Pearson LCCI Level 4 Certifi Cate In Financial Accounting
L4PearsonLCCI Level 4 Certificate inFinancial Accounting(VRQ)(ASE20101)SPECIFICATIONIssue 3First teaching from September 2015
PearsonLCCI Level 4 Certificatein Financial Accounting (VRQ)(ASE20101)SpecificationIssue 3First teaching from September 2015
Edexcel, BTEC and LCCI qualificationsEdexcel, BTEC and LCCI qualifications are awarded by Pearson, the UK’s largestawarding body offering academic and vocational qualifications that are globallyrecognised and benchmarked. For further information, please visit our qualificationwebsite at qualifications.pearson.com. Alternatively, you can get in touch with ususing the details on our contact us page at qualifications.pearson.com/contactusAbout PearsonPearson is the world's leading learning company, with 35,000 employees in morethan 70 countries working to help people of all ages to make measurable progressin their lives through learning. We put the learner at the centre of everything wedo, because wherever learning flourishes, so do people. Find out more about howwe can help you and your learners at qualifications.pearson.comThis specification is Issue 3. Key changes are sidelined in the document. We willinform centres of any changes to this issue. The latest issue can be found on ourwebsite, qualifications.pearson.comAcknowledgementsThis specification has been produced by Pearson on the basis of consultation withteachers, examiners, consultants and other interested parties. Pearson would like tothank all those who contributed their time and expertise to the specification’sdevelopment.References to third party material made in this specification are made in good faith.Pearson does not endorse, approve or accept responsibility for the content ofmaterials, which may be subject to change, or any opinions expressed therein.(Material may include textbooks, journals, magazines and other publications andwebsites.)All information in this specification is correct at time of publication.ISBN 978 1 446 94738 8All the material in this publication is copyright Pearson Education Limited 2017
IntroductionLCCI qualificationsLCCI qualifications are widely regarded by employers as preparing students to carryout the key functions of modern international business. The qualifications arerecognised worldwide by employers, universities and professional bodies such asthe Association of Chartered Certified Accountants (ACCA).This new and engaging range of qualifications has been developed in collaborationwith professional bodies, employers and customers. We have conducted in-depth,independent consultation to ensure that the qualifications develop the breadth anddepth of knowledge, skills and understanding that students need to be effectiveemployees, and that the qualifications support progression pathways.LCCI offers a wider range of qualifications; they are available at levels1 to 4 across the following subject areas: English Language Marketing and Customer Service Business, Administration and IT Financial and Quantitative.This specification is part of the Financial and Quantitative suite of LCCIqualifications.Please refer to the Pearson website for details of other qualifications in the suite.This qualification replaces the LCCI Level 4 Certificate in Financial Accounting.
Purpose of the specificationThis specification sets out: the objectives of the qualification any other qualification that a student must have completed before taking thequalification any prior knowledge and skills that the student is required to have before takingthe qualification any other requirements that a student must have satisfied before they will beassessed or before the qualification will be awarded the knowledge, understanding and skills that will be assessed as part of thequalification the method of assessment and any associated requirements relating to it the criteria against which a student’s level of attainment will be measured (suchas assessment criteria).
RationaleThe Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ) meets thefollowing purpose:The purpose of this qualification is for students to meet professional body standardsfor this sector and in particular, to provide students with progression andrecognition/exemption from ACCA. The qualification at Level 4 will provideprogression for students completing Pearson LCCI Level 3 Accounting qualifications.The qualification is also appropriate for students in a supervisory or managementrole, or aspiring to such roles, in which they may have influence over organisationaldecision making.
Qualification aimThe Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ) is for studentswho work in, or want to work in a position supporting a company’s financedepartment.This qualification provides students with an understanding of the significance offinancial statements and the relevance of the information they contain. Studentswill produce financial statements in accordance with relevant accounting standardsfor single and group entities.This qualification will provide students with the necessary skills to interpret complexfinancial statements for reporting and assist in decision making by providing clearanalysis of the financial statements. Students will also gain an understanding of thepreparation of company financial statements in accordance with the InternationalAccounting Standards Board (IASB).This qualification is trusted and valued by employers worldwide and recognised byuniversities and professional bodies. Students can progress from this qualificationby working towards higher professional qualifications and membership ofprofessional bodies, increasing their employability in the sector. Students may alsocontinue their academic development by progressing to degree courses in financialand accounting disciplines.
ContentsSpecification at a glance1Knowledge, skills and understanding2Content2Assessment7Assessment summary7Assessment Objectives8Performance descriptors9Entry and assessment information10Student entry10Combinations of entry10Age10Resitting the qualification10Awarding and reporting10Access arrangements, reasonable adjustments and specialconsideration11Equality Act 2010 and Pearson equality policy12Malpractice13Language of assessment14Other information15Total Qualification Time and Guided Learning Hours15Student recruitment15Prior learning and other requirements15Progression16Exemptions16National Occupational Standards16Codes16Support, training and resources17Appendix 1: Glossary of International AccountingStandards terminology21
Specification at a glanceThe Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ) consists of oneexternally examined paper.Title: Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ) Externally assessed100% of thetotalqualificationOverview of content The Regulatory Framework and Governance Responsibilities Accounting Systems The Principles of Financial Statements for Single Entities, Partnerships andGroups Financial Statements The Analysis of Business Performance Using Financial StatementsOverview of assessment One written externally set and marked paper, consisting of 100% of the overallgrade of the qualification The examination will be 3 hours The examination will consist of 100 marks Students will be graded Pass/Merit/Distinction. A result of Fail will be recordedwhere students do not achieve the required marks for a Pass The paper comprises five questions Students answer all questionsPearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 20171
Knowledge, skills and understandingContentThe following content must be covered to prepare students for the final assessmentof this qualification.1. The Regulatory Framework and Governance ResponsibilitiesSubject contentWhat students need to learn:1.1 The principlesapplied whenundertakingaccountingresponsibilitiesin businessa) The scope of the financial accounting functionb) How the main financial statements contribute towardsmeeting the needs of different stakeholders and usersc) The principles incorporated into the IFAC (IESBA) codeof ethicsd) The fundamental and enhancing characteristics thatunderpin sound accounting practicese) The organisational values that exert a positive influenceon organisational culturef) The responsibilities of governance and management insupporting the accounting functiong) The difference between the respective roles andresponsibilities of executive directors and non-executivedirectors1.2 The role offinancial auditsand theregulatorysystemgoverningfinancialreportinga) The purpose of external auditsb) The responsibilities of an external auditorc) The implications of not submitting the required financialstatements to the relevant statutory bodiesd) The reporting responsibilities of the external auditore) The need for independence by the external auditorf) Fraud and the external auditorg) The impact of risk on the audith) The regulatory framework relating to financial reportingi)2The roles of: International Financial Reporting Standards (IFRS)foundation International Accounting Standards Board (IASB) IFRS advisory council IFRS interpretations committeePearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 2017
Subject contentWhat students need to learn:j) The meaning of, features and parts of the IASB’sFramework for the Preparation and Presentation ofFinancial Statements (Framework)k) The conceptual frameworkl)The purpose of IFRSm) Bank and cash2. Accounting SystemsSubject contentWhat students need to learn:2.1 The recordingof regulartransactionsand necessaryadjustmentsfor the yearenda) Record receivables and payablesb) Record changes in inventoryc) Make adjustments for accruals and prepayments3. The Principles of Financial Statements for Single Entities, Partnershipsand GroupsSubject contentWhat students need to learn:3.1 Theaccountingtreatment oftangible andintangiblenon-currentassetsa) Acquisitions, disposals and depreciation3.2 Account fordepreciationa) Revaluation of a non-current asset and subsequentdepreciation (IAS 16)3.3 The treatmentof provisions,contingentliabilities andcontingentassetsa) The difference between a provision, contingent liabilityand a contingent asset (IAS 37)3.4 The treatmentof events afterthe reportingdatea) The difference between an adjusting and non-adjustingevent after reporting period date (IAS 10)b) The revaluation of non-current assetsc) Intangible assets (IAS 38)d) The impairment of assetse) Preparation of a schedule of non-current assetsb) The accounting treatment for a provision, contingentliabilities and contingent assets in different businessscenariosb) Correct accounting treatment for an adjusting andnon-adjusting event in the financial statementsPearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 20173
Subject contentWhat students need to learn:3.5 Accountingpoliciesa) Impact of accounting policies (IAS 8)b) Changes in accounting policies (IAS 8)c) Changes in accounting estimates (IAS 8)3.6 Revenuerecognitiona) General principles of revenue recognition (IAS 18)3.7 Theaccountingtreatment ofshares anddividendsa) The characteristics of ordinary shares and preferencesharesb) Revenue recognition for goods and servicesb) The first share issue, market value share issue, bonusissue and rights issuec) Ordinary share and preference share dividends4. Financial StatementsSubject contentWhat students need to learn:4.1 Prepare themain financialstatements forsingle entitiesandpartnershipsa) The purpose of the main financial statementsb) The interrelationship of the main financial statements forsingle entity and partnershipsc) Preparation of a statement of financial position from agiven data set for single entities and partnershipsd) Preparation of a statement of profit or loss from a givendata set for single entities and partnershipse) Preparation of a statement of cash flows from a givendata setf) The purpose of disclosure notes in financial statementsg) How to address incomplete recordsh) Preparation of a statement of adjustment to profit from agiven data set, following the clearance of a suspenseaccount4.2 Prepareconsolidatedfinancialstatementsa) The nature and purpose of consolidated financialstatements (parent, subsidiary and associate) (IFRS 10)b) Concepts of consolidated statements (fair value atconsolidation, goodwill at consolidation, non-controllinginterest, inter-company transactions)c) Calculation of goodwill using the full goodwill methodfrom a given data setd) Accounting for an impairment of goodwill4Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 2017
Subject contentWhat students need to learn:e) Preparation of a consolidated financial statement ofprofit or loss (acquisition taking place at the beginning ofthe financial year) (IFRS 10)f) Preparation of a consolidated financial statement offinancial position (acquisition taking place at thebeginning of the financial year) (IFRS 10)5. The Analysis of Business Performance Using Financial StatementsSubject contentWhat students need to learn:5.1 Themeasurementof businessperformancea) The importance of measuring business performance5.2 The analysisof financialstatementsa) Ratios extracted from financial statement:b) The elements of business performance that can bemeasured by the main financial statementsc) Ratios used to measure financial performance gross profit margin net profit margin asset ratio turnover return on capital employed (ROCE) return on equity current ratio quick ratio (acid test) inventory turnover (days and months) receivable turnover (days and months) payable turnover (days and months) interest cover dividend yield dividend cover earnings per share gearingb) Interpretations and recommendations of financialanalysisc) The limitations of financial analysisPearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 20175
The following skills should be developed throughout the course of study.SkillsStudents should:a) Understand the importance of financial reportingb) Understand the regulatory framework and governanceresponsibilitiesc) Prepare financial statements in accordance with therelevant international financial reporting standards forsingle entities, partnerships and groups, includingstatement of: profit or loss financial position changes in equity cash flows changes in equityd) Analyse the financial statements to assess theperformance and position of an entity, makingappropriate recommendations6Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 2017
AssessmentAssessment summaryPearson LCCI Level 4 Certificate in Financial Accounting (VRQ)First teaching: September 2015Number of series: 4Overview of content The Regulatory Framework and Governance Responsibilities Accounting Systems The Principles of Financial Statements for Single Entities, Partnerships andGroups Financial Statements The Analysis of Business Performance Using Financial StatementsOverview of assessment One written externally set and marked paper, consisting of 100% of the overallgrade of the qualification The examination will be 3 hours The examination will consist of 100 marks Students will be graded Pass/Merit/Distinction. A result of Fail will be recordedwhere students do not achieve the required marks for a Pass The paper comprises five questions Students answer all questions. Calculators may be used in the exam Bilingual dictionaries are permitted for use in the examPearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 20177
Assessment ObjectivesAssessment objectives have been developed for this qualification to ensure thatexaminations are appropriately targeted. They describe the abilities that studentsshould be able to demonstrate. Each question targets one or more assessmentobjectives. They are applied to the examination in the proportions below.AssesmentObjectiveAO1WeightingRecall12Recall accounting facts, terms, definitions,processes and formulae.AO2Perform Procedures63Record business transactionsUse accounting techniquesPrepare financial statementsAO3Demonstrate Understanding10Demonstrate understanding of accountingprocesses, procedures and techniquesAO4Analyse10Compare, classify and deconstruct informationInterpret financial data and informationRecognise patterns and correlationsAO5Evaluate5Build a reasoned decisionMake judgments about significance ofinformationPredict consequences8Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 2017
Performance descriptorsGradeDescriptorPassCandidates can recall, use and apply financial accounting facts,terms definitions, processes and formulae.Candidates can demonstrate basic understanding of financialaccounting processes, procedures and techniques.Candidates can record business transactions using correctaccounting techniques.Candidates can prepare accurate financial statements with routinetransactions.Candidates can select and use accounting information.Candidates can make judgements which are supported withlimited evidence.DistinctionCandidates can demonstrate a detailed knowledge of financialaccounting facts, terms, definitions, processes and formulae usingthem consistently and effectively in given scenarios.Candidates can demonstrate a detailed understanding of financialaccounting processes, procedures, techniques and concepts.Candidates can record business transactions using correctaccounting techniques with precision.Candidates can prepare accurate financial statements with nonroutine transactions for different purposes.Candidates can interpret, select and use relevant accountinginformation from complex redundant information.Candidates can interpret, analyse, select and use relevantaccounting information to assess accounting problems orsituations.Candidates can synthesise complex information and makeconnections between accounting concepts in order to makejudgements that are supported and justified with pertinentevidence.Candidates can communicate complex financial information in anappropriate format for a range of different stakeholders.Performance descriptors may be revised following first award.Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ)Specification – Issue 3 – May 2017 Pearson Education Limited 20179
Entry and assessment informationPlease see the LCCI International Qualification Operations Guide for centres and theLCCI Examination Regulations, available from our website:qualifications.pearson.com/lcciStudent entryDetails on how to enter candidates for the examination for thisqualification can be found at: qualifications.pearson.com/lcciThe closing date for entries is approximately six weeks beforethe start of each examination series. Centres should refer to thepublished examination timetable for examination dates.Combinations of entryThere are no forbidden combinations of entry for thisqualification.AgeThis qualification is intended for learners aged 16 and above.Resitting the qualificationCandidates can resit the examination for Pearson LCCI Level 4Certificate in Financial Accounting (VRQ).It is strongly advised that candidates do not register toundertake a resit until they have received the results from theirprevious examination.Awarding and reportingThe Pearson LCCI Level 4 Certificate in Financial Accounting(VRQ) qualification is graded and certificated on a three-gradescale: Pass/Merit/Distinction. Pass and Distinction are awarded,Merit is arithmetically calculated.10Pearson LCCI Level 4 Certificate in Financial Accounting (V
recognition/exemption from ACCA. The qualification at Level 4 will provide progression for students completing Pearson LCCI Level 3 Accounting qualifications. The qualification is also appropriate for students in a supervisory or management role, or aspiring to such roles, in which the
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