PIPFA Final Level cheat sheet

Under IFRS 15, revenue is recognized when control of goods/services transfers to the customer; the five-step model: identify contract, identify performance obligations, determine transaction price, allocate price to obligations, recognize revenue on satisfaction.

IFRS 9 classification of financial assets depends on the business model (hold to collect, hold to collect and sell, other) and contractual cash flow characteristics (solely payments of principal and interest, SPPI).

Goodwill is tested for impairment annually under IAS 36; impairment loss is allocated first to goodwill, then pro rata to other assets of the cash-generating unit.

Deferred tax is computed using the liability method: temporary differences multiplied by the enacted or substantively enacted tax rate expected to apply when the asset is realized or liability settled (IAS 12).

Weighted average cost of capital (WACC) = (E/V × Re) + (D/V × Rd × (1 − tax rate)); use market values for weights and after-tax cost of debt.

Capital asset pricing model (CAPM): Re = Rf + β × (Rm − Rf); beta measures systematic risk; unsystematic risk is diversifiable and not priced.

Under IAS 2, inventory is measured at the lower of cost and net realizable value; cost includes purchase, conversion, and other costs to bring inventory to present location and condition; NRV = estimated selling price less costs to complete and sell.

IAS 16: property, plant and equipment initially at cost; subsequent measurement either cost model or revaluation model; depreciation allocated on a systematic basis over useful life; residual value and useful life reviewed at least annually.

Under IFRS 16, a lessee recognizes a right-of-use asset and a lease liability at the present value of lease payments; short-term (≤12 months) and low-value asset leases may be expensed on a straight-line basis.

The modified accrual basis (used in governmental funds under GASB) recognizes revenues when measurable and available, and expenditures when the related liability is incurred.

Governmental fund financial statements include the balance sheet and statement of revenues, expenditures, and changes in fund balances; proprietary funds use accrual accounting and include statement of net position and statement of revenues, expenses, and changes in net position.

Under GASB, the financial reporting entity includes the primary government and component units; component units are included if the primary government is financially accountable or the nature and significance of the relationship is such that exclusion would be misleading.

IPSAS 1 requires presentation of accrual-based financial statements: statement of financial position, statement of financial performance, statement of changes in net assets/equity, cash flow statement, and notes.

Budgetary accounting in the public sector uses appropriations, encumbrances, and expenditures; an encumbrance reserves budget authority and is recorded when a purchase order or contract is issued.

Performance reporting in the public sector often uses the balanced scorecard or performance budget; key elements: inputs, outputs, outcomes, efficiency, and effectiveness measures.

In public sector auditing, the three types of audit are financial audit, compliance audit, and performance (value-for-money) audit; performance audit examines economy, efficiency, and effectiveness (the 3Es).

Fund accounting separates resources for specific purposes; major fund reporting requires individual presentation of governmental and enterprise funds meeting 10% and 5% tests.

Public sector debt is often reported separately as general obligation debt (backed by full faith and credit) versus revenue debt (backed by specific revenue streams); debt service funds account for principal and interest payments on general long-term debt.