Myanmar CPA Part II cheat sheet

Conceptual framework: an asset is a present economic resource controlled as a result of past events; a liability is a present obligation to transfer an economic resource; recognition requires relevance and faithful representation.

Accrual basis: revenue recognised when performance obligation is satisfied (IFRS 15 five-step model); expenses matched to the period in which related economic benefits are consumed.

Depreciation methods: straight-line = (cost − residual)/useful life; reducing balance = carrying amount × rate; units of production = (cost − residual) × units used / total units.

Inventory (MFRS/IAS 2): measured at lower of cost and net realisable value; cost excludes abnormal waste, storage (unless necessary), and selling costs; NRV = estimated selling price − costs to complete − selling costs.

Impairment (IAS 36): recoverable amount = higher of fair value less costs of disposal and value in use; recognise loss when carrying amount exceeds recoverable amount.

Provisions (IAS 37): recognise when a present obligation from a past event is probable and reliably measurable; a contingent liability is disclosed, not recognised.

Revenue over time: recognise by measuring progress (input or output method) when the customer receives and consumes benefits, or the asset has no alternative use and right to payment exists.

Statement of cash flows (IAS 7): classify into operating, investing, financing; interest paid and dividends paid may be operating or financing but must be applied consistently.

Control (IFRS 10): power over relevant activities, exposure to variable returns, and ability to use power to affect returns; control, not ownership percentage, drives consolidation.

Goodwill at acquisition = consideration transferred + NCI + previously held interest − fair value of identifiable net assets acquired; NCI measured at fair value (full goodwill) or proportionate share (partial goodwill).

Non-controlling interest at reporting date = NCI at acquisition + NCI share of post-acquisition profit and OCI − NCI share of dividends.

Intra-group sales: eliminate group revenue and cost; unrealised profit in closing inventory is eliminated against the seller's profit and inventory carrying amount.

Associates (IAS 28): significant influence presumed at 20% or more of voting rights; equity method - carrying amount plus share of profit and OCI less dividends received.

Joint arrangements (IFRS 11): joint operation - recognise share of assets, liabilities, revenue and expenses; joint venture - equity method, not proportionate consolidation.

Business combination (IFRS 3): acquisition method; identifiable assets and liabilities at fair value at acquisition date; acquisition-related costs expensed.

Foreign operations (IAS 21): translate assets and liabilities at closing rate, income and expenses at rate on transaction date (average permitted), exchange differences to OCI.

Contribution margin = sales − variable costs; contribution per unit of limiting factor determines the optimal product mix when a resource constraint exists.

Break-even units = fixed costs / contribution per unit; break-even revenue = fixed costs / contribution margin ratio; margin of safety = (budgeted sales − break-even sales) / budgeted sales.

Target profit volume = (fixed costs + target profit) / contribution per unit; CVP assumes constant selling price, constant variable cost per unit and fixed costs within the relevant range.

Standard costing variances: material price = (standard price − actual price) × actual quantity purchased; material usage = (standard quantity − actual quantity) × standard price.

Labour rate variance = (standard rate − actual rate) × actual hours paid; labour efficiency variance = (standard hours for actual output − actual hours worked) × standard rate.

Fixed overhead: expenditure variance = budgeted fixed overhead − actual fixed overhead; volume variance = (budgeted hours − standard hours for actual output) × standard absorption rate.

Relevant costing: include future differential cash flows; exclude sunk costs, committed fixed costs and non-cash book values; opportunity cost of an internal transfer is relevant.

Transfer pricing: minimum = variable cost plus lost contribution per unit of intermediate product; maximum = external market price; goal congruence requires the range to exist.

Audit risk = inherent risk × control risk × detection risk; detection risk is the only component the auditor controls through the nature, timing and extent of procedures.

Materiality: overall materiality often a benchmark (e.g. 5% of profit before tax, 0.5–1% of revenue or total assets); performance materiality is set lower to reduce aggregation risk.

Assertions: occurrence, completeness, accuracy, cut-off, classification and presentation for transactions; existence, rights and obligations, completeness, valuation for balances.

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

Subsequent events review: adjust the financial statements for conditions existing at year end; disclose conditions arising after year end; review up to the date of the auditor's report.

Going concern: if a material uncertainty exists, the auditor includes a separate section in the report; if use of going concern basis is inappropriate, express an adverse opinion.

Opinion modifications: qualified (material but not pervasive), adverse (material and pervasive misstatement), disclaimer (material and pervasive inability to obtain evidence).

Independence: no direct financial interest, no key audit partner rotation breaches, no provision of services that assume management responsibility; safeguards cannot eliminate all threats.

Myanmar income tax is levied under the Income Tax Law; residents are taxed on worldwide income, non-residents on Myanmar-source income only; tax year runs 1 October to 30 September.

Corporate income tax rate is 22% for companies under the Income Tax Law; special rates apply to specific sectors (e.g. higher rates for certain natural resource extraction).

Capital gains of companies are taxed at 22%; gains on disposal of shares, land and buildings are included; individuals face a separate capital gains schedule.

Personal income tax is progressive with a basic relief allowance; salary income is subject to tax withheld by the employer and remitted monthly.

Commercial tax is a turnover tax on goods and services at 5% standard rate, with specific goods subject to higher rates; exports are generally zero-rated.

Commercial tax registration threshold applies to businesses exceeding specified turnover; registered persons charge commercial tax on taxable supplies and remit to the Internal Revenue Department.

Withholding tax applies to specified payments (e.g. interest, royalties, payments to non-residents); non-resident withholding on interest and royalties is 15% under the law.

Tax compliance: annual income tax return filed within the statutory deadline; late filing and late payment attract penalties and interest under the Tax Administration Law.

Myanmar Companies Law 2017: a private company limits membership (not more than 50) and restricts share transfers; a public company may offer shares to the public.

Directors owe duties of care, skill and diligence, to act in good faith in the company's best interests, to avoid conflicts, and not to misuse company property or information.

Corporate governance codes separate the roles of chair and CEO; board committees (audit, nomination, remuneration) should comprise independent non-executive directors.

The audit committee should be independent, oversee external audit, internal control and financial reporting, and meet the auditor without management present.

A contract requires offer, acceptance, consideration, intention to create legal relations and capacity; consideration must be sufficient but need not be adequate.

A company is a separate legal person; the corporate veil may be lifted for fraud, sham, or where statute imposes personal liability (e.g. wrongful trading).

Agency: an agent binds the principal within actual or apparent authority; undisclosed principal may sue and be sued on the contract.

Related party transactions require disclosure; material transactions with directors or substantial shareholders need board or shareholder approval.

Time value: PV = FV / (1 + r)^n; NPV = present value of cash inflows − initial investment; accept projects with positive NPV.

WACC = (E/V) × Ke + (D/V) × Kd × (1 − tax rate); use market values of equity and debt; project discount rate should reflect project risk.

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

Dividend growth model: Ke = D1/P0 + g; g = retention ratio × return on equity; P0 = D1 / (Ke − g).

IRR is the discount rate at which NPV = 0; accept if IRR exceeds the cost of capital; IRR may give multiple answers with non-conventional cash flows.

Working capital: cash conversion cycle = inventory days + receivable days − payable days; shorter cycle releases cash.

Leverage: operating gearing measures fixed cost proportion; financial gearing = debt / (debt + equity); high gearing increases financial risk and cost of equity.

Payback ignores time value and cash flows after payback; discounted payback corrects for time value but still ignores later cash flows.

Fundamental principles of the IESBA Code: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

Threats to independence: self-interest, self-review, advocacy, familiarity and intimidation; apply safeguards or decline/terminate the engagement.

Confidentiality continues after the relationship ends; disclosure is permitted where required by law, permitted by client, or for legal proceedings.

Auditor independence: prohibit contingent fees, prohibit assuming management responsibility, and require rotation of key audit partners for listed entities.

IT general controls: access management, change management, backup and recovery, and data centre physical security support the reliability of application controls.

Computer-assisted audit techniques (CAATs) allow testing of full populations; audit software extracts, sorts and analyses client data to identify exceptions.

Cyber controls: multi-factor authentication, segregation of duties, encryption of data at rest and in transit, and logging and monitoring of privileged access.

Data protection: personal data should be collected for specified purposes, used only for those purposes, kept accurate and secure, and retained no longer than necessary.