BPP ACCA December 08 Exam Tips (Optional Papers)

ACCA DECEMBER 2008 EXAM TIPS

ACCA Paper P4

Advanced Financial Management
December 2008 Exam Tips and Useful Articles
The purpose of this analysis is to highlight areas that we would expect to be tested based on the December 2007 and June 2008 exams. This will only be the third exam written by the new examiner, Bob Ryan, so it is extremely difficult to predict which areas of the syllabus are most likely to be tested.

No one knows what is in the exam, apart from the examiner; your safest bet is to achieve good syllabus coverage in your revision, as the examiner aims to do in the exam.

Role and responsibility towards stakeholders:

All exams to date have contained optional questions involving ethics; this is expected to continue, note that environmental issues could be an aspect of this question.

Advanced investment appraisal:

Overseas investment appraisal is due to be tested – this also gives the examiner the opportunity to test how political, economic and translation risk could be managed. This type of question could also ask you to give examples of trade barriers and the role of the world trade organisation in promoting free trade.

Real options are a popular source of exam questions, note that either call or put options are examinable in this context.

Acquisitions and mergers:

Issues could include valuation techniques, financing a takeover, and discussion of the UK/US shareholder based approach to corporate governance compared to the European stakeholder approach

Corporate reorganisation & reconstruction:

The ability to analyse a proposed financial reconstruction is an important topic in this syllabus area. A question could also ask you to analyse the options for a struggling business in terms of possible unbundling strategies, ethical issues could also be tested in this context.

Treasury & advanced risk management:

Either foreign currency hedging or interest rate hedging - given the emphasis on international aspects to financial management in this syllabus, a question on foreign currency hedging is more likely. Questions could also include discussion of the role of treasury and a framework for managing risk. Derivatives are due to be examined with numbers. The examiners recent article focuses on how interest rates are set by lenders to reflect credit risk; this is expected to form a part of an exam question.

Useful Articles:

If you want to read around the subject or improve your understanding there are a number of articles on the ACCA website. The most useful recent article to review is:

Title: How lenders set their rates

Author: Bob Ryan (the examiner)

Date: August 2008

Summary: credit risk and the normal distribution, how these affect lending rates

Look out for articles published by the P4 examiner in the lead up to the exam; an article came up shortly before the December 2007 exam and the June 2008 exam, both were examined.
[REMEMBER to Check TARC ACCA blog for more EXAM TIPS UPDATES]

ACCA Paper P5

Advanced Performance Management

December 2008 Exam Tips and Useful Articles

This exam and examiner are not predictable. Just because a topic featured in the last exam doesn’t mean it won’t feature this time. The examiner has already tested some syllabus areas more than once (and at consecutive sittings), whilst other topics remain unexamined. Use the following tips as important areas to cover, but remember that no one knows what is in the exam, apart from the examiner. Your safest bet is to achieve good syllabus coverage in your revision, as the examiner aims to do in the exam. Also remember that much of the paper (up to 70%) is compulsory, and your choice is limited even in the optional section.

The following is a guide to areas that you should include as part of your revision:

Section A:

Scope of strategic performance measures in the private sector Financial data has appeared repeatedly in the previous syllabus exams and on all the real exams to date, so it would be surprising if it were not included here. You may be asked to draw up an income statement or budget or to compare actual performance against a benchmark. This can also include the use of activity-based approaches, learning curves or optimal pricing.

Once the financial data has been collated and compared, questions usually include the need to comment on these and may require discussion of non-financial indicators, additional information to improve assessment or strategies to improve performance.
2008 P&R Kit Questions: Q31 Quicklink, Q32 GWCC, Q33 SEC.

Divisional performance and transfer pricing issues

It is notable when transfer pricing is absent from the exam but it has not yet been tested in a complete question. Given that the P5 syllabus covers world economics and fiscal policy, it may be tested in an international context.
2008 P&R Kit Questions: Q36 Business Solutions, Q37 NAW Group, Q40 CD (a).

Risk

Either of the two questions in Section A could be set in the context of a risky decision. This could link to suggestions of strategies to reduce risk or could encompass numerical evaluation of the risk involved and the likelihood of this being acceptable to management using probabilities, risk appetite or sensitivity analysis

2008 P&R Kit Questions: Q40 CD (b), Mock exam 2 Q1, Mock exam 3 Q3.


Section B:

At least one question in this section will be entirely discursive. It could well cover:

Current developments in management accounting

Many of the modern management and management accounting techniques have been examined here with both JIT and TQM common topics in the previous syllabus. Knowledge of these was used to discuss the impact they would have on information systems or performance measures.

2008 P&R Kit Questions: Q11 Costs and quality, Q13 Management Accounting Relevance,


Q31 (d) Quicklink.

Management accounting and information systems

An essay question on sources of information, relevance of operational management accounting information in today’s business environment or types of management information system is a likely choice at this sitting as it was a typical question in the previous syllabus.

2008 P&R Kit Questions: Mock exam 1 Q2.


Questions that may contain some numerical information might cover:

Alternative views of performance measurement

The examiner often includes a question where an organisation has to be evaluated against an established theoretical model. The balanced scorecard and performance pyramid have appeared in previous exams.

Theoretical models to assess performance and strategy

Linking strategic decisions to mission statements or suggesting strategic options using models such as Ansoff’s matrix or the BCG matrix lend themselves to questions containing a mixture of financial and discursive elements

2008 P&R Kit Questions: Q9 Better Budgeting, Q35 Specialist Car Company, Q48 Eatwell Restaurant, Q51 GER, Q53 Bettaserve, Mock exam 1 Q4, Mock exam 2 Q2, Mock exam 2 Q3.

Useful Articles:

If you want to read around the subject or improve your understanding, there are a number of articles on the ACCA website. Shane Johnson (your examiner) has promised to write articles on the new elements of the syllabus, prior to examining them, so more articles may appear between now and the date of the exam.

Keep checking the website between now and the exam as any articles that appear are likely tips for December.

There has, to date, been one article since the last exam, written by Michael Pogue, the P5 assessor, covering business failure. We suggest that you read this by following the link below:

http://www.accaglobal.com/students/publications/student_accountant/archive/2008/87/3113229

The following articles are particularly relevant to the P5 syllabus, given the tips above. Some of these were written to support the previous ACCA paper, paper 3.3, which was also written by the P5 examiner. Many others are available on the ACCA website.

‘Economic Value Added’ by Shane Johnson and Matt Bamber outlines the advantages of an

economic value added approach to performance measurement.

‘Defining managers’ information requirements’ by Jim Stone describes the use of critical success factors.

‘Management control - a pre-requisite for survival’ by Shane Johnson explains why increasing recognition is given to satisfying the needs of different stakeholders.

‘Performance measures to support competitive advantage’ by Graham Morgan uses the success of airlines such as EasyJet and Ryanair to examine how the balanced scorecard might be utilised to maintain the low-cost carriers' competitive edge.

‘The pyramids and pitfalls of performance measurement’ by Shane Johnson, outlines the issues which are central to the understanding and assessment of performance measurement.

‘Business strategy and performance models’ by Shane Johnson provides a brief overview of three models to assist accountants in the determination of business strategy and in the appraisal of business performance.

‘Examiner's approach to Paper P5’ by Shane Johnson, provides his approach to the Advanced Performance Management exam.


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