THE LICENSURE EXAMINATION FOR CERTIFIED PUBLIC ACCOUNTANTS (LECPA)

SYLLABUS FOR FINANCIAL ACCOUNTING and REPORTING

A. Financial Reporting Framework, Standard-Setting Bodies, and Regulations of the Accountancy

Profession
1. Role and functions of the standard-setting bodies (IASB, ISSB, IFRS Interpretations
Committee, FSRSC, PIC and PSRC)
2. Regulation and environment of the profession and their accreditation requirements
2.1 Professional Regulatory Board of Accountancy
2.2 Accredited professional organization of professional accountants in the Philippines
2.3 Sectors in the practice of accountancy profession
2.4 Functions of SEC

B. Conceptual Framework for Financial Reporting, Accounting Process and Presentation of Financial
Statements
1. Conceptual framework for Financial Reporting
1.1 Objectives of the conceptual framework of for financial reporting
1.2 Qualitative characteristics of useful financial information
1.3 Financial Statements and the Reporting Entity
1.3 Elements of the financial statements (Asset, Liability, Equity, Income, Expense)
1.3.1 Definition
1.3.2 Recognition and derecognition criteria
1.3.3 Measurement bases
1.4 Presentation and Disclosure (Effective Communication Principles)
1.5 Concepts of capital and capital maintenance

2. Accounting process
2.1 Steps in the accounting process
2.2 Use of general journal, special journals, general ledger, and subsidiary ledger
2.3 Importance of adjusting entries, closing entries, and reversing entries

3. Presentation of financial statements

3.1 Statement of financial position
3.1.1 General features and elements
3.2 Statement of comprehensive income and statement of changes in equity
3.2.1 General features
3.2.2 Nature and function of expenses
3.2.3 Components of income from continuing operations and discontinued
operations
3.2.4 Presentation of earnings per share
3.3 Statement of cash flow
3.3.1 General features
3.3.2 Sections of the statement of cash flow
3.3.3 Direct and indirect method of presenting cash flow from operations
3.4 Notes to financial statements

C. Cash and Other Financial Assets

1. Cash
1.1 Nature and composition of cash
1.2 Cash control
1.2.1 Bank reconciliation statement (common reconciling items)
1.2.2 Petty cash fund (imprest system)
 2. Other financial assets (initial recognition, basis for classification, subsequent measurement
(valuation), derecognition, reclassification, and presentation in the financial statements
2.1 Financial assets measured at fair value through profit or loss
2.2 Financial assets measured at fair value through other comprehensive income
2.3 Financial assets measured at amortized cost
2.4 Trade and other receivables
2.5 Investment in associates and joint ventures

D. Non-financial assets
1. Inventories
1.1 Nature of inventories
1.2 Measurement at initial recognition
1.3 Measurement subsequent to initial recognition
1.4 Estimation procedures in determining inventory value
1.4.1 Gross profit method
1.4.2 Retail inventory method

2. Property, plant and equipment

2.1 Nature of property, plant and equipment
2.2 Measurement at initial recognition
2.3 Borrowing costs on self-constructed assets (capitalization vs. outright expense)
2.4 Subsequent expenditures (repairs, replacement, etc)
2.5 Measurement subsequent to initial recognition
2.5.1 Cost Model (including impairment)
2.5.2 Revaluation Model (including revaluation and impairment)
2.6 Changes in depreciation methods and useful life and residual value of assets
2.7 Derecognition of property, plant and equipment

3. Investment property
3.1 Nature of investment property
3.2 Measurement at initial recognition
3.3 Measurement subsequent to initial recognition
3.3.1 Cost Model
3.3.2 Fair Value Model
3.4 Reclassification and derecognition of investment property

4. Intangible assets
4.1 Nature of intangible assets
4.2 Measurement at initial recognition
4.3 Measurement subsequent to initial recognition (with finite useful life)
4.3.1 Cost Model (including impairment)
4.3.2 Revaluation Model (including revaluation and impairment)
4.4 Measurement subsequent to initial recognition (with indefinite useful life)
4.5 Impairment and derecognition

5. Biological assets
5.1 Nature of biological assets
5.2 Measurement at initial recognition
5.3 Measurement subsequent to initial recognition

6. Noncurrent assets held for sale (or disposal group)

6.1 Criteria for classification
6.2 Measurement at initial recognition
6.3 Measurement subsequent to initial recognition
 6.4 Reclassification and derecognition

7. Prepaid expenses and other assets

7.1 Measurement of prepaid expenses and other assets

E. Financial Liabilities
1. Financial liabilities
1.1 Classification
1.2 Measurement at initial recognition (including debt issue costs)
1.3 Measurement subsequent to initial recognition
1.4 Derecognition of financial liabilities
1.5 Debt restructuring

F. Non-financial liabilities, provisions, and contingencies

1. Customer loyalty programs (coupons, premiums, loyalty points, etc.)
2. Warranties and product guarantees
3. Other provisions and contingencies
4. Unearned revenues from contracts, gift certificates, and subscriptions

G. Shareholders’ Equity
1. Share capital transactions
1.1 Initial issuance and stock issuance cost
1.2 Share-based payment – (limited to share options only)
1.3 Treasury share transactions
1.4 Retirement and conversion of shares

2. Transactions affecting retained earnings

2.1 Prior period errors and change in accounting policies
2.2 Dividend computation and distribution

3. Cumulative other comprehensive income

H. Leases
1 Right-of use asset and lease liability
1.1 Measurement at initial recognition
1.2 Measurement subsequent to initial recognition including changes in estimates
1.3 Financial statement presentation
2 Exemption to recognition and measurement principles
3 Direct-finance lease, manufacturer’s or dealer’s lease (sales-type lease), operating lease
4 Sale-leaseback transactions

I. Income Tax
1 Measurement of accounting profit and taxable profit (book basis vs. tax basis)
2 Current tax liability (asset)
3 Deferred tax liability (asset)
4 Financial statement presentation and disclosure of current income tax and deferred income
tax, current tax liability (asset) and deferred tax liability (asset)

J Employee Benefits
1 Nature and classification of employee benefits
2 Recognition and measurement of employee benefit costs under defined benefit plan and
defined contribution plan
3 Financial statement presentation and disclosure of employee benefit costs
K Interim Reporting
1 Purpose and components of interim financial reports
2 Recognition and measurement of assets, liabilities, revenue, and expenses for interim
reporting

L Operating Segments
1 Identification of reportable segments
2 Reporting segment information

M Other Reporting Frameworks

1 PFRS for SMEs
2 PFRS for Small Entities
3 PFRS for Cooperatives

N Sustainability Reporting
1. Definition, objectives and principles of sustainability reporting
2. Disclosure requirements of an entity’s ESG Goals

O Special Revenue Recognition Methods

1. Right of return
2. Principal-agent relationships
3. Non-refundable upfront fees
4. Licensing and royalties
5. Repurchase agreements
6. Gift cards
7. Consignment arrangements
8. Bill-and-hold sales
9. Long-term construction contracts
10. Franchise

P Joint Arrangements
1. Joint operations
1.1 Nature and scope of joint operations
1.2 Difference of joint operations from business combinations
1.3 Standards, principles, and methods of accounting for joint operation transactions

2. Joint ventures
1.1 Nature and scope of joint ventures
1.2 Difference of joint ventures from business combinations
1.3 Standards, principles, and methods of accounting for joint venture transactions

Q Home Office and Branch accounting

1. Journal entries on the books of the home office and branch
1.1 General procedures
1.2 Special procedure (inter-branch transfer of cash and merchandise at billed price)

2. Reconciliation of reciprocal accounts

3. Individual and combined financial statements

R Business Combination
1. Nature, scope, and characteristics of business combination transactions
 2. Statutory merger and consolidation / acquisition of assets and liabilities (acquisition
method)
2.1 Determination of consideration received
2.2 Recognition of assets and liabilities acquired
2.3 Recognition and measurement of goodwill and gain from a bargain purchase
3. Journal entries on the books of the acquirer
4. Financial statement presentation of the results of the business combination

S Separate Financial Statements

1. Determination of the carrying amount of investment in subsidiaries, associates, and joint
ventures, and its effect on the profit or loss under the following methods:
1.1 At cost
1.2 Financial instruments under PAS 39
1.3 Financial instruments under PFRS 9
2. Dividends
2.1 Computation and proper accounting treatment
2.2 Required disclosures in applying the accounting policies in the investment in
subsidiaries, associates, and joint ventures

T Consolidated Financial Statements

1. Consolidation procedures and determination of the amount to be presented in the financial
statements relating to the following:
1.1 Net income, dividend, amortization and impairment of goodwill
1.2 Intercompany transactions (inventories, land, and depreciable assets)
1.3 Net income and other comprehensive income / equity attributable to equity holders
of parent/controlling or parent’s interest of non-controlling interest
1.4 Net income and other comprehensive income / equity attributable to equity holders
of parent/controlling or parent’s interest of consolidated group
1.5 Retained earnings / ordinary share/ dividends attributable to
1.5.1 Equity holders of parent
1.5.2 Controlling or parent’s interest
1.5.3 Group

U Foreign Currency Transactions and Foreign Currency Financial Statements

1. Recording and reporting of foreign currency transactions into presentation currency
1.1 On the date of transaction
1.2 At financial statement date
1.3 At settlement date
2. Translation of foreign currency financial statements into presentation currency

V Funds Accounting
1. Nature, concept and basic principles of funds accounting
2. Not-for-Profit Organizations (NPO)
2.1 Basic features of not-for-profit organizations
2.2 Journal entries to record transactions affecting the general and fiduciary fund
accounts
3. Government Accounting – General Fund
3.1 Basic concepts in government accounting
3.2 Procedures in government budgeting
3.3 Accounting policies under the Government Accounting Manual (GAM)