Professional Documents
Culture Documents
The Institute
of Chartered
Accountants of
India
(Set up by an act of
Parliament) Your monthly guide to CA news, information and events
Special Issue on
Strategic Cost
Management
and Performance
Evaluation
The Institute of Chartered Accountants of India(ICAI)
World Accountancy Education Day
Organised By: Career Counseling sub-group under BOS, ICAI
10th November, 2017
Accountancy Education for All
World Accountancy Education Day will be celebrated on 10th accounting. The author of the book was Italian mathematician
November, 2017 with the theme “Accountancy Education for and Franciscan friar Luca Bartolomeo de Pacioli. Although
All” conducted by the Career Counselling Committee of the double-entry bookkeeping had been around for centuries,
Institute of Chartered Accountants of India in India as well as Pacioli’s 27-page treatise on the subject has earned him the title
Abroad. “The Father of Modern Accounting.” The system he published
included most of the accounting cycle as we know it today.
Objectives of Celebrating World Accountancy
Education Day Commemoration of World Accountancy Education
Day
World Accountancy Education Day will be celebrated every
year with the following objectives • The World Accountancy Education Day will be expected to
celebrate in capital cities of each state as well as other cities
• To widely spread a message about the significance of
and in abroad destinations
Commerce Education in the daily life of the people.
• To display all the activities, efforts and achievements in the • Career Counselling/Mega Career Counselling Programme
field of Commerce for human welfare. will be organized to promote the Accountancy Education in
in each Branch/ Regional Councils/Chapter Abroad.
• To discuss all the issues and implement innovative strategies
for the development of the Accountancy education. • Mega Career Counselling Programme cum Exhibitions will
be organized to promote the Accountancy Education in
• To give an opportunity to showcase the talents of Commerce
Branch/ Regional Councils/Chapter Abroad.
students in the country. To encourage the people as well as
popularize the Accountancy education.
Activities to be organized during the Accountancy
The Commerce Carnival is going to be an event with a series Education Day in the Branches/ Regional Councils/
of activities and programs involving school and college students, Chapter Abroad on 10th Nov., 2017
eminent Educationists and faculties of the state, country &
abroad. We want to provide a real platform for the budding • Career Counselling Programme /Mega Career Counselling
students to make their career and profession in Commerce. Programme
• Press Conference
10th November - World Accountancy Education • Radio/TV talk shows
Day-2017 • Public speech
Why • Commerce exhibitions
• Debate Competition
On November 10, 1494, a book titled Summa de Arithmetica,
• Quiz competitions
Geometria, Proportioni et Proportionalita (Everything About
Arithmetic, Geometry and Proportion) was published in • Elocution Competition
Venice. This was the first book that aimed to summarize the • Essay Writing Competition
mathematical knowledge of those days. One of the tractatus • Marathon race/ Human Chain
of the Summa, entitled “Particularis de computis et scripturis”
• Variety of other programmes
(About accounts and other writings) provides a detailed
description of Venetian book-keeping. This was the first printed The aforesaid programmes will be organized to popularize
essay on double entry bookkeeping - called “Method of Venice” the Accountancy education in the country as well as abroad
- and was direct base of some widespread works on mercantile amongst the student community & other stakeholders.
A
Final. The contents have been developed with the collaborative
s you read this communication, I hope that you would efforts of BOS faculty and subject experts from academia
be well prepared technically as well as psychologically and industry. It is heartening to know that the study material
for the ensuing examination. I extend my heartfelt is receiving rave reviews from students, members and other
wishes to all of you appearing in the ongoing stakeholders across the nation. On behalf of ICAI, I congratulate
examinations. You must revise intensively to be able to present the faculty and experts for the quality delivered.
your answers well, maximizing your chances to score well. Question Bank
Organize yourself and your study space so that you are able to
locate important books, notes for final revision thus utilizing Since the first examination under the New Course is due in May
your time in a productive manner. You must take due care 2018, the Board of Studies proposes to bring out a Question
of your health, take light meals and reasonable sleep for good Bank consisting of questions in the core papers and case studies
concentration and retention. in the elective papers of the Final Course. This question bank
will assist students in their preparation of the core subjects as
Points to Remember well as case study based elective subjects.
It is important that you maintain your composure during Digital Learning Hub
the exam to utilize every minute of the allocated time. How
effectively you utilize your time during the examination affects To facilitate learning anytime-anywhere, entire study material
your performance. Remember- Your Answer-sheet represents for the Revised Scheme is available online in the form of
your knowledge and determines your result. Here are a few E-Books for your benefit at the link:
tips/suggestions to get you prepared: https://learning.icai.org//per/g21/pub/1666/
With the commencement of the exam, for the initial 15 minutes SelfServices/templates/Login09082017121351/Login/Lx_
you should read the question paper as well as instructions Login1209082017121404.html
carefully and decide the questions you will attempt, the E-Books have reflowable content, they can be viewed on a
sequence (Starting from the question you know the best to laptop, tablet or smart-phone and are equipped with in-built
the question you know the least) and time to be allocated to tools for annotations, changeable font (style &size), easy search,
each question (Commensurate with the weightage assigned traversal and print options for convenient learning.
to the question). Make sure to allocate time for revision.
You as students must make the best use of these facilities to
For theoretical questions, prepare a rough structure of your save your precious time and maximize learning. Stay focused
answer in your mind before you start writing and enumerate and do your best with utmost dedication and commitment
the points sequentially followed by relevant explanation towards your goal. I am sure you shall soon join the fraternity
highlighting keywords/technical terms. Maintain clarity, of Chartered Accountants and make your family and nation
coherence and brevity. Elucidate your answer with illustrations, proud.
examples, relevant case laws or sections wherever necessary. If
a particular question requires making an assumption, it must be Remember: Success comes to those who deserve it. So
clearly stated with the underlying reason in brief. work hard to deserve the success you aspire. As the noted
motivational speaker and author, Shiv Khera puts it: “Your
For practical questions, enumerate the steps and provide positive action coupled with positive thinking results in
working notes legibly. Adhere to the time limits. Revisit the success.” So be positive and act positively.
unfinished questions after attempting all other questions. Do
not devote too much time on a single question. Try to attempt Yours Sincerely,
all the sub parts of a question sequentially, attempting the
questions needed to be answered for a good score. Attach the
Best Wishes,
supplementary sheets in the right sequence and ensure details
are legibly written on the front page.
Campus Placements at a glance
CA. NILESH S. VIKAMSEY
Our esteemed institute is a popular destination amongst PRESIDENT
reputed organizations seeking competent professionals in ICAI, NEW DELHI
The Chartered Accountant Student November 2017 03
You can’t cross the sea merely by standing and staring at the water. – Rabindranath Tagore
VICE PRESIDENT’S COMMUNICATION
I
foundational characteristics of true professionals.
am highly delighted to convey my best wishes to all We must be serious about our occupation. In other
of those who are appearing for the November 2017 words, we must understand that our occupation is
Examinations, which would have started by now. challenging, with high expectations of discernable
I am fully aware and acknowledge the seriousness standards. We should seek more opportunities and
and the hard work that are required for achieving success utilize our relationships for constant progress. It is a
in the professional examination of high quality like common fact that we are interested in improving our
ours. I strongly believe that you all must have seriously circumstances, but reluctant to improve ourselves. If you
considered the inputs and insights that I had given in my want to change your circumstances, ultimately, you have
last communication. Your sincere efforts and dedication to change yourself. You should always realize the fact that
in dealing with the examinations will definitely bring to it is your skills, attitudes and behaviours that helps you to
you the desired results. As you know the CA examinations shape your circumstances.
aim not only to test your theoretical knowledge but the
application skills also. I am sure that you all will outshine To remain successful in your chosen path, you need
in both these areas and remain elated on your triumphant proper guidance and consultation. Always take guidance
victory. and direction from your seniors and teachers. Always
work for the implementation of the ideas and skills
Dear friends, we are passing through the era of you gain from training programs, conferences and
globalization. The profession of chartered accountancy conventions.
continues to remain very dynamic, demanding and above
all, highly rewarding. You are all required to develop The completion of examinations should also bring in
multi-dimensional skills to recognize your hidden period of great relief and provide you with the time
traits and unleash them to widen your professional to relax and do other important tasks. You all should
growth. The Institute’s articleship training provides utilize the available time effectively and in a constructive
you a lifetime learning experience and exposure to face manner. Some people view time management as a list
practical situations while you grow in the profession. of rules that involves scheduling of appointments, goal
The completion of a well-disciplined and structured settings, thorough planning, creating things to do lists
articleship will definitely help you in your path of and prioritizing.
professional excellence and growth. Yours sincerely,
We all have opted for this coveted profession not by
chance but by choice. I sincerely cherish and wish that all
my students establish their own identity and uniqueness
in their profession. There is no dearth of professionals in
our country. We come across many professionals in our
daily life. Rather than remaining or being identified as a CA. NAVEEN N. D. GUPTA
mere professional, the chartered accountants are to be VICE PRESIDENT, ICAI, NEW DELHI
Happiness is when what you think, what you say, and what you do are in harmony. - Mahatma Gandhi
CHAIRMAN’S COMMUNICATION
charts, and diagrams have been added for your easy learning,
absorption and retention. Students enrolled for new course
curriculum may apply for central dispatch system wherein
they will get the study material at their door step.
It is important to note here that in last three months
your Board of Studies has delivered more than 40000 sets
of Study material under Central Dispatch System which not
only provide ease to students but also prove to be a unique
environment friendly project saving thousands of trees.
A
t the outset our best wishes for those who course on GST and Ind AS (Six Days each) in a combination
are appearing for November 2017 Chartered of Webcasts from Head Office and physical classes at Regional
Accountancy examinations. Remember, there is no Councils and Branch(es) for the students. The Webcast on
short cut to hard work and success but to get the best result GST will be held on 17th, 18th, 24th and 31st of next month
we need to strike the right chord at this stage. All you are and on 6th and 7th of January 2018 from 10 AM to 1 PM. The
required to do is to maintain the same tempo over a period Physical Classes timings will be from 2PM to 5 PM on the
of several weeks prior to and during examinations. With the same days.
examination fever spreading its stress amongst all students, The Ind AS classes have been scheduled on 13th, 14th, 20th,
we need to balance between the health and preparation as 21st, 27th and 28th of January 2018. Students, after completion
well. Your sincere efforts and dedication will definitely bring of the Course(s) are required to pass a mobile app based online
to you desired results. test with 50% marks to be eligible for receiving “Participation
Certificate” by Board of Studies. The fee for each of the
Mock Test Paper Scheme course will be ` 1500/-. Students are required to contact their
We firmly believe that the students must have attended the nearest Branch/Regional Council for Registration. The last
Mock Test Papers that have been organized by the Regional date of registration is 10th December, 2017.
Councils and Branches under the guidance of Board of
Studies. Mock Test is a way to introspect and assess the Soft Skills
preparation for examination for the students before hand to While your technical skills may get your foot in the door,
avoid any kind of surprise in examination hall. Apart from your soft skills are what open most of the doors to come.
morale boosting, they also highlight the areas which require Your work ethics, your attitude, your communication skills,
more preparation. your emotional intelligence and other personal attributes
are the soft skills that are crucial for your career success.
Question Bank/Case Studies in Study Material You are all required to develop multi-dimensional skills to
Under the New Scheme of Education and Training although recognize your hidden traits and unleash them to widen
care has been taken to include many illustrations, case your professional growth. We would like to exhort all of
studies and questions (with answers) in study material, still you to undergo the four week’s Residential Programme on
consistent efforts are required on part of Board of Studies to Professional Skills Development at the Centre of Excellence,
make that more dynamic; for which we are committed. It is Hyderabad, which will definitely help you in your path of
for the first time that Case Study Based Elective Papers are professional excellence and growth.
being introduced in the CA curriculum. In order to assist It is our sincere wish that all our students establish their
students in their preparation for core subjects as well as own identity and uniqueness in their profession.
case study based elective subjects, your Board of Studies is
aiming to bring out a Question Bank consisting of questions Wish you all the best
for practice along with answers in the core papers and case
studies for the elective papers of the Final Course.
Quality Management
Tools Cost of Quality
Process Innovation
Target Costing
Strategic Cost Management and Performance Evaluation
Throughput Accounting
Standard Costing
Cost Control & Beyond Budgeting
Analysis
Budgetary Control
Behavioural Aspects
Strategic Analysis;
Profitability Analysis Analysis Through ABC
Planning and
Forecasting Tools ABB & ABM
Limitations of
Traditional Cost Strategic Cost Vision, Mission Strategic cost
Management and Objectives It also involves
Management management is integrating cost
the application of information with
cost management the decision-making
Components of Strategic techniques so that they
Cost Management framework to
improve the strategic support the overall
• Strategic Positioning position of a business as organisational strategy.
well as control costs.
• Cost Driver Analysis Value Shop
• Value Chain Analysis Model
The basic aim of
Strategic Cost
It is not limited to Management is to help
controlling costs but the organisation to
The Value Chain Approach using cost information achieve the sustainable
Strategic Frameworks for for Assessing Competitive for management competitive advantage
Value Chain Analysis Advantage decision making. through product
differentiation and cost
leadership.
Ignores Strategic
Competition, Positioning
Market Growth,
and Customer Analysis
Requirement
Excessive
Short-term Focus on Cost
Outlook Reduction
Cost
Limitations of Driver
Traditional Cost Analysis
Management
Ignores
Reactive Dynamics of Value
Approach Marketing and Chain
Economics Analysis
Limited Focus
on Review and
Improvisation
External
Enviroment
to imitate
Procurement
(Purchasing of Raw Materials, Machines, Supplies)
Quality Management • Theory of Constraints Supply Chain Management • Gain Sharing Arrangement
• Throughput Accounting • Outsourcing
Cost of Quality Total Quality Management Business Excellence Model • Key Process
• Push/Pull Model
• Components • 6 Cs • EFQM
• Upstream-flow Management
• Optimal COQ • Deming’s 14 points • Baldrige Criteria
• Downstream-flow Management
• PDCA Cycle • Organisation Culture
• Service Level Agreements
• Criticism
• Prevention Costs
• Apprisal Costs • Concepts of Excellence • Relationship with Suppliers • Relationship Marketing
• Internal Failure Costs • Conceptual Framework •U se of Information •C ustomer Relationship
• External Failure Costs • Logic Assessment Framework Technology Management
• Use of Information Technology
• Brand Strategy
Appraisal Costs
♦ The need of control in product and services to ensure high 6C’s
quality level in all stages, conformance to quality standards and
performance requirements is Appraisal Costs.
Continuous
♦ Appraisal Cost incurred to determine the degree of conformance Customer Focus Improvement
to quality requirements (measuring, evaluating or auditing).
Baldrige Criteria for Performance Excellence Goldratt’s Five-Step Method for Improving
This model provides the foundation for most of the business excellence Performance
models adopted around the world. The framework is built round the
seven categories i.e., The key steps in managing bottleneck resources are as follows:
♦ Leadership,
♦ Strategic planning,
♦ Customer and market focus, Identify the
Constraints
♦ Measurement analysis and knowledge management,
♦ Workforce,
♦ Process management and
Repeat the Exploit the
♦ Business results. Process Constraints
Customers Account
Types of Supply Chain- Push and Pull Profitability (CAP)
Push Model
Customers Lifetime
Supplier Manufacturer Distributor Retailer Customer Value (CLV)
E-Payment The six markets model suggests that a firm must regulate its actions
towards developing appropriate relationships with each of the market
Relationship with Suppliers areas as the management of relationships in each of the six markets is
Supplier capabilities of innovation, quality, reliability and costs/ critical for the attainment of customer retention objective.
price reductions and agility to reduce risk factors all have witnessed The growing interest in relationship marketing suggests a shift in
significant changes when aligned with key suppliers. Greater value can the nature of marketplace transactions from discrete to relational
TPM Goals
Zero Defects, Zero Breakdowns, Define the problem,
Zero Accidents the project goals
and customer
requirements.
Autonomous Maintenance
Management
Control means
Measure the process maintaining the
to determine current improved process
performance. and future process
performance.
5S
Analyze the process Improve the process
to determine root
Performance Measurement in TPM causes of variation
by addressing and
eliminating the root
and poor performance causes.
The most important approach to the measurement of TPM (defects).
performance is known as Overall Equipment Effectiveness (OEE)
measure.
Performance × Availability × Quality = OEE % DMADV: The application of these methods is aimed at creating a
high-quality product keeping in mind customer requirements at
OEE may be applied to any individual assets or to a process. It is every stage of the product. It is an improvement system which is
unlikely that any manufacturing process can run at 100% OEE. used to develop new processes or products at Six Sigma quality levels.
According to Dal et al (2000), Nakajima (1998) suggested that ideal Phases are described in diagram:
values for the OEE component measures are:
Strategies
Introduction Growth Maturity Decline
Product Offer basic product Offer product extensions, Diversify brands and Phase out weak items
service & warranty models
Price Cost plus profit Price to penetrate market Price to match or beat Price cutting
competitors
Advertising Build product awareness Build awareness & interest Stress on brand Reduce level to keep hard
amongst early adopters in mass market differences and benefits core loyalty
& dealers
Distribution Build selective Build Intensive Build more intensive Go selective: Phase out
distribution distribution distribution unprofitable outlets
Sales Promotion Use heavy sales Reduce to take advantage Increase to encourage Reduce to minimal level
promotion to entice trial of heavy consumer brand switching
demand
Controlling Environmental Costs First, a ‘carbon footprint’ (as defined by the Carbon Trust) measures
the total greenhouse gas emissions caused directly and indirectly by
After Identification and Allocation of Environmental Costs, task of
a person, organization, event or product.
controlling starts. An organization may try to control these costs as
mentioned below-
Second, environmental costs are becoming huge for some companies,
particularly those operating in highly industrialized sectors such as
Waste
oil production. Such significant cossts need to be managed.
‘Mass balance’ approach can be used to determine how much
material is wasted in production, whereby the weight of materials Third, regulation is increasing worldwide at a rapid pace, with
bought is compared to the product yield. penalties for non-compliance also increasing accordingly.
PRICING DECISION
Competition-
Based Cost-Based Value- Based
A product introduces
upgraded version with few The evolutionary products may
Pricing of New Product Evolutionary Product additional characteristics be priced taking cost-benefit,
of the product is known as competitor, and demand for
evolutionary product. the product into account.
Mid Company
The change of high price
Evolutionary The demand is likely to in the initial periods
Low Company be inelastic in the earlier serves to skim the cream
stages till the product is of the market that is
established in the market. relatively insensitive to
Me-too price.
Perceived Benefits
The demand for the High initial capital
product is not known the outlays, needed for
Existing Offerings New Offerings price covers the initial manufacture, results in
cost of production. high cost of production.
While preparing to enter the market with a new product, management
must decide whether to adopt a skimming or penetration pricing
strategy.
Performance
Measurement
Benchmarking and Evaluation
Responsibility Centre
• Cost Centre Performance
• Revenue Centre Measurement in
• Profit Centre the Not for Profit
Performance Reports Sector
• Investment Centre
• VFM
• Adapted Balanced
Divisional Scorecard
Performance
Measures
Economic
Shareholder Value
Added (SVA)
Divisional
Performance Balanced Scorecard
Measures Social
The Performance
Pyramid
Environmental
The Performance
Prism
♦ Environmental- measures the impact on resources, such as air,
water, ground and waste emissions (Baumgartner & Ebner, 2010,
Triple Bottom Line p.79).
(TBL)
♦ Social- relates to corporate governance, motivation, incentives,
health and safety, human capital development, human rights and
Return on Investment (ROI) ethical behaviour.
♦ ROI expresses divisional profit as a percentage of the assets ♦ Economic- refers to measures maintaining or improving the
employed in the division. company’s success.
♦ ROI is a common measure and thus is ideal for comparison across
corporate divisions for companies of similar size and in similar Linking CSFs to KPIs and Corporate Strategy
sectors. ROI can therefore lead to a lack of goal congruence.
In order to truly achieve effective measurement of business
Residual Income (RI) performance, the KPIs must be selected and designed in
a way that ensures that the CSF is delivered if the KPI meets
♦ To overcome some of the dysfunctional consequences of ROI, the threshold, and the CSFs in turn must be designed and
the residual income approach can be used. constructed in a way that ensures that the company’s strategic
♦ For evaluating the economic performance of the division, residual vision is delivered if the CSFs are met.
income can be defined as divisional contribution less a cost of
capital charge on the total investment in assets employed by the
division. Balanced Scorecard
♦ Residual income suffers from the disadvantages of being an The balanced scorecard is a method which displays organisation’s
absolute measure, which means that it is difficult to compare performance into four dimensions namely financial, customer,
the performance of a division with that of other divisions or internal and innovation. The four dimensions acknowledge the
companies of a different size. interest of shareholders, customers and employees taking into
account of both long-term and short-term goals. Kaplan and Norton
classified performance measures into four business ‘perspectives’
Economic Value Added (EVA)
♦ Economic Value Added is a measure of economic profit.
Economic Value Added is calculated as the difference between the Financial Perspective Customer Perspective
Financial performance measures In this stage, companies identify
Net Operating Profit After Tax (NOPAT) and the Opportunity indicate whether the company’s customers and market segments in
Cost of Invested Capital. This opportunity cost is determined strategy implementation and which they compete and also the
execution are contributing to its means by which they provide value
by multiplying the Weighted Average Cost of Debt and Equity revenue and earnings. to these customers and markets.
Capital (WACC) and the amount of Capital Employed.
EVA = NOPAT – WACC × Capital
Internal Business Perspective
Shareholder Value Added (SVA) In this stage companies identify processes Learning and Growth Perspective
and activities which are necessary to In the learning and growth
A variation along the same concept as EVA. Rappaport suggested achieve the objectives as identified at perspective, Companies determine
the activities and infrastructure that
that future cash flows should be discounted at a suitable cost of capital financial perspectives and customer
the company must build to create
perspective stage. These objectives may
and that shareholder value would be increased if this measure were be achieved by reassessing the value chain long term growth, which are necessary
to achieve the objectives set in the
to increase. According to Rappaport, the following seven factors- he and making necessary changes to the
previous three perspectives.
existing operating activities.
calls them “value driver”- affect shareholder value:
♦ Rate of Sales Growth
Performance Pyramid
♦ Operating Profit Margin
The Performance Pyramid is also known as Strategic Measurement
♦ Income Tax Rate and Reporting Technique by Cross and Lynch 1991. They viewed
♦ Investment in Working Capital businesses as performance pyramids. The attractiveness of this
The Building Block Model Benefits cannot be quantified Benefits may accrue over a
Fitzgerald and Moon proposed a Building Block Model which longer term
suggests the solution of performance measurement problems in
service industries. But it can be applied to other manufacturing and
Key Challenges
retail businesses to evaluate business performance.
Equity
Motivation
Economic
Ownership Quality Controllability
Financial
Performance
Flexibility
Efficiency
Innovation
Effectiveness
Comperative
Performance
Resource
Utilization
Satisfaction of
Customer beneficiary and
Perspective other stakeholder’s
interest
Fund raising, funds The performance measures/ The actual outcome is measured
Financial growth and funds key performance indicators and evaluated against the
Perspective distribution of each of the perspectives is performance measures defined.
defined.
Adapted Balanced
Scorecard
Internal Internal efficiency,
Processes volunteer
development and
Perspective quality
Behavioral Consequences
Marginal Cost Standard Cost Full Cost Cost Plus In such a setup, profit evaluation is centralized at the entity level.
Based Based Based Markup Based
Therefore, the supplying division may have little incentive to
find measures for making cost efficient. Non-recovery of fixed
Market Based Transfer Price costs would demotivate the supplying division. It may oppose
certain decisions like capacity expansion or further infusion of
Transfer price is based on market price of goods or services similar to
the ones transferred internally within divisions. The transfer can be investment, that lead to higher fixed costs.
recorded at the external market price, adjusted for any costs that can
be saved by internal transfer e.g. selling and distribution expenses,
Standard Cost Based Transfer Price
packaging cost.
Transfer price is recorded at a predetermined cost, which is based
Advantages Disadvantages on budgets and certain assumptions regarding factors of productions
like capacity utilization, labor hours etc.
♦ Since demand and supply ♦ Market price may not be completely
determine market price, it is unbiased, if a competitive
likely to be unbiased. environment does not exist. Advantages Disadvantages
♦ Market prices are less ambiguous ♦ May not be suitable when market
compared to cost-based pricing. prices can fluctuate widely or ♦ Performance evaluation can ♦ Profit performance measurement
quickly. be done against budgeted cost is centralized and cannot
♦ Since the pricing is competitive, targets. be measured for individual
divisional performance can be ♦ Goods that are transferred may divisions.
linked more objectively to its be at an intermediate stage in the
contribution to the company’s production process. At times market
overall profits. price may not be available for such
intermediate goods.
Behavioral Consequences
Budgeted costs are generally based on historic records.
Shared Profit Relative to Cost Based Transfer Price Therefore, little incentive exists to make costs more efficient to
Shared profit relative to cost method is an alternative to market price improve profitability.
method. Cost incurred by each division indicates the value it has
added to the product cost, that is finally used to arrive at the selling Full Cost Based Transfer Price
price of the final product. The primary advantage of this method is
Transfer price is based on full product cost. It includes cost of
that it allocates profit based on the proportion of value addition to the production plus a share of other costs of the value chain like selling
product in terms of cost. and distribution, general administrative expense, research and
development etc.
Cost Based Transfer Price
Cost based pricing models are based on the internal cost records Advantages Disadvantages
Feed-forward Control
Budgetary Control In certain cases, we may be able to measure the amount of error
Budget is an estimation of revenues and expenses over a specified before it has actually taken place. We may thus be able to place a
future period of time which needs to be compiled and re-evaluated control mechanism before the error takes place. Feed-forward
on a periodic basis based on the needs of the organisation. Control is one such Controlling system.
Budgetary Control is the process by which budgets are prepared
for the future period and are compared with the actual performance According to the CIMA’s Official Terminology, It is defined as the
for finding out variances, if any. In other words, Budgetary Control ‘forecasting of differences between actual and planned outcomes
is a process with the help of which, managers set financial and and the implementation of actions before the event, to avoid such
performance goals, compare the actual results with the budgets, and differences.’
adjust performance, as it is needed.
A feed-forward control system operates by comparing budgeted
Feedback and Feed-Forward Control results against a forecast. Control action is triggered by differences
Feedback and Feed-forward are two types of control schemes between budgeted and forecasted results.
for systems that react automatically to changing environmental
Any manager who ignores feed-forward control will contribute to the
dynamics.
downfall of a company.
Performance Levels, System Objectives etc. Limitations
Note:
Not all topics of SCMPE have been covered in this capsule. However, our selection doesn’t attach more importance to some topics and less
to others.
The Commerce Wizard will be conducted in two levels in English language for Students studying in
Class X/XI/XII and B.Com./BBA/BMS/Allied Subjects Part I, Part II & Part III Examination separately.
Important Date & Timings for Level I Test: On line & Level II Test: Online/Pen & Pencil Mode:
Class X/XI/XII Level-I (Online test) Level-II Test : Online or Pen Pencil
7th January, 2018 (Sunday) Mode in the designated test centre
21st January, 2018 (Sunday)
Class X /B. Com./BBA/BMS/ 11.45 AM to 1.00 PM
Allied Subjects Part I For Class X/XI/XII
10:30 am. To 11.45 a.m.
Class XI /B. Com./BBA/BMS/ 2.00 PM to 3.15 PM
Allied Subjects Part II For B.Com./BBA/BMS/Allied Sub-
Class XII/B. Com./BBA/BMS/ 4.15 PM to 5.30 PM jects Part I/Part II/Part III
Allied Subjects Part II
3.00 p.m. to 4.15 p.m.
Registration fees ` 500/-per student, ` 1,000/- for others Accommodation (if required) @ ` 1,500/- per student
Payment Mode Cash/DD/Cheque to be drawn in favor of Ernakulam Branch of SIRC of ICAI, payable at Ernakulam or
Online Registration at www.kochiicai.org, Ph: 0484 – 2369238/ 2362027, 09388844893, 08848817191,
9961120532, Email: ernakulam@icai.org; Website: www.kochiicai.org
CA. Atul Kumar Gupta, Chairman, BoS; CA. Mangesh Pandurang Kinare, Vice-Chairman, BoS; CA. Babu Abraham
Kallivayalil, Central Council Member, Conference Director; CA. Lukose Joseph, Chairman, Ernakulam Branch & CA. Roy
Varghese, Chairman, SICASA, Ernakulam Branch, Conference Coordinators.
CA Students Conference - GOA & NAGPUR 1ST & 2ND DECEMBER, 2017
RAVINDRA BHAWAN, MARGAO,
Organized by: Board of Studies, ICAI GOA
Hosted by: Goa & Nagpur Branch of WIRC and WICASA of Goa & Nagpur Branch
THEME: NURTURING VALUES & INTEGRITY- ATTAINING EXCELLENCE IN
PROFESSIONAL PURSUITS
DAY-1
09.30 am – 11.00 am Technical Session : I: Topic: Accounting & Assurance- Ind AS; Audit Sampling Techniques;
Due Diligence
11.00 am – 12.00 noon Inaugural Session: Chief Guest: Shri. Manohar Gopalkrishna Prabhu Parrikar*, Chief
Minister of Goa.
12.00 noon – 01:00 pm Special Session : I: Topic : CA : Challenge Accepted
02.00 pm – 03.00 pm Special Session : II: Interaction And Open House With Board Of Studies
03.00 pm – 05.00 pm Technical Session : II : Topic : Taxation- GST – One Nation One Tax?; ICDS – Revenue
Recognition; TDS on payments under Section 195
DAY-2
09.30 am – 11.00 am Technical Session : III : Topic : Economic Environment- Start up India-India’s Key to
growth; Demonetization & its Impact; Real Estate Regulation Act
11.15 am - 01.15 pm Special Session : III : Topic – Journey of Professional Excellence – Eminent Faculty
02.15 pm – 03.45 pm Technical Session : IV: Topic : Corporate Compliance- Financial Audit Vs. Forensic Audit;
Importance of Independence of Auditor; Code of Ethics
*Subject to confirmation
Students Eligible to attend the Students Conference: Students who have registered as IPCC/Intermediate Students/
Students who are pursuing their Articleship Training/ Students who have completed their Practical Training but could
not qualify their final examinations may attend the conference till next one year from the date of completion of Practical
Training. (CPT Students and Students who have completed one year beyond their Articleship training will not be eligible
to register for these Conferences)
Registration fees ` 600/-per student ` 1,200/- per student (Residential)
(Non-Residential) (Shared accommodation at good dormitory will be provided)
Payment Mode Demand Draft / Cheque to be drawn in favour of Goa Branch of WIRC of ICAI – WICASA payable at
Panaji. Phone: 0832-2438516, 0712-2443968, 2441196; Email: wicasagoa@icai.org, Nagpur@icai.org;
Website: www.goa-icai.org, www.nagpuricai.org
CA. Atul Kumar Gupta, Chairman, BoS; CA. Mangesh Pandurang Kinare, Conference Director & Vice-Chairman, BoS;
CA. Abhijit Kelkar, Regional Council Member, Conference Coordinator; CA. Vinesh Pikale, Chairman, Goa Branch &
CA. Sandeep Jotwani, Chairman, Nagpur Branch & CA. Kedar Kenkre, Chairman, Goa Branch of WICASA & CA. Saket
Bagdia, Chairman, Nagpur Branch of WICASA; Conference Co-ordinators.
Registration fees ` 500/-per student Accommodation (if required), Please contact the Office
Payment Mode Cash/DD/Cheque to be drawn in favour of The Secretary, ICAI payable at Chennai, For further details contact
Office, email : srobos@icai.in; Ph: 044 30210376
CA. Atul Kumar Gupta, Chairman, BoS; CA. Mangesh Pandurang Kinare, Vice-Chairman, BoS; CA. M.P. Vijay Kumar,
Central Council Member, Conference Director; CA. G. Sekar & CA. K. Sripriya, Central Council Members, Conference
Co-Directors; CA. Cotha S. Srinivas, Chairman, SIRC of ICAI & CA. Jalapathi K, Chairman, SICASA, Conference Coordinators.
The event also offers golden opportunity for the students interested in writing papers. Further details of
Conference will be hosted on ICAI website soon.
Students of Final (Old) Course, appearing in May, 2018 and November, 2018 examinations, may note that
the new Study Materials for Final Paper 7: Direct Tax Laws and International Taxation and Final Paper 8:
Indirect Tax Laws under the Revised Scheme of Education and Training are relevant for Papers 7 & 8 of
the Final (Old) Course as well, with the exception of the following three chapters in Module 4 of the Study
Material of Paper 7 Part II: International Taxation, namely,
Chapter 6: Overview of Model Tax Conventions;
Chapter 7: Application and Interpretation of Tax Treaties; and
Chapter 8: Fundamentals of Base Erosion and Profit Shifting.
Thus, Modules 1, 2, 3 and chapters 1 to 5 of Module 4 of Study Material of Final (New) Paper 7:
Direct Tax Laws and International Taxation are relevant for Final (Old)Paper 7: Direct Tax Laws also. The
content of the Study Material is based on the direct tax laws as amended by the Finance Act, 2017. The
relevant assessment year is A.Y.2018-19.
Students may note that in the new course, Final Paper 7 is divided into two parts, namely, Part I: Direct
Tax Laws carrying 70 marks and Part II: International Taxation carrying 30 marks. There is, however, no
such marks bifurcation in the old course Final Paper 7: Direct Tax Laws.
As far as Paper 8: Indirect Tax Laws is concerned, the syllabus is the same in both old course and
new course, and hence, the Study Material for new course is applicable for the old course. The syllabus is
divided into two parts: Part I : GST (75 marks) and Part II: Customs and FTP(25 marks). Here again, the
content of Part II is based on the law as amended by the Finance Act, 2017.
Announcement
Board of Studies is organizing Six Days Course on GST and Ind AS through a combination of Webcasts
from Head Office and physical classes at Regional Councils and Branch(es) for the students as per
following schedule:
FEEDBACK FORM
We are happy to inform that the BoS has developed new study material for all levels under New Scheme
of Education and Training, incorporating several student-friendly features, like diagrams, flow charts,
examples, illustrations etc. to make learning more understandable and interesting. It is our pleasure to
further inform that the new study material has been published and the soft copy is available at
https://icai.org/new_post.html?post_id=5720&c_id=314
The journey of Board of Studies is continuous; not to reach the destination but to touch excellence by
providing world class study materials to students. Thus, although all efforts have been taken to make the
study material error free, we seek your inputs to further enhance the quality of the study material, so that
even the inadvertent errors/mistakes do not remain. For this purpose, BoS has prepared a ‘feedback’ form
for Foundation, Intermediate and Final courses.
Course Links for Feedback Form
Foundation https://docs.google.com/forms/d/1IJJPnWLHYdyrbsvaronxZ3kcRxKQuo0-50FM_damYyk/
viewform?edit_requested=true
Intermediate https://docs.google.com/forms/d/1Sktm8GYtEKwZOMhpI5OU5WYLX2TI2USYz4zuRqTif
5U/viewform?edit_requested=true
Final https://docs.google.com/forms/d/1dm5Lc9WB_gwO1O_95gFVJZvXWIo7dMEjsOhs7CfTSnI/
viewform?edit_requested=true
Kindly give your feedback/suggestions so as to enable us to further improve the material and make it
error free.
Chairman, Board of Studies
Vice-Chairman, Board of Studies
This programme aims to help the Chartered Accountancy students and newly qualified Chartered
Accountants in imbibing the professional skills required for effective functioning in business organisations
and the profession. The Programme environment focuses on development of communication skills, personal
qualities, interpersonal and teamwork skills, problem solving skills, leadership skills etc,.
Students who have passed Chartered Accountancy IPCC/ PCC/ PE- II examination and pursuing last
year of Practical training or completed Practical training are invited to join the course for this batch.
Recently qualified Chartered Accountants are also welcome to join the course.
Student’s opinion
CoE is a place to learn from best of It was an amazing experience and the
speakers who fill the session with loads faculties were exceptionally good. It
of learning and bundle of creativity. It is bridges the gap between a CA students
a great place to learn from students and and a professional. It influences us to
professional with diverse background. be creative and think out of box.
A must-do course for all CA Students.
For online registration, you can proceed with ‘Board of Studies Announcements’ https://www.icai.org/
new_category.html?c_id=345 under the ‘Students’ tab on the Home Page of the ICAI’s website www.
icai.org. For any query, you can write us at ashokdua@icai.in or may also contact us on 0120-3045935.
36