Financial Reporting is designed to provide you with financial reporting and business skills that are applicable in an international professional environment. The segment is based on International Financial Reporting Standards (IFRSs) which are issued by the International Accounting Standards Board (IASB). Many international jurisdictions have adopted, or are progressively adopting, the IFRSs.

In a competitive international environment, financial reporting provides users with information to formulate corporate strategies, business plans and leadership initiatives. There is also a common acceptance of IFRSs to communicate financial information which is internationally understood. This reduces the cost of capital for the international reporting entities.

Financial reporting provides information for corporate leadership. Members of the accounting profession with financial reporting skills and knowledge provide business advice to board directors, analysts, shareholders, creditors, colleagues and other stakeholders. Members of the accounting profession who provide assurance services for financial reports also require a good understanding of the IFRSs. Directors are also required to state that the financial statements are fairly stated. These examples reinforce the importance of financial reporting. In addition to the completion of this segment, CPA Australia encourages continuous professional learning in financial reporting, which is constantly evolving.

This segment's technical content includes linkages with the other segments in the CPA Program. The boundaries of the syllabus do not restrict the knowledge expected in a professional environment, hence candidates and members of the profession are encouraged to learn beyond the syllabus. Financial reporting is a significant part of an entity’s governance and accountability process, issues which are covered in the Ethics and Governance segment. Compliance with the IFRSs is important because it results in the presentation of fairly-stated financial statements. This presentation outcome is also the aim of audit and assurance services. The assurance knowledge and audit skills are taught in the segment, Advanced Audit and Assurance. While taxation is covered in the segment, Advanced Taxation, and is distinct from financial reporting, the accounting for tax is recognised as material information and therefore included in this segment. Financial reporting provides information about the business operations and the financial results. As a result, there is a relevant topical link with the segment, Contemporary Business Issues.

Financial Reporting is a compulsory segment in the CPA Program professional level for candidates commencing from semester 2, 2009. It is an elective segment for candidates who commenced prior to semester 2, 2009.

Exam structure

The Financial Reporting exam is comprised of a combination of multiple-choice and written-response questions.

Segment aims

The primary aim of Financial Reporting is to provide you with globally transferable skills to prepare a set of general purpose financial statements in different jurisdictions. The segment encourages high quality financial reporting and the practice of strong ethical values in the accounting profession.

The secondary aim is to provide:

  • effective financial analytical skills
  • the ability to comprehend and use a stock-exchange listed entity's financial statements

General objectives

On completion of this segment, you should be able to:

  • understand the application and basis of selected IFRSs issued by the IASB
  • develop the necessary skills to apply IFRSs in the preparation of general purpose financial statements
  • comprehend and explain details relating to general purpose financial statements
  • facilitate the preparation of general purpose financial statements including the exercise of professional judgement

Segment content

The segment is divided into seven modules. A brief outline of each module is provided below.

Module Recommended proportion of study time
1. The Conceptual Framework and its application in financial reporting


2. Presentation of financial statements


3. Provisions, contingent liabilities and contingent assets


4. Income taxes


5. Financial instruments


6. Business combinations and group accounting


7. Impairment of assets


Module 1: The Conceptual Framework and its application in financial reporting

This module explains the role of a Conceptual Framework in the development of accounting standards, and identifies the constraints in light of other influences and factors in standard setting and in the application of principles in practice. It focuses on the major components of the Conceptual Framework issued by the IASB. The objectives of general purpose financial statements and the diversity of users’ information needs are considered, as well as the underlying assumptions and qualitative characteristics of financial reporting. Cases are used to explore the challenges that can arise in applying the qualitative characteristics.

The application of the Conceptual Framework's definitions and recognition criteria of elements of financial statements in selected accounting standards is evaluated. We have included accounting standards that are currently under review, thus demonstrating the application of concepts and introducing you to some emerging developments in financial reporting.

The module considers the complex issue of measurement, including the measurement bases in the Conceptual Framework as well as others identified by the IASB. The application of the mixed measurement model is considered from a practical perspective in the context of accounting for leases, employee benefits, share-based payments and customer loyalty programs. The concepts, principles and measurement bases included in this module form an important foundation for your study of subsequent modules.


  • Part A: The role of a framework of accounting in global financial markets
  • Part B: The Conceptual Framework for Financial Reporting

Module 2: Presentation of financial statements

This module focuses on the preparation of a complete set of financial statements in accordance with IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. IAS 10 Events after the Reporting Period is also discussed to highlight the importance of how post-reporting-date events are dealt with when preparing financial statements.

Another area of emphasis is IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors which deals with changes in accounting policies, correction of errors and estimates. The differences between prospective application and retrospective application are included to provide a practical understanding and application skills of how changes in accounting policies are adopted.


  • Part A: Presentation of financial statements
  • Part B: Statement of profit or loss and other comprehensive income
  • Part C: Statement of changes in equity
  • Part D: Statement of financial position
  • Part E: IAS 7 Statement of Cash Flows

Module 3: Provisions, contingent liabilities and contingent assets

This module focuses on the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets including the accounting for restructuring, accounting for decommissioning, restoration and similar liabilities and the disclosures required for contingent assets and contingent liabilities.


  • Part A: Provisions
  • Part B: Specific applications
  • Part C: Contingent liabilities and contingent assets

Module 4: Income taxes

This module focuses on the requirements of IAS 12 Income Taxes and explores the methodology of tax-effect accounting. The module discusses the recognition and measurement of deferred tax assets and liabilities in detail, including the accounting for tax losses, and the tax-effect of revaluation of assets.


  • Part A: Income tax fundamentals
  • Part B: Recognition of deferred tax assets and deferred tax liabilities
  • Part C: Assets carried at fair value or revalued amounts
  • Part D: Financial statement presentation and disclosure
  • Part E: Comprehensive example

Module 5: Financial instruments

The module focuses on the requirements of IFRS 9 Financial Instruments, IAS 32 Financial Instruments: Presentation, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosure. The emphasis is on the measurement of financial instruments (such as fair value, amortised costs) and hedging. The impairment test for financial instruments is also highlighted as being different from that in IAS 36 Impairment of Assets. Presentation and disclosure matters are given some focus, particularly the classification of liabilities and equity and IFRS 7 disclosures on the different types and characteristics of risk.


• Part A: What are financial instruments?
• Part B: Recognition and derecognition of financial assets and financial liabilities
• Part C: Classification of financial assets and financial liabilities
• Part D: Measurement
• Part E: Impairment of financial assets and hedge accounting
• Part F: Presentation issues
• Part G: Disclosure issues

Module 6: Business combinations and group accounting 

This module reviews the main features of IFRS 3 Business Combinations acquisition method. This module also explores group accounting as required by IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements and accounting for associates in accordance with IAS 28 Investments in Associates and Joint Ventures. Disclosures in accordance with IFRS 12 Disclosure of Interests in Other Entities are also covered. Preparation and presentation of consolidated financial statements is discussed with emphasis on pre-acquisition equity, intra-group transactions and non-controlling interests.

A set of consolidated financial statements is used to illustrate the nature of information provided.


  • Part A: IFRS 3 Business Combinations
  • Part B: Consolidated financial statements
  • Part C: Investments in associates
  • Part D: Joint arrangements – Overview

Module 7: Impairment of assets

The module focuses on the requirements of IAS 36 Impairment of Assets. The module includes the impairment requirements relating to individual assets such as property, plant and equipment, intangible assets as well as the impairment requirements of cash-generating units, including goodwill.


  • Part A: Impairment of assets – An overview
  • Part B: Impairment of individual assets
  • Part C: Impairment of CGUs
  • Part D: IAS 36 – Disclosure

Study and exam reference materials

The IFRSs are important reference materials for the study of Financial Reporting. There are various sources of IFRSs which provide different versions of pronouncements. The study materials for 2014 are based on the IFRS 2013 (Red Book). A PDF copy is available on My Online Learning (MYOL).

Only the IFRSs used in the study guide are required for study and assessment purposes. The reference to IFRSs will be based on the coverage of the study materials and will therefore differ from one standard to another.

For your CPA Program studies, the recommended source for the IFRSs and best reference for your Financial Reporting studies and exam is through MYOL. 

A list of standards that you will be required to print for your studies and exam is also provided on MYOL.