Syllabus for MICB - ICB Levels 2 & 3 Bookkeeping PLUS L3 Payroll Management

Paper A1 – Basic double-entry bookkeeping to trial balance

• Underpinning knowledge
  • Knowledge of the different categories of business that exist
  • Terms in bookkeeping (assets, liabilities, etc.)
  • Banking procedures
  • Understanding the different categories of VAT (standard, reduced, zero, exempt, outside the scope)
• Calculation of the value of the capital investment for a sole trader
• Calculation of business documents including calculation of VAT
• Showing an understanding of the effect of entering transactions into a bookkeeping system for sales, purchases, overheads, capital items, returns, personal items, etc.
• The effect of making and receiving payments including bank, cash and petty cash transactions
• Calculation of account balances
• Production and explanation of a trial balance

Paper A2 – Further double entry bookkeeping to trial balance

• Underpinning knowledge
  • Ethics
  • Legislation relevant to the bookkeeper
  • Accounting concepts
  • Understanding the different categories of VAT (standard, reduced, zero, exempt, outside the scope)
• Further double entry including the following
  • Topics from Paper A1
  • The content of control accounts
  • Writing off a bad debt
  • Construction Industry Scheme
  • Posting non-sole trader entries (subscriptions, donations, drawings of partners, directors’ loan accounts, etc.)
• Entry of payroll journals
• Calculation of the value of a suspense account in a system that does not balance
• Reconciliation of debtors, creditors and bank balances
• Correction of errors that do not affect the trial balance
• Production and explanation of a trial balance

Paper A3 – Data entry to trial balance using a computerised accounts package

• Opening of entries
• Entry of cash and credit transactions
• Production of a trial balance
• Production of reports for debtors, creditors, bank, VAT and the audit trail

Paper M4 – reconciliations and final accounts of a sole trader

• Underpinning knowledge
• Reconciliation and correction of errors (customer and supplier reconciliations, bank reconciliation, correction of errors including the clearance of a suspense account balance)
• The calculation of summary figures for control accounts
• VAT Returns (cash and standard VAT returns only but including EU transactions)
• Posting adjustments including disposal and acquisition of fixed assets
• Revaluation of assets
• Final accounts of a sole trader (profit and loss account and balance sheet)

Paper M5 – final accounts of a partnership

• All of the requirements for paper M4 but set in a partnership scenario plus:
• Underpinning knowledge
• Ethical considerations
• Underpinning knowledge of the legal requirements for a partnership
• Final accounts of a partnership including the appropriation account and production of partners’ current accounts
• Calculations and bookkeeping entries to record a change of partnership (partnership ratios, goodwill, the effect on capital and current accounts etc.)

Paper M6 – final accounts of a not-for-profit organisation

• All of the requirements of paper M4 but set in a not-for profit scenario plus:
• Underpinning knowledge regarding not-for-profit organisations
• Understanding the different requirements of a chart of accounts for such an organisation
• Understand the concepts of the different forms of income for not-for-profit organisations including a subscriptions account
• Posting adjustments including the subscriptions account and disposal and acquisition of fixed assets
• Final accounts of a not-for-profit organisation

Paper M7 – Management accounts of incorporated businesses

• Final accounts including adjustments for a limited company (internal management accounts format only)
• Limited liability partnerships
• Calculation and interpretation of ratios

Paper M8 – Level 3 External Assessment

• Understand the law relating to payroll, discrimination, employment status, data protection and confidentiality
• The legislation for PAYE and National Insurance Contributions (NICs)
• The requirements of the Working Time Directive
• The Statutory Minimum Wage
• Pension scheme and the different types of pension schemes together with the effect they may have on PAYE and NI deductions
• The “Real Time Information” (RTI) scheme
• Deadlines that apply for submitting information to HMRC

• Calculate, the various payments that can make up an employee’s gross Pay, including:
• Calculate, the various payments that can make up an employee’s gross Pay, including:
• Paid holiday in advance

• Contracted in and contracted out NI contributions
• NI contributions for a gross pay figure
• NICs for an employee being paid for periods (such as holidays) in advance

• Tax codes
• Calculate the amount of pay that is taxable for an employee with a given tax code and PAYE to be deducted
• Change in tax code issued by HMRC (Forms P6 and P9)

• Student loans, and • Attachment of earnings

• NI deductions for Directors
• NI deductions using the “non Cumulative” (“Alternative” or “Table method”) and the “Cumulative Director method”

• The impact BIK has on an employee’s pay and their employer’s costs for; company car, private fuel, loan, private health insurance, other common basic benefits assuming all required details are provided and complete
• Forms P11D, P11D(b) and P9D with details relating to the benefits and the deadlines by which they must be submitted

• The basic principles behind CIS
• Understand the duties of a contractor to verify sub-contractors
• Correctly calculate the amount of tax to be deducted if applicable
• Understand how to make appropriate adjustments to payments to HMRC for CIS tax
• Accurately complete a CIS300 form at month-end for a contractor business in the construction industry
• Accurately complete a CIS132 form at month-end for a subcontractor business in the construction industry
• Understand the duties of a sub-contractor to submit relevant invoices within appropriate timescales
• Explain why tax may be deducted at source from such an invoice
• Understand the different methods of reclaiming tax deducted depending on the legal entity of the business (i.e. sole trader v limited company)

• P45, P46, P11 & P60

• Installing, setting up, configuring and using it to produce accurate, comprehensive reports from a range of payroll scenarios encountered in a business of up to 10 employees.
• Setting up the details of a new business including appropriate company and existing employee details. Some existing or new employees may be directors who undertake to have their NI deducted using different methods or employees who work irregular hours. Enter and process payroll for a variety of different pay periods and produce reports detailing gross pay, deductions and net pay for each period
• Periodic back-ups of payroll-related information.
• Produce summary reports
• Deal with new employees, and employees leaving
• Carry out or simulate a month end procedure under RTI and produce a number of required reports including potential adjustments resulting from CIS deductions and any other recoverable amounts. Note: under the new RTI scheme it is impossible to produce the month end information unless you are using a live business. Be prepared to be able to show what information would be submitted or to explain how this would work

• Making advance payment of holiday pay to an employee
• Making a bonus payment to a defined range of employees
• Configuring an attachment of earnings
• Setting up a pension scheme for a range of employees.
• Making Statutory payments for Sickness, Maternity, Paternity, Adoption
• Processing a change to an employee’s tax code or basis under which a tax code operates
• Configuring deductions of student loan repayments