PQ ACCA exams

HowtopasstheACCAs
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Three old hands from Kaplan Financial, Tom, Sean and Alison, give their insight into passing P1, P2 and P3

Questions Practise as many past papers as you can. On a wordy subject it is tempting to focus on learning the theory in the hope that this will be enough for the exam: it wont! The exam is highly practical, with many of marks allocated to application of the scenario.

How to pass P1
Alternatively, you may opt to start planning the case study in part A.

Reading time Think carefully about how you are going to use the reading time so you have a clear plan of action for the exam day. You may choose to spend this time selecting the questions you will answer in part b.

Case study The case studies are getting progressively longer and so more time is required to read and plan the answer. My key tip would be to code your question as you read rather than just highlight it. When you read a sentence relating to part (c) of the question, mark it with a (c). In this way, you plan as you go and once read you can immediately see the key things to discuss.

Professional marks The case study will always have 4-6 marks for writing in a professional manner. This part of the exam is often a concern for students so familiarise yourself with the format of a letter, press release, report, statement etc, to ensure you are prepared. For further information on this, there is a good technical article on the ACCA website entitled Professional Marks from PQ August 2009. Alison Dundjerovic

In short put in a lot of work! For Q1 you have to be comfortable with all aspects of group accounts as this comes up for 35 compulsory number crunching marks. Now a lot of the workings, for example goodwill, impairment reviews, associates, disposals, changes in the NCI, cash flow calculations and even group foreign exchange differences lend Tom Clendon themselves to formats. Make sure you not only learn them but practise them in the context of past exam questions. Perhaps either a group statement of comprehensive income or group cash flow is due this time. So make sure you are very comfortable with the cash flow format. It annoys me that some students overrun this part of the exam. Time management is so important, so please do not waste time adding up the answer. An ethical dilemma always comes up in Q1 make sure you review the past exam questions to get a flavour of the sort of things he asks for. In section B, you will attempt two of three questions. Q2 and Q3 of the exam focus on your knowledge of accounting standards. You must know them, but more importantly be able to explain how to apply them in practical situations. There are useful articles on the accaglobal website, on financial instruments (July and August editions) that are worth a read, as this topic is I think the examiners favourite. Q4 in the exam is based on a current issue, so in a way there is little merit studying past exam questions in preparation. We have the new standards IFRS1013, as well as proposals on leases and the management commentary guidance. So do some web browsing. I like the Deloitte IFRS in focus newsletters on the IAS plus website, while KPMG also has good briefing sheets and your examiner Graham Holt also writes articles that are published on the ACCA website (members PQ section CPD).
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How to pass P2

Time management There are only three questions, so if you mess up your time you limit your opportunity of success. Try to ensure you allow yourself to do all of the exam, then you need 50 out of 100 to pass 50%. Poor time management may mean you do 80% of the questions, so then you need to get 50 out of 80 62.5%, or a 25% higher score!

How to pass P3

Good layout Layout should respect the marker and help them navigate your answer easily. Remember, the markers are under time Sean Purcell pressure and need all the help they can get. Students who plan their answer normally have good layout.

Mark focus As a marker of P3 I see too many answers where the answer is not reflective of marks available and is either too short or too long. Make sure your answer reflects the mark allocation and think about structuring your layout to reflect this.

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Answer the question asked Exams are stressful for most people and so it is highly likely you will misread a question due to stress. Read the question twice, do a plan, then read it a final time and check with the plan to make sure you are going in the right direction. Dont feel constrained by academic theory Much of P3 ideas and themes can be related to real life and a student who is prepared to use ideas from real business behaviour is often able to deliver a much PQ more comprehensive and confident answer.
PQ Magazine December 2012

PQ ACCA exam tips

You tell us what you want and here it is our exam tips for Decembers sitting, with the usual health warnings
F4 English legal system court structure, court vs tribunal. Contract law exclusion clauses, intention to create legal relations. Tort of negligence general negligence, professional misstatement. Employment law common law duties, dismissal. Agency/partnership how agency relationship arises, termination of partnership. Company law separate personality/lifting the veil, company registration, class rights. Fraudulent behaviour insider dealing, bribery. F5 Throughput accounting and TOC. Learning curves. Variances sales variances, market size and market share. Decision trees. F6 Income tax joint investment income. adjustment of profits. national insurance. Corporation tax chargeable gains to calculate, with rollover relief. group loss relief, tax planning. interest on late payment of corporation tax. VAT VAT registration (futures test). cash accounting scheme. default surcharges. Capital gains tax Transfer between spouses. Incorporation relief. PPR, gift and entrepreneurs relief. F7 Q1: consolidated statement of comprehensive income and consolidated statement of financial position with adjustments to include: PURP, share exchange, current accounts, impairment, revaluation, fv adj. Q2: published accounts to include: statement of comprehensive income, statement of financial position and SOCIE from TB. Possible adjustments to include: revenue recognition, depreciation, revaluation, tax & deferred tax.
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Evaluation of a performance management system. Corporate failure. Divisional performance appraisal and transfer pricing. P6 Corporation tax capital gains groups: NGNL and rollover relief. degrouping charges. overseas aspects: branch vs sub/CFCs/transfer pricing. Capital gains reliefs: rollover, holdover, gift, PPR and letting. Inheritance tax lifetime gifts. valuation of shares. death estate computation. Income tax sole traders opening year rules, trading losses. self assessment admin: payment by instalment, new penalty regime. income tax comps at marginal rates, possible overseas income. VAT partial exemption. land and buildings. registration. P7 Core areas likely to be examined: Engagement planning and risk assessment. Engagement procedures. Ethics and professional issues. Completion (matters to consider/evidence on file) and engagement reporting. Plus: Planning. Subsequent events (ISA 560). Review engagements. Obtaining work. Competition in the statutory audit market. Improving the audit report. Please note: these are for the INT variant. The UK variant is likely to additionally include an aspect of insolvency. F1, F2, F3 Since these exams are multiple choice it is not possible to give specific tips as the papers cover the breadth of the syllabus no topics can be ruled out. The key to success on all three papers is to practise as many mock exams as possible. When you attempt a mock exam do not guess any of the questions. Instead, make a note of it and move on to the next question. Mark the exam when you are finished and any questions that were left unanswered or you got wrong find the answer in your text book, read the chapter and make notes.
PQ Magazine December 2012

Kaplan Financial

Q3: Ratios with interpretation. Q4/Q5: Qualitative characteristics, finance leases, tangible & intangible assets, government grants. F8 Audit risk including analytical procedures. Systems: purchasing/sales (including tests of control). Evidence: purchases/payables; share capital/directors transactions. Specific standards/topics: communicating with those charged with governance (ISA 260/265). materiality (ISA 320). external confirmations (ISA 505). completion (ISA 580 written representations). auditors reports. F9 Investment appraisal: a key topic highly likely to be examined. The most common technique assessed is NPV with inflation and taxation, although be prepared for a twist. Working capital management: its been a while since weve seen the more numerical aspects surrounding inventory or payables management. Valuations: cash flow based values have yet to be examined. Business Finance: make sure youre able to discuss the impact that different policies may have on a company by being able to both calculate and interpret financial ratios. Cost of Capital: its been a while since weve seen any of the more technical CAPM based calculations regarding de-gearing and re-gearing betas.

P1 Corporate governance: stock exchanges. Ethical theories absolutism. Internal control failures. Transaction cost theory. Sustainability social and environmental footprints. P2 Question 1: group statement of cash flows plus ethics, possibly including inappropriate application of IFRS 10 and/or accounting errors. Other questions: Content of Questions 2, 3 and 4 can come from any part of the syllabus. Possible topics which may be examined include: Reconstructions. Employee benefits and share option schemes. Financial instruments. Foreign currency. Fair value measurement. P3 Decision trees. Strategic change. Strategy evaluation. Benefits realisation. P4 Business valuation. Investment appraisal. Corporate reconstruction. BSOP model. Interest rate hedging. The Eurozone debt crisis. P5 Building block model linked to CSFs. Importance of political factors in performance management.

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ACCA exam tips PQ

F4 Courts and sources of law. Contract consideration, exclusion clauses. Torts/partnership. Articles of association. Capital (including debentures). Directors. Employment law. Criminal law insider dealing, money laundering, etc. F5 Costing systems ABC, throughput accounting and the theory of constraints. Short term decision making: CVP analysis, limiting factors. Budgeting and variance analysis (calculations). Budgetary systems (ABB, ZBB etc) and behavioural aspects of budgeting. Performance measurement divisional performance, ROCE vs RI. Transfer pricing. F6 Corporation tax: basic computation with capital allowances and profit adjustments; due dates for submission of tax returns and penalties for late submission. Possible group relief/transfer of group gains or losses. Calculating the VAT due for a quarter, default surcharges for overdue returns. Individual tax: employee benefits & pension contributions. Calculation of an income tax liability. Capital gains tax: a mixed bag of topics shares, gift relief, transfers between husband and wife, compensation receipts with some gains qualifying for entrepreneur relief. A mixed question involving the trader; short computations on assessments, partnerships and change of accounting date. Overseas aspects of a company; double tax relief, branches and subsidiaries, transfer pricing and VAT on imports and exports. General inheritance tax question. Badges of trade problem question with a calculation of the results either as a trading or capital gain. F7 Q1: consolidated SPL and OCI and statement of financial position (with acquisition during the year). Q2: published financial statement (possibly adjusted rather than from a trial balance). Q3: cash flows and interpretation (including some ratios). Qs 4 and 5: aspects of the conceptual framework and greater focus on the following standards:
PQ Magazine December 2012

IAS 12 (deferred tax). IAS 17 (leases). IAS 18 (revenue) linked with IAS11 (construction contracts). IAS 38 (intangible assets). IFRS 5 (non-current assets held for sale and discontinued operations). F8 Internal controls and substantive procedures usually come up (perhaps bank and cash/liabilities). Audit risk. Materiality. Written representations and audit reports. Relevant & reliable evidence. CAATs. Other areas ISA 402/ISA 720/ going concern (recent technical article). F9 Investment appraisal: NPV including identification of relevant cash flows, tax saved on capital allowances, inflation and nominal cost of capital. Calculation of a project specific cost of capital and discussion. Special investment decisions lease or buy. Working capital management working capital characteristics of different businesses and the working capital cycle. Overcapitalisation vs overtrading. All aspects of receivables management including credit control, discounts and factoring. Sources of finance and cost of capital. Theories of capital structure (Modigliani and Miller). Company valuation. Dividend growth model vs market value discussion. Foreign exchange risk management. P1 Peterkeeling.com P2 Q1: complex group or group cash flows plus manipulation of financial. Information and related ethical issues. Q2: case study on investments IFRS10/11, IAS28(2011) and IFRS9/13 if Q1 is cash flows OR case study on deferred tax (IAS12). Q3: mixed scenario on accounting standards IAS19/21/24 & IFRS5. Q4: essay on application of Frameworks faithful representation. P3 PEST and Five Forces analysis. Success criteria suitability,

acceptability, feasaibility to be applied. Some financial calculations and their implications. Project management. Marketing. Matrix structure. Outsourcing. Porters competitive advantage generic strategies and the diamond. P4 Foreign direct investment (NPV, MIRR, project duration). Project specific cost of capital. Transfer pricing. Adjusted present value. Black Scholes option pricing. Financial and corporate reconstruction. Currency futures and options. Stakeholders. P5 Benchmarking. Impact of external factors on strategy and performance. The role of performance management systems in business integration value chain and McKinseys 7Ss. Transfer pricing. ROI, RI and EVA. Not for profit organisations value for money. P6 A company with UK and foreign subsidiaries; double tax and group relief; controlled foreign companies and branches. VAT on imports and exports. An individual trader starting to trade after acquiring a business; loss reliefs, reliefs for capital expenditure including VAT; sales of assets to provide funds for business development. Cash and annual accounting. Gifts of shares and share buy backs. Employment tax issues including share schemes. Gifts, inheritance tax and overseas issues. IR35. P7 Going concern. Planning and groups. Ethics with quality control & assurance reporting. Audit reports other information. Profit forecast. F4 Statutory interpretation. Offer & acceptance. Intention to create legal relations. Exemption clauses. Tort of passing off.

Articles of association. Auditors. Maintenance and reduction of capital. Agency position of partners. F5 Throughput accounting, possibly little theory from environmental accounting. CVP analysis/linear programming. Types of budgets/flexible budgets. Learning curve. Planning and operational variances, with some basic ones. Performance analysis of a business over few periods involved. F6 Q1: income tax computations for husband and wife. for a self employed person maybe involving adjustment of a profit. employment income including the evaluation of benefits. Q2: (a) corporation tax computation adjustment of a trading loss and relief for the trading loss in the current chargeable accounting period and carry back for 12 months including capital allowances for plant and machinery. (b) VAT surcharges for paying the VAT late/group registration for VAT. Q3: capital gains tax for individual with shares including rights and bonus issues and incorporation relief. Q4: pensions and the new rules. Q5: implications of a person being UK domiciled for the purposes of IHT, or property business income for individuals. F7 Q1: CSFP or CIS with associates and contingent or deferred consideration; or CSFP plus CIS without association. Q2: redrafting published accounts; or normal published, both with 15 marks on standards. Q3: interpretation and/or cash flow, with 5 marks on standards. Q4: mixed standards and concepts, eg financial instruments, non-current assets, contracts, deferred tax, discontinued operations. Q5: mixed standards, for example substance, EPS, leasing, accounting policy changes, intangibles. F8 Substantive procedures inventory, share capital, reserves and directors emoluments, opening balances and comparatives. Internal controls revenue and capital expenditures. Planning issues audit risk. Continued on page 18
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PQ ACCA exam tips

Continued from page 17 Ethics fundamental ethics, threats and safeguards. Audit reports & going concern. Audit evidence quality, quantity, reliability and relevance. F9 Investment appraisal with tax and inflation possibly a bit of sensitivity or lease or buy. WACC computation, possibly with project specific cost of equity. Working capital to include cash management eg Miller-Orr model or cash budgeting and financing working capital. Business finance to include a bit of dividend policy and debt financing. Valuation to include PE ratio method and dividend growth model. P1 Role of the chairman. Nomination committee. Stakeholder classifications. Audit committee and internal audit. TARA. Tuckers model. P2 Group comprehensive income (or cash flow). Financial instruments. Deferred tax. Pensions. Non current assets. The usual mix of standards in the mix question. Joint arrangements, fair value or hedging as current issues. P3 Strategic analysis including external analysis and management accounting as part of decisionmaking. Financial analysis of a company. Evaluation of a strategic option suggested by the examiner. Application of the marketing mix. Improvement of business processes (probably including use of e-business). Process of managing change. P6 IHT with the death estate including BPR, APR and valuation rules. Transfer of unused nil rate band between spouses. Changing the will after a person is dead. Instalment option for paying IHT. A big company question regarding a company selling its trade and assets. Controlled foreign companies and transfer pricing. Sole trader starting to trade with
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stakeholders. Domestic and international investment decisions. Mergers and acquisition strategies. Advanced treasury and risk management techniques. Impact of macro economics and international financial institutions. Emerging issues in finance and financial management. P5 External environmental analysis, Porters 5 Forces. Activity based management. Value chain analysis. Balanced scorecard or Fitzgerald and Moon building blocks model. Critical success factors. Beyond budgeting/behavioural aspects of budgeting. P7 New audits, tendering. Planning, materiality, sampling, analytical review. Audit, business or financial statement risk. Group audits, joint ventures, goodwill, joint audit. Assurance services. Ethics, practice management. IFRS 1-13! And IAS 1 to 40. Close down procedures, opening balances, comparatives. Outsourcing, service providers, use of an expert. CG, internal audit (ethics/outsourcing), audit PQ committees. To see our comprehensive tips for all the papers go to www.pqmagazine.co.uk and click on our study zone. BPP has provided us extensives tips for these papers get online now!

opening year rules, choice of accounting date, capital allowances and maybe trading losses at the beginning of the trading cycle. Rules for personal service companies. Incorporation of a business including incorporation relief and the election to transfer plant and machinery at TWDV. Self assessment for individuals, consequences of filing the tax return late and paying the balancing payment late. Ethics and deliberate tax defaulters. F5 ABC. Cost volume profit analysis involving PV charts in multi product situations. Planning variances involving costs. Performance measurement in non profit organisations. Budgeting. Environmental management accounting.

ARR and (discounted) payback. Leases versus buy decisions. Bond valuation. P1 Corporate governance concepts the underlying fundamentals. CG in other organisations NGOs, public sector. CG types and forms rules v principles, insider/outsider, UK codes, SoX. Agency theory stakeholders, Mendelow. Board structure. Internal control and business risk Turnbull. Ethical theories and business codes. Professionals and public interest. Corporate citizen, footprints and sustainability. Social and environmental auditing. P3 Environmental analysis PESTEL/Porters 5 forces and impact on stakeholders. Harnessing IT in the value chain apply to VC. Outsourcing and how it helps business strategy. Using Johnson, Whittington and Scholes model to evaluate strategic options under the heading suitability, acceptability and feasibility. Process redesign and change management strategy. Project management, focusing on cost/benefit analysis of business case for a project. P4 Role and responsibility towards

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F7 Leases. Revenue recognition. Substance v form. Convertible instruments (IAS32/IFRS 9). Accounting for taxation. Accounting for assets, particularly IAS 16. Accounting for taxation. Lease accounting. Events after the reporting period. F9 Interest rate risk.

These tips should be used in conjunction with proper study and revision. They are not a substitute for in-depth revision. We cannot guarantee that everything we mention will be on the paper. These tips are a rough guide only, no one knows what the examiner was thinking 18 months ago when the paper was set!
PQ Magazine December 2012