. It measures how much each unit or sale contributes toward covering fixed costs and generating profit.

The level of sales at which total contribution equals total fixed costs, producing neither profit nor loss. It can be expressed in units or in revenue.

The excess of budgeted or actual sales over break-even sales, showing how much sales can fall before a loss arises. Usually expressed as a percentage.

A system that assigns predetermined costs to products and compares them with actual costs, generating variances that management investigates and acts upon.

The process of decomposing the difference between budgeted and actual results into price and quantity components to explain performance and assign responsibility.

A budget adjusted to the actual level of activity achieved, allowing fair comparison of actual costs with what costs should have been at that volume.

A future cash cost that differs between alternatives. Sunk costs and committed costs are excluded because they cannot be changed by the decision.

The benefit forgone by choosing one alternative over the next best option. It is relevant to decision-making even when no cash outflow occurs.

A cost already incurred that cannot be recovered or altered by any future decision, and therefore should be ignored in relevant costing.

The threshold at which omissions or misstatements could influence economic decisions of users. It is a matter of professional judgement affected by size and nature.

The risk that the auditor expresses an inappropriate opinion when financial statements are materially misstated. It comprises inherent, control, and detection risk.

The risk that audit procedures fail to detect a material misstatement. Unlike inherent and control risk, it is controlled by the auditor through the nature, timing, and extent of work.

An attitude of questioning and alertness to conditions indicating possible misstatement, including critically assessing audit evidence rather than accepting it at face value.

Information used by the auditor to reach conclusions on which the audit opinion is based. It must be sufficient in quantity and appropriate in relevance and reliability.

Procedures designed to detect material misstatements at the assertion level, including tests of details and substantive analytical procedures.

A written agreement between auditor and client setting out the scope, responsibilities, and terms of the audit, helping to avoid misunderstanding about the engagement.

A turnover-based tax levied in Myanmar on the sale of goods and provision of specified services, with certain goods exempt or taxed at higher rates.

A Myanmar tax imposed on certain goods such as tobacco, alcohol, and luxury items, charged at rates that vary by product category.

Tax deducted at source by a payer from specified payments, such as interest, royalties, or contract fees, and remitted to the Internal Revenue Department.

Tax collected in advance of final assessment, commonly on imports or through withholding, credited against the taxpayer's eventual income tax liability.

A tax regime where the taxpayer computes and declares its own liability, with the revenue department reviewing and assessing returns after submission.

A doctrine holding that acts beyond the powers conferred on a company or public body by law or its constitution are invalid and cannot bind the entity.

A legal obligation of directors to act in the best interests of the company with loyalty, care, and good faith, avoiding conflicts of interest.

The system of rules, practices, and processes by which a company is directed and controlled, balancing stakeholder interests and promoting accountability.

A subcommittee of the board, composed mainly of independent directors, overseeing financial reporting, internal control, and the external audit relationship.

The policies and procedures designed to provide reasonable assurance about reliable reporting, effective operations, and compliance with applicable laws and regulations.

A control principle separating authorisation, custody, and record-keeping so that no single person can both perpetrate and conceal an error or fraud.