AAT LEVEL 3 ADVANCED DIPLOMA IN ACCOUNTING PROGRAMME

AAT LEVEL 3 ADVANCED DIPLOMA IN ACCOUNTING PROGRAMME ADVANCED BOOKKEEPING UNIT ASSESSMENT FINAL ACCOUNTS PREPARATION UNIT ASSESSMENT MANAGEMENT ACCOUNTING: COSTING UNIT ASSESSMENT ETHICS SPREADSHEETS INDIRECT TAX UNIT ASSESSMENT SYNOPTIC ASSESSMENT WINDOW 04/06/2021 AAT_Level 3_Final accounts preparation. 1

All Inclusive AAT Advanced Diploma in Accounting Level 3 Programme: 8 th October 2019 – 31 st December, 2020. Delivery day and Time: Tuesdays ; 2 p. m. -5 p. m. Unit Delivery Dates Mock Exam Date Total GLHS Actual exam Date Autumn Half Term : 21 st October – 27 th October Management Accounting : Costing 29 th November, 2019– 7 th January, 2020 21 14 th January 17 th January Xmas Break: 16 th December, 2019 – 5 th January, 2020 Advanced Bookkeeping 14 th January, 2020 - 10 th March, 2020 24 10 th March 17 th March February Half Term : 17 th – 23 rd February, 2020 Final Accounts Preparation 17 th March -12 th May, 2020 24 12 th May Easter Break: 10 th April – 26 th April, 2020 May bank holiday : 8 th May Spring Half Term : 25 th – 31 st May Final accounts_Limited companies 19 th May

Unit Indirect Tax All Inclusive AAT Advanced Diploma in Accounting Level 3 Programme: 8 th October 2019 – 31 st December, 2020. Delivery day and Time: Tuesdays ; 2 p. m. -5 p. m. Delivery Dates Mock Exam Total date GLHS 19 th May -14 th July, 2020 24 14 th July Actual Exam Date 21 st. July Summer break : 29 th July – 6 th September Ethics Spreadsheets 21 st July- 8 th Sept 15 th September- 13 th October 9 15 Autumn Half Term : 19 th October – 25 th October TOTAL GUIDED LEARNING HOURS 117 Apprenticeship assessment Programme: 1. Monthly 1 hour work-based reviews 2. End point assessment gateway – 30 th November-31 st December, 2020. Final accounts_Limited companies Synoptic Assessment 6 th Oct 13 th Oct

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Final Accounts Preparation Unit v It involves preparation of final accounts for sole traders and partnerships and initial awareness of limited company accounts. Learning outcomes Weighting Distinguish between financial recording and reporting needs of different types of organisations. Explain the need for final accounts, accounting and ethical principles underpinning their preparation. 10% 7% Prepare accounting records from incomplete information. 27% Produce sole traders’ accounts. 31% Produce partnerships’ accounts. 20% Identify the main differences between sole traders’ and limited companies’ accounts. 5% 04/06/2021 AAT_Level 3_Final accounts preparation. 4

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Assessment structure v v Assessment duration : 2 hours. Computer based exam and marking. Competency : 70% 6 Assessment Tasks. 04/06/2021 AAT_Level 3_Final accounts preparation. 5

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Assessment tasks and content Task Content of assessment tasks Marks 1 Reconstruct general ledger accounts. 15 2 Incomplete records and application of ethical principles underpinning accounts preparation. 15 3 Final accounts for sole traders. 18 4 Application of knowledge forming the basis of final accounts preparation. 16 5 Accounting for partnerships 15 6 Partnership final accounts and initial reporting regulations relating to limited companies. 21 Total 04/06/2021 100 AAT_Level 3_Final accounts preparation. 6

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Assessment methods v v v Pick lists – Select options from a drop-down box Drag and drop- enter narrative. Gap Fill – type numbers Enter ticks Enter dates from a calendar. 04/06/2021 AAT_Level 3_Final accounts preparation. 7

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Learning outcomes- Organisations and their final accounts v Explain which organisations need to prepare final accounts. v Explain applicable regulations relating to different types of organisations. v Explain ethical principles which are applied when preparing accounts. v Session Approach PRESENTATION, QUIZZES AND DISCUSSION ILLUSTRATIONS AND OTHER EXAMPLES WORK THROUGH EXERCISES IN CLASS AND FOR HOMEWORK q Tasks covered v Tasks 2 and 3 above. 04/06/2021 AAT_Level 3_Final accounts preparation. 8

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation Organisations: Final accounts • A business is treated separately from owners when its accounts are being prepared. Sole traders • Owned and run by one person. Partnerships • Owned and run by 2 or more people. Limited Company • Separate legal entity from owners. Not for profit • Business is run for public good. Limited Partnerships • Members have limited liability. 04/06/2021 AAT_Level 3_Final accounts preparation. 9

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Background – incorporation v Businesses can be incorporated or non-incorporated. q Unincorporated businesses v There is no legal distinction between the business and its owners (e. g. sole traders or partnerships). v The owners have unlimited liability – they may be personally liable if the business cannot pay its debts. v Owners do not have to prepare and file accounts but need records to confirm and complete personal tax returns. v Tax liability is not shown in the accounts, as owners are taxed under selfassessment rules. 04/06/2021 AAT_Level 3_Final accounts preparation. 10

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Background – incorporation v Businesses can be incorporated or non-incorporated. q Incorporated businesses v These businesses are limited partnership or companies which are separate legal entities. v They can enter contracts, own assets and incur liabilities in their own right. v They must prepare financial statements and present them to shareholders and file them with the Registrar of Companies. v Tax liability is shown in the accounts. 04/06/2021 AAT_Level 3_Final accounts preparation. 11

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Limited liability v Liability of owners is restricted to their original investment, if business fails. v Owners ( shareholders or members) must own at least 1 share in the company. v They must prepare financial statements and present them to shareholders and file them with the Registrar of Companies. v Tax liability is shown in the accounts. q Types of companies v Public limited companies (plc) – can raise finance from the public on a stock exchange. v Private limited companies (Ltd) – cannot invite the public to purchase shares via a stock exchange. v Tax appears in the accounts of these companies as they are legal persons. 04/06/2021 AAT_Level 3_Final accounts preparation. 12

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Limited liability partnerships ( LLP) This form of business is set up in law by the LLP Act 2000: v LLP is a legal person in law and can enter contracts in its own right. v Liability is restricted to amounts stated in the partnership agreement and members are agents of the LLP. v LLPs must: o Register with Companies Registrar and formation documents signed by 2 members. o Prepare and file accounts and returns. v LLPs may: o Have their accounts audited. v LLPs are not: o Subject to corporation tax but members are taxed individually based on their profit share. 04/06/2021 AAT_Level 3_Final accounts preparation. 13

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Owners and managers v Sole traders and partnerships: o Own and manage their businesses o Take drawings for personal expenses. v The partnership agreement sets out how profits or losses are shared between partners. v Large companies tend to be managed by directors , separate from the main shareholders. v Directors are agents of the shareholders: o Financial statements are required by law to show directors have managed the business affairs ( their stewardship role) 04/06/2021 AAT_Level 3_Final accounts preparation. 14

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Ownership considerations – sole trader to partnerships. v A sole trader should take account of the following issues prior to forming a partnership: Advantages Disadvantages More than one person making finance contributions Partners may have different interests, leading to disagreement. A range of expertise and ideas is available to the business. Cessation impacts: where a partner retires or resigns – funds must be available to pay them off. More regulation – a partnership agreement must be in place. Records must be maintained for drawings and profit share. 04/06/2021 AAT_Level 3_Final accounts preparation. 15

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Ownership considerations – sole trader and partnerships to companies. v Prior to incorporation the following issues should be considered: Advantages Disadvantages Limited liability- owners not personally liable for debts of the business. Increased regulation – annual accounts preparation, presentation to members and filing. Financing – easier to raise finance by issuing shares, loan stock or bank loan. Audit of accounts – payment for assurance. Investment appreciation – rising profits lead to increased share price and investment gain. Control- professional directors may manage business on a day to day basis. v Complete activity 1 - Page 7. v Complete activity 2 - Page 7. v Complete activity 3 - Page 8. 04/06/2021 AAT_Level 3_Final accounts preparation. 16

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Companies Act 2006 v It outlines the key law relating to formation governance and administration of companies. v Breaching the Act could result in a fine and / or imprisonment. v A key area is the role and responsibilities of directors: o Directors must maintain proper accounting records. o Directors must prepare annual financial statements for presentation at annual general meeting. o Directors must file these statements with the Registrar of Companies within 9 months of the accounting period. o The financial statements must be audited ( if not exempted) and give a true and fair view of the financial transactions 04/06/2021 AAT_Level 3_Final accounts preparation. 17

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Not for profit organisations v These may include charities, clubs, societies or NGOs ( non-governmental organisations). v They have stakeholders (e. g. funders) as opposed to shareholders and do not pay dividends. v They focus on income generation and cash flow. 04/06/2021 AAT_Level 3_Final accounts preparation. 18

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Charities v The Charity Commission: o Provides the required status before any organisation can operate as a charity. o Issues Statements of Recommended Practice (SORPs), specifically applicable to charities. v Charities must: o Pass a ‘public benefit test’ to operate as a charity. o Comply with relevant accounting standards, charity law and good practice. o Prepare a Statement of Financial Activities ( SOFA) and Statement of Financial Position for inclusion in an annual report that must be submitted to the Charity Commission. v Complete activity 4 – page 10 04/06/2021 AAT_Level 3_Final accounts preparation. 19

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Professional ethics v Accountants must work competently and meet deadlines when preparing the financial statements for presentation to management and shareholders. v Accounting is a professional occupation that : o Requires extensive training, study and maintenance of specialised knowledge. o Is represented by professional associations which oversee certification and licensing of members. v Professional bodies like the AAT issue Codes of Ethics that provide a framework for fundamental values and quality. v The Code does not prescribe specific rules but provides guidance on behaviour. v This position of trust and responsibility is regulated by the International ethics Standards Board (IESBA), falling within control of the International Federation of Accountants (IFAC). 04/06/2021 AAT_Level 3_Final accounts preparation. 20

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Personal and Professional Qualities v The AAT requires members to develop both personal and professional qualities: q Personal Qualities Quality Explanation Reliability This ensures that work meets professional standards. Responsibility Members should take ownership of own work. Timeliness Work delays could be costly and disruptive to clients. Courtesy These are important for building business and professional relationships with colleagues and clients. Respect 04/06/2021 AAT_Level 3_Final accounts preparation. 21

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Personal and Professional Qualities v The AAT requires members to develop both personal and professional qualities: q Professional Qualities Quality Explanation Independence Ability to form own opinions based on facts. Member must be independent in mind and be seen to be independent. Accountability Members must be responsible for their judgement and decisions. Scepticism Member should always have a questioning mind about motives and information received from others. Social responsibility General responsibility to both employer and a wider society. 04/06/2021 AAT_Level 3_Final accounts preparation. 22

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Ethics v These are norms, beliefs and standards that guide appropriate professional behaviour to protect the public interest. v Businesses are morally responsible for their actions. v Accountants are deemed to work in the public interest. q Role of the accountant v This depends on where the accountant works: o In practice- providing a range of services to clients e. g. auditing. o In business – employed by commercial organisation. o In the public sector – employed by a public service organisation e. g. local authority. v Their role is guided by : o Law and other regulations setting out the basic requirements. o Professional codes of ethics of the accounting profession e. g. AAT code of professional ethics. 04/06/2021 AAT_Level 3_Final accounts preparation. 23

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Fundamental principles – AAT code q - P. I. P. C. O v o o o This stands for ? Professional competence and due care. Integrity Professional behaviour. Confidentiality. Objectivity 04/06/2021 AAT_Level 3_Final accounts preparation. 24

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Ethical principles q Fundamental principles – AAT code Principle Explanations Professional competence You must maintain appropriate professional knowledge and skill to deliver a competent professional service to clients or employers. And due care Act diligently –obligation to deliver agreed work ( ability; realistic timescales) Integrity Honesty in professional /business relationships. Professional Behaviour. You must avoid any action that may bring the profession into disrepute. Confidentiality You must not disclose or use to your advantage information obtained from professional contacts. Objectivity Do not allow bias, conflict of interest or undue influence to override professional or business judgements. 04/06/2021 AAT_Level 3_Final accounts preparation. 25

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Fundamental ethical principles v To achieve their objectives accountants must comply with fundamental principles or rules that guide behaviour. These ethical rules are considered collectively. Principles Explanations Examples Professional competence and due care. • Achieve and enhance competence by maintaining CPD – keep up to date with auditing and accounting developments. • Ensure you possess professional and technical skills for new assignments. Turn down, outsource or obtain training for work you cannot do. • Duty of care -work performed to New client fully aware of risk/ financial implications the highest standards. of outcome of work. 04/06/2021 AAT_Level 3_Final accounts preparation. 26

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Fundamental ethical principles Principles Explanations Examples Integrity Straight forward and honest approach in professional relationships. Being requested by management to make adjustments that are not true or fair. Professional behaviour. Do nothing to bring the profession into disrepute by being unprofessional or acting illegally. Inappropriate behaviour or advice to clients which breach the law or regulations. Confidentiality ( See next slide) Keep clients’ information secret unless there is a legal duty to disclose. Do not disclose information that is not already in the public domain. Objectivity Act without bias or duress and ensure decisions are based on facts. Do not let personal opinions affect advice that is given. 04/06/2021 AAT_Level 3_Final accounts preparation. 27

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Confidentiality v Normally accountants must observe and maintain confidentiality in all business dealings, apart from in the following situations: Situation Explanations Disclosure is legally permitted and authorised by client or employer. For example, permission to contact an existing auditor. Disclosure is required by law. HMRC investigation; court cases; National Crime Agency request ( for money laundering) A professional duty to do so. As part of a Financial Reporting Council investigation that is in the public interest. v Assessment approach to resolving ethical problems: • Explain the unethical problem – the threat. • State principle (s) affected. • Suggest solution – the safeguards. 04/06/2021 AAT_Level 3_Final accounts preparation. 28

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q The conceptual framework v This identifies potential threats to the accountants’ independence -A. S. I. F. S v The accountant will face different challenges to the ethical principles - either in practice or business. q Threats to accountants in practice: A. S. I. F. S: Threat Explanations Advocacy Promoting a position or opinion of a client that could compromise future objectivity. Self-interest Financial or other interest which could influence judgement or behaviour. Intimidation Perceived or real duress preventing the accountant from being objective. Familiarity Arising from close or personal relationship making the accountant too sympathetic to interests of others. Self-review Review of judgement or information where accountant was previously involved. 04/06/2021 AAT_Level 3_Final accounts preparation. 29

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Ethical principles – problem-solving procedure v There is a requirement to identify and evaluate threats to any appointments; v Apply safeguards; v Otherwise discontinue or resign from the appointment. q Threats – A. S. I. F. S Threat Explanation Examples Self-interest Financial or other interests may influence judgement or behaviour. Undue fee dependence on one client Self-review A previous judgement is re. Tax and consultancy work evaluated by accountant responsible carried out by same for that judgement. engagement team. 04/06/2021 AAT_Level 3_Final accounts preparation. 30

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Ethical principles q Threats Threat Explanation Examples Advocacy Promoting a view or position that in time may affect objectivity. Acting on behalf of clients that may be in dispute with other parties. Familiarity Close relationships may affect Long term engagements objectivity. with the same clients. Intimidation Actual or perceived threats may hamper objectivity. 04/06/2021 Threatened withdrawal of services. AAT_Level 3_Final accounts preparation. 31

AAT Level 3 Advanced Diploma in accounting: 2019 Unit: Ethics q Ethical principles v There is a requirement to identify threats to any appointments and apply safeguards, discontinuing or resigning. q Safeguards v Professional, legislation and regulation: o Education, training and experience – minimum professional entry requirements. o Continuing professional development (CPD). o Corporate governance regulations. o Professional standards, monitoring and disciplinary procedures. o External reviews of information produced by members. 04/06/2021 AAT_Level 3_Final accounts preparation. 32

AAT Level 3 Advanced Diploma in accounting: 2020 Unit: Final Accounts Preparation q Data protection and security v There is a risk that a business may lose competitive advantage or face business disruption due to loss or interference with its data: o Risk of error or malfunction of computers. o Malicious or fraudulent behaviour such as computer hacking. v Complete activity 5– Page 14 v Complete test your learning – Pages 17 -19. 04/06/2021 AAT_Level 3_Final accounts preparation. 33