ACCA Exam tips for June 2010! All these tips are from BPP, these exam tips may not be 100% accurate thus DO NOT solely rely on these tips to do your revision! Practise more questions so you're prepared for the coming exam! Good luck!
Paper F4
* Operation of judicial precedent
* Offer and acceptance of contracts
* The tort of negligence
* Breach of contract and remedies
* Directors’ statutory duties under the Companies Act 2006
* Insider dealing and/or Money Laundering
Paper F5
* Specialist Cost and Management Accounting Techniques. ABC, Throughput Accounting & Target Costing have featured recently. Backflush accounting has not yet been examined. Be prepared to discuss techniques such as ABC compared to traditional costing techniques such as Absorption Costing.
* Decision making techniques. Relevant costing, linear programming and risk & uncertainty have been examined recently. Pricing is yet to be examined in much detail other than a brief discussion about discounting and a requirement to suggest two pricing strategies.
* Budgeting. Learning curves have featured most regularly to date. Discussion marks may look at the appropriateness of budgeting types or the behavioural impacts of types of budgeting. Numerical elements in a budgeting question could include flexed budgets or time series analysis.
* Standard costing & variance analysis. Mix & yield variances, planning & operating variances and operating statements have been examined. Be prepared to discuss performance and whether variances are an indicative measure of good / bad performance.
* Performance Measurement and Control. Questions focusing on interpretation of performance and financial vs non financial measures have featured on all papers to date. Questions could focus on the public sector, divisional performance measures such as ROI / RI or a discussion of the impact on performance of various transfer prices.
Paper F6
Income tax:
* Employment income including benefits and PAYE system
* NIC for employed earners
* Income tax losses
* Property income
* Calculation of income tax payable
* Treatment of pension contributions
Corporation tax:
* Calculation of plant and machinery capital allowances
* Calculation of CT payable
* Submission of CT return and payment of tax
* Group relief
Capital gains tax:
* Calculation of various disposals from a company’s perspective
* Share disposals
* Replacement of business asset relief
* Part disposal
VAT:
* Default surcharge liability notice
* Common penalty regime
* Annual accounting/flat rate scheme
Paper F7
* Q1 (25 marks). Consolidated statement of comprehensive income (P&L) and/or statement of financial position (balance sheet) with one subsidiary plus associate (including adjustments for fair values, unrealised profit, intragroup trading, goods/cash in transit, other syllabus area). Discursive part (b) on reasons for adjusting for unrealised profit or other group topic.
* Q2 (25 marks). Accounts restatement/preparation with adjustments e.g. depreciation, current/deferred tax, inventory (stock) valuation, leases, substance over form issues, financial instruments (change in FV or amortised cost), revaluations, share issues or government grants. May include EPS calculation or movement in share capital and reserves.
* Q3 (25 marks). Interpretation and/or statement of cash flows, perhaps with written part on not-for-profit entities. Interpretation may focus on limited ratios and their interpretation (e.g. liquidity). Sections of a statement of cash flows (rather than whole statement) may be tested.
* Q4 & Q5 (15 & 10 marks). One question in context of conceptual framework; other containing one or two discrete topics. Possibilities: regulatory framework, inflation, government grants, deferred tax, substance over form issues, leases, intangible assets, impairment or construction contracts.
Paper F8
* Not for profit organisations
* Risk assessment
* Ethics
* Computer based auditing
* Analytical procedures
* Fraud
Paper F9
* Working capital. This has always been a favourite theme; questions on inventory management and receivables management are likely here. Make sure that you are comfortable with using working capital ratios to calculate inventory, receivables, payables and cash balances.
* Investment decisions. This exam normally contains a question involving net present value (NPV), often with tax and inflation. Remember that you may need to calculate a weighted average cost of capital before you calculate an NPV.
* Sources of finance. This is a topical area, we would expect a part question on financing problems covering gearing issues and problems for small-medium sized companies. Ratio analysis is likely to feature here.
* Business Valuations. This area is commonly tested and is a core syllabus area. You should note that in recent sittings the examiner has looked to combine different syllabus areas within the same exam question – for example asking you to calculate a cost of equity and then use it to value a company. Make sure that you are also able to value debt.
* Financial environment & risk management. Recent exchange rate and interest rate volatility could impact on a company’s financial management plans – a part question on this area could be set, with further discussion and calculations on hedging techniques.
Paper P1
* Corporate Governance. Governance underpins the P1 syllabus so you can expect detailed questions on principles-based systems such as the UK Combined Code (2006). Make sure that you fully understand the role and responsibilities of directors (both executive and non executive), and how good governance structures help to reduce risk. Remember that you may need to discuss the various committees recommended as part of best practice, and the disclosures required by the Turnbull report.
* Risk Management. Typical risk management questions often require you to identify specific risks in a given scenario, and then suggest how the organisation might seek to respond to those risks. You may also need to give your opinion on the risks, so key models that are highly examinable are the risk mapping matrix and the ‘TARA’ response model.
* Control Systems. In order to respond to risks, organisations will implement a range of controls. You need to be able to suggest suitable controls in a given context, and show that you know the difference between the control environment and control procedures. Questions in internal control may also cover internal audit, as this is an integral part of both risk management and control.
* Ethics. Ethics questions invariably require candidates to related their opinions or ideas to key theories. Remember that personal ethics relate to how we behave or choose to behave, and key schools of thought include Deontology (duty) and Telelogy (Outcome). Kohlberg’s model of ethical development is highly examinable, and questions may ask you to recognise where a particular individual fits into the model. Professional ethics is concerned with following an ethical code of conduct, and questions may ask you to evaluate an accountant’s actions.
* Corporate Social Responsibility. Organisations have a wider duty to stakeholders. This area is always highly examinable, and questions frequently ask candidates to refer to the Gray Owen Adams model, when identifying how an organisation should choose to behave.
Paper P2
Section A:
* Compulsory case study including preparation of a group statement of comprehensive income (profit and loss account) and/or statement of financial position (balance sheet) including complex group structures, continuing and discontinued activities or foreign subsidiary, or alternatively a statement of cash flows. This will include other accounting complications such as financial instruments, pensions, share-based payment and impairments.
* There will also be discursive requirements on a linked accounting adjustment and social/ethical/moral aspects of corporate reporting.
Section B:
* Industry question (often Q3), testing range of standards (NB: no specific knowledge of the particular industry is required)
* Discussion question (Q4) looking at current developments in corporate reporting such as small and medium-sized entities, leases, success/issues on implementation of IFRSs, management commentary, comprehensive income/presentation of financial statements, improvements in performance measurement. May also include a related computational part based on figures from a case study.
* ‘Multi-part’ testing a range of standards separately, such as related parties, pensions, changes in accounting policies, recognition and/or impairment of tangible and intangible assets, foreign currency transactions, leases, revenue recognition, consistency of standards with the conceptual framework, changes in accounting policies, the effect of accounting treatments on earnings per share or ratios and deferred tax implications.
Paper P3
* Internal/External analysis. A core area of the syllabus and could be based around a number of key models all of which may be used to analyse the current position of the organisation. This could be the main part of your section A. The value chain and BCG matrix are included so make sure you are able to work with these models. Ensure that you can undertake analysis of a business’ current position and performance using ratios as this is increasingly an element of P3.
* Generation and evaluation of strategic options. Leading on from an initial analysis of a business you may be asked to offer advice on the best options in light of the current position or having been informed of an issue an organisation is facing.
* Project management. Most business decisions result in projects being initiated. This is an important area of P3 and although we have seen this before there are a number of ways this area could be examined.
* Business processes and Change management. Although seen in previous sittings this could be part of a requirement. This could incorporate changes to both upstream and downstream supply chains.
* Quality. A popular area of the syllabus that has featured in a number of sittings. We have seen the key models examined in recent sittings. The importance of quality may see it included as a part requirement or underpinning a business decision.
* Marketing. Techniques and customer relationship could feature in section B. Competitive behaviour through lifecycle modelling could be an underpinning issue in either section A or B.
* Stakeholders. Identification of stakeholders has been examined previously although you may still see this as a part requirement.
Paper P4
* Role and responsibility towards stakeholders. Ethical issues continue to appear regularly as an optional discussion question, normally with practical financial issues from elsewhere in the syllabus. The discussion question is normally one of the easier optional questions.
* Advanced investment appraisal. The compulsory question often features an NPV question with an analysis of risk. Cost of capital calculations are regularly tested, make sure that you are comfortable adjusting betas for differences in gearing. Real options and adjusted present value are also popular themes, and are normally tested in section B of the exam.
* Acquisitions and mergers. Although this area was heavily examined in December, this exam normally contains a question involving valuations which the examiner sees as a crucial part of the syllabus.
* Corporate reconstruction. This is a topical area; a question could also ask you to evaluate a capital reconstruction e.g. a business that is considering offering its creditors shares in order to enable it to survive.
* Advanced risk management. We would expect to see a numerical risk management question featuring either interest rate or exchange rate hedging. Foreign currency derivatives are due to be tested numerically; the new examiner has indicated that questions may well ask you to compare the results of a hedge using a number of different hedging techniques.
Paper P5
* Scope of strategic performance measures in the private sector. Analysis of financial and non-financial performance; this could include the use of activity-based approaches or learning curves, and strategies to improve performance.
* Divisional performance and transfer pricing issues. ROI, RI , EVA or even ABC could feature here; transfer pricing could feature as an aspect of these questions.
* Problems with budgeting. Budgeting has been a favourite essay question with your examiner, especially an awareness of the problems of budgeting but was largely unexamined in 2009.
* Alternative views of performance measurement. The examiner often includes a question to evaluate an organisation against an established theoretical model. The balanced scorecard, performance pyramid and building blocks have all appeared in previous exams.
* Performance hierarchy. 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 that could easily include a simple NPV or profit analysis.
Paper P6
Income tax:
* Pension contributions – tax relief
* EIS/VCT schemes
* Income tax losses
* Accrued income scheme
* Personal service companies
* Termination payments
* Share schemes
* Overseas aspects for individuals
Capital gains tax:
* Small part disposal of land
* Takeover/reorganisations
* EIS reinvestment relief
* Damaged/destroyed assets
* Leases/wasting assets
Inheritance tax:
* Death estate, treatment of lifetime gifts
* Quick succession relief
* Gifts with reservation of benefit
* Variation of will
* Payment of IHT
* IHT implications of transferring property into a trust
Corporation tax:
* Research and development
* Intangible assets
* Liquidation/winding up
* Consortium relief
Value added tax:
VAT groups
* Imports/exports
* Partial exemption
* Treatment of VAT on disposal of buildings
Ethics
Paper P7
* A risk-based and/or planning scenario in the compulsory section
* Questions based on articles published in Student Accountant in the past six months – such as the article on Going Concern from February 2010
* A number of requirements asking for audit procedures and required evidence in respect of specific financial reporting issues
* A practice-based scenario looking at professional, ethical and quality control issues
* A reporting scenario of some sort – probably testing either emphasis of matter or other matter paragraphs
* Legal and regulatory issues affecting assurance providers, especially in the context of firms’ professional liability and the UK Companies Act 2006
* Specific procedures for obtaining evidence (such as analytical procedures and other ISAs that have changed following the Clarity Project) and evaluating the quality of audit work carried out, both for components and groups
* The requirements of other forms of assurance engagement, such as Value for Money (VfM) studies or agreed upon procedures
* The correct treatment of more complex accounting issues (such as employee benefits and adoption of IFRS) than has been seen before
* Specific ISAs may be examined in sufficient detail to warrant learning the key elements for regurgitation in the exam, such as comparatives (ISA 710) other information (ISA 720) or opening balances (ISA 510)
* Discrete topics that we have not yet seen such as questions using the context of internal audit or examples of other non-audit engagements
* The need to understand current issues such as globalisation, the impact of the recession on auditors, corporate governance, risk management and auditor liability – especially relevant in the context of the going concern article from February 2010
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June 2010 ACCA Exam tips
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An update from Student Accountant (May 2010). A must read issue for those who going for June and December exams!
Verbs that you needed to understand for the coming ACCA exams!
1) explain = involves justifying comments giving reasons and examples.
2) recommend = involves giving advice on a course of action.
Practise Non-computational question by attempting questions, analysing model answers to exam questions, reading financial newspapers and taking mock exams and quizzes.
Be warned about not attempting a question in exam! Because a question not attempted indicates to the examiner that you may have opted for question spotting in your studies, perhaps not covering the entire syllabus. You should attempt to answer all questions as this may be the major difference between passing and failing.
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