article student accountant

7/28/2019 Article student accountant

1/34

For a greater chance of passingyour ACCA exams dont pass this byPractice makes perfect with BPP test

simulations. In fact, youll have a greater

chance of passing your exams when you

attend a BPP Taught course, Revision

course and Question Day.

Platinum-approved by ACCA, BPP has

a proven formula for helping students

achieve success in their exams with

tried, tested and continuously improved

teaching methods. And our expert

tutors support you every step along the

way. They have been there themselves,

gone through exactly what youll be

going through and can save you time as

well as give you the tips and techniques

to pass the exams.

Visit bpp.com/acca or call to book on 0845 075 1100 to learn more and see

how successful you can be with BPP.

i i i i ii l i l i l l i i

i l l i i l i

i i i lll il

STUDENT ACCOUNTANT ESSENTIAL EXAM GUIDE 04/2011 35STUDENT ACCOUNTANTESSENTIAL EXAM GUIDE 10/2011

Reed Business SchoolThe Manor, Little Compton,Nr Moreton-in-Marsh, Glos GL56 ORZTel 01608 674224 Email [email protected] www.reedbusinessschool.co.uk

Reed Business School ACCA Results(Platinum accredited results) How manytuition providers publish all their results?Historic transparent results available todownload on our website Our successrates speak for themselves Contact usfor our ACCA course details

Delivering results

At the time of print the June 2011 results had not been released.These will be posted on our website when they become available.*F1 & F2 Insufficient student numbers and not included in ACCA accredited results

All profits are convenanted up to a registered charity,Reed Educational Trust Ltd. Registration no. 328347.

9234

100

44

60

41100

4486

4794

8840

51

38

88

10051

82

48100

3590

44

100

100

85

84

F1*

F2*

F3

F4

F5

F6

F7

F8

F9

P1

P2

P3P5

P6

P7

December 2010 RBS Worldwide (%)

i i i i ii l i l i l l i i

i l l i i l i

i i i lll il


2/34

ACCA is committed to providingsupport to all its students. As part ofthis support, a range of materials in a variety of media to reach as manystudents as possible is availablespecifically to address the ACCAQualification exams. Information fromACCAs examiners including examinerreports, examiner interviews and awide variety of technical articles areavailable in a range of different mediaon the ACCA website.

The two sets of examiner interviews areavailable on www.accaglobal.comand are extremely valuable resources.Each set of interviews can helpyou prepare for your exams in differentways and, when used in conjunction

with the paper resources available,they can make a big difference toyour studies.

EXAMINERS APPROACH INTERVIEWS

The examiners approach interviews arevery useful when you are undertakinga particular paper for the first time,giving you a real insight into whatexaminers are looking for in termsof exam performance. They cover themain themes of each paper and giveinformation on the style of the examsand how they are structured. They alsoadvise on exam technique, with tips onhow to succeed and potential pitfallsto avoid.

The examiners approach interviewscomplement the examiners approacharticles, which were written togive guidance on how to tackle eachexam paper. These resources containsimilar information but the differencein delivery method can be a usefuladvantage when studying and maygive you a better chance of absorbingthe examiners advice. The examinersapproach interviews also containuseful links to other relevant resources

for your exam.

EXAMINERS ANALYSIS INTERVIEWS

The examiners analysis interviews build

on the examiners approach interviews.They highlight where studentsare performing well, where students areperforming less well, and give advice onhow students can improve performancein problem areas.

Its never too soon to start listeningto the examiners analysis interviews,but they would probably be most usefulonce you have covered the syllabus andare starting to think about the detail ofa paper and how to apply what you havelearned in the exam.

They are designed to give guidancearound which areas of the syllabusstudents have been struggling within recent exam sittings and howstudents can tackle the difficultiesothers have been having. The analysisinterviews are closely related to theexaminers reports, which are publishedafter each exam session. They bringtogether the examiners reports fromthe first three sessions of the ACCAQualification, illustrating that somemistakes are being repeated consistentlyand highlighting critical areas of thesyllabus to focus on. Remember, thisdoes not mean

one of those areas will

necessarily be examinable inthe next session.

The ACCA website features examinerinterviews recently at this yearsLearning Providers Conference. It isstill very important to make use of theindividual examiners reports availablein this issue of the Essential Guide andon the ACCA website, as well as listeningto the analysis interviews. After you haveworked through a practice question,refer to the relevant examiners reportand you will find an analysis of thatquestion, what the examiner is lookingfor in a good answer, typical answersgiven by students, why they might notbe relevant and so on.

All of these resources and others suchas the Syllabus and Study Guide, pastpapers, examinable documents andtechnical articles can be accessed atwww2.accaglobal.com/students/acca/exams/

EXAMSUPPORT

ACCA IS COMMITTED TO PROVIDING SUPPORT TO ALL

ITS STUDENTS. EXAMINER REPORTS, EXAMINER

INTERVIEWS, EXAM NOTES (WHICH PROVIDE

GUIDANCE ON EXAMINABLE MATERIAL INCLUDING

RELEVANT ACCOUNTING AND AUDITING DOCUMENTS

AND A WIDE VARIETY OF TECHNICAL ARTICLES

ARE AVAILABLE IN A RANGE OF DIFFERENT MEDIA

ON THE ACCA WEBSITE AT WWW.ACCAGLOBAL.COM/

STUDENTS/ACCA/EXAMS

EXAMINERS APPROACH AND EXAMINERS ANALYSIS INTERVIEWS

EACH SET OF EXAMINER INTERVIEWS CAN HELP

YOU PREPARE FOR YOUR EXAMS IN DIFFERENT WAYS

AND, WHEN USED IN CONJUNCTION WITH THE

PAPER RESOURCES AVAILABLE, THEY CAN MAKE A BIG

DIFFERENCE TO YOUR STUDIES.

36 EXAM GUIDANCE


3/34

GOODBAD

Values, ethics and governanceare essential skills forfinance professionals.

This is why ACCA has adopted aholistic approach to your ethicaldevelopment via the exams syllabus,the practical experience requirementsand the Professional Ethicsmodule requirements you needto complete in order to obtain yourACCA Qualification.

As an ACCA student, your ethical andprofessional development starts fromday one as soon as you have registeredwith ACCA.

PROFESSIONAL ETHICS MODULE

As part of your ethical development,students are required to complete theProfessional Ethics module, developedby ACCA.

This will give you exposure to a rangeof ethical perspectives and includesseveral self-tests which require you toreflect on your own ethical behaviourand values.

You then apply what you have learnedin a case study where you experience anaudit situation from two points of view that of the auditor and the corporatefinancial accountant.

MODULE CONTENT

So what can you expect the moduleto be like? It consists of nine units

detailed below each designed to helpyou understand what it means to thinkand act as a professional accountant.Sometimes, without you even realising,your personal values can get in the wayof your professional ethics. As accountingstudents, you have been learning thetechnical aspects of your chosenprofession, and may not have spent muchtime thinking about your own values, howyou make decisions, and how you may beinfluenced in making those decisions. TheProfessional Ethics module includes someexercises to help you explore these issues.Then, when you are faced with a difficultdecision and find yourself applying thefundamental principles of your profession,you will be better prepared to apply yourprofessional judgment rather than yourpersonal beliefs.

Professional ethics module units1 Start here2 Judging the acceptability

of arguments3 What is ethics?4 Rules vs principles5 About ACCAs fundamental principles6 The framework7 Case study8 Applying what you have learned9 Tell us what you have learned

Looking at some of the units within theProfessional Ethics module more closely:

Unit 2 gives you the opportunity tojudge the acceptability of argumentsfor and against some difficult decisions.It is important that you give carefulconsideration to these arguments,and there is great value in discussingthese with your friends and colleagues.The objective is to help you see whatkinds of arguments might make youchange your mind. Providing you withthis valuable knowledge about yourselfwill be useful when you are a qualifiedaccountant, where you may be facedwith a difficult decision and find thatpeople are trying to influence yourdecisions or behaviour.

Unit 3 contains a brief overview ofethical schools of thought to help yourecognise your own personal values inthe context of established theory.

Unit 7 is an interactive case study.

Based on a realistic scenario andusing computer animation, the unitprovides the opportunity to apply whatyou have learned from other units byevaluating information, assessing theconsequences of your actions, andmaking ethical judgments. The casestudy is a chance for you to practiseyour ethical decision-making skills andwill provide you with feedback on all thedecisions you make.

Unit 8 gives you further practice atmaking ethical decisions. Withinthis module you are presented withfive situations. For each one, you arerequired to select what you think is thebest solution, and obtain feedback onyour decision. In Unit 9, you are required to write

a short paragraph about what youhave learned from completingthe module.

You are given access to the ProfessionalEthics module as soon as you becomeeligible to take Paper P1, Governance, Riskand Ethics. It is recommended that youtake the Professional Ethics module at thesame time as, or before Paper P1.

While you have the flexibility tocomplete the Professional Ethics modulein your own time, if you registered as astudent after January 2007, you shouldnote that ethics is now one of yourrequirements of membership. ACCA willnow contact you as soon as you have metall of the requirements exams, ethics,experience and performance objectives and invite you to transfer to membership.

PROFESSIONAL ETHICS

RELEVANT TO ACCA QUALIFICATION PAPERS

STUDENT ACCOUNTANT ESSENTIAL EXAM GUIDE 10/2011 37

HOW TO BE GOOD


4/34

steppingup

Paper P5 is an advanced performancemanagement paper. It looks at differenttypes of performance managementsystems and considers whether or notthey provide useful information to themanagement of an organisation. Byperformance management systems,we include techniques such asbudgeting, variance analysis, balancedscorecards and other such techniquesused by organisations to manage theirperformance so they can plan andcontrol their activities better. It alsocovers areas such as remunerationschemes for management andemployees which attempt to motivatethem to work towards the objectives ofthe organisation.

While performance managementsystems are covered in Paper F5,at Paper P5 additional models of

performance management are includedsuch as value based models, andthe performance prism. In addition,candidates must be able to advise onwhat type of systems are relevant toa particular organisation. Differentorganisations have different informationrequirements, and candidates must beable to understand these, and be awareof the factors that determine what typeof management accounting informationis needed.

Finally, in Paper P5, there is moredetailed discussion of qualitative factorssurrounding performance management.Candidates need to have much moredepth of knowledge than at Paper F5.So rather than just knowing the rationaleof the Balanced Scorecard, for example,candidates might be asked to evaluate itin the context of a specific scenario.

WhAT do I need To knoW?

Since Paper P5 builds on Paper F5, theexaminer could assume you know allof the Paper F5 topics. In practice, theexaminer is unlikely to examine PaperF5 topics in detail unless they are alsospecifically included within the syllabus

for Paper P5 too. It is advisable howeverto have a good knowledge of certainareas of the Paper F5 syllabus beforestarting to study Paper P5. The areas ofparticular importance are as follows: activity-based costing budgeting decision making performance measurement.

Activity-based costing, which is inSection A1 of the Paper F5 syllabus,feeds into activity-based management,in the Paper P5 syllabus. Someactivity-based management questionsin Paper P5 exams have requiredcandidates to perform calculations usingactivity-based costing principles, so it isimportant to have a good knowledge ofthis area.

The other specialist cost andmanagement accounting techniquesincluded in the Paper F5 syllabuswhich are also relevant to Paper P5 aretarget costing, lifecycle costing andenvironmental management accounting.However, as these are specificallyincluded within the Paper P5 syllabus,candidates should be able to refresh andincrease their knowledge of these fromtheir Paper P5 materials.

Budgeting is another important area.In Paper P5, the focus is on whetherbudgets are a useful tool or not, andwhich types of budget are useful in whatsituations. It is useful, therefore, to befamiliar with the following budgetingsections from Paper F5 syllabus: C1 Objectives of budgeting C2 Budgetary systems C3 Types of budget C5 Behavioural aspects of

budgeting.

While quantitative aspects ofbudgeting have been excluded from thislist, candidates would have to have todeal with some maths for exampleto deal with simple forecasting.Candidates would not be requiredto do detailed calculations involvingtechniques such as regression and timeseries analysis.

Decision making is an area thatsometimes gets examined in Paper P5.Candidates may be asked to evaluatea decision, so some calculation maybe required in such questions. It isimportant, therefore, to be familiar withrelevant costing principles, which are in

Section B1 of the Paper F5 syllabus. Anawareness of CVP analysis is also useful(Section B2) although it is extremelyunlikely that you would be required todraw any of the charts in Paper P5. Inaddition, a practical understanding ofcost structures, cost behaviour (fixedand variable) and break even analysiswill often be useful in analysing andgiving advice in a scenario

Knowledge of limiting factors(Section B3) is required, not just fordecision making, but also because itfeeds into transfer pricing. You shouldknow how to solve basic limited factordecisions. It would not be necessaryto go into solving linear programmingproblems for Paper P5.

Pricing (Section B4) is not specificallyin the syllabus for Paper P5, but theexaminer has indicated that he wouldexpect candidates to be aware to be ableto calculate a simple cost plus price.Pricing is also relevant in the context oftransfer pricing.

Risk and uncertainly is an importantfactor in control of an organisationso the Paper F5 topics on risk anduncertainty should also be known.Particularly important areas areexpected values, maximax, maximin,

minimax regret and the use ofsensitivity analysis, and these have allbeen examined recently at Paper P5. Itis unlikely that you would be asked todraw a decision tree at Paper P5 butknowledge the underlying principles ofprobability and joint probabilities wouldbe useful.

Variance analysis is a coremanagement accounting tool, so youdo need to be aware of it, and be ableto discuss whether it provides usefulinformation to management. Candidatesmay also be required to calculatevariances at Paper P5 level, so it isimportant to understand how to dothese particularly those variances withstrategic implications.

Performance measurement isintroduced at Paper F5, and is a coretopic at Paper P5. However, the relevantlearning outcomes from Paper F5 arealso included within the Paper P5syllabus too so you should be ableto pick up the required knowledge ofthis area from your Paper P5 studymaterial rather than needing to goback and review your Paper F5 notes.The performance measurement topics

are developed further at Paper P5 withthe introduction of new techniquessuch as Economic Value AddedTM,the performance pyramid and theperformance prism.

STudyIng PAPer P5

The core part of your Paper P5preparation will be your Paper P5 studymaterials. When studying for Paper P5,

movIng uP from PAPer f5 To P5:

underPInnIng knoWledge for PerformAnce mAnAgemenT

38 TechnIcAl


5/34

it is not necessary or desirable to learneverything in your study materials parrotfashion. Simply repeating what you haveseen in your study manuals in an examis never likely to satisfy the examinersrequirements. What is important is toread the materials, understand andappreciate the issues, and think aboutthem. Then practise past exam questionsdealing with these areas. This will helpyou to develop the skills of criticalanalysis that you will need both in theexam, and in your professional work.

In the section on beyond budgetingfor example, your textbook maywell include a list of weaknesses oftraditional budgeting processes, assuggested by Hope and Fraser. Moreimportant than learning this list is tounderstand the weaknesses suggested,and think about whether or not you

agree with them. By doing this, you willbe better placed to answer a questionin the exam on the weaknesses ofbudgeting by coming up with your ownideas, even if you could not rememberthe list from the textbook.

Have a broad knowledge of thesyllabus. It is better to have areasonable knowledge of the entiresyllabus, than a perfect knowledge ofsay 60% of it, and not to know anythingabout the rest.

Being a Professional level paper, it isimportant to read around the subject too.There are plenty of technical articles onthe ACCA website relating to Paper P5,and these are essential reading. Thesearticles have a long shelf-life so the olderarticles are equally as important as thearticles from the past few years.

As a Paper P5 tutor, I find that usingreal-life examples help my students tounderstand the concepts covered duringthe courses, and makes the materialscome alive. These examples can befound in quality newspapers and newswebsites, so try to read a good qualitynewspaper/website, if not every day, atleast once a week.

Practising past exam questions undertimed conditions is essential. A big partof the challenge in Paper P5 (and indeedall the Professional level papers) is beingable to analyse a detailed scenario, andprovide relevant answers to the questionsasked. Unless you practise this inadvance, you are at a big disadvantage inthe exam hall. Many students get into theterrible habit of reading the question andthen auditing the answer. This is a waste

of time. You only learn from a question ifyou really try it yourself.

Finally, you should also read theexaminers reports from the last sittings.These provide a useful insight into wherestudents have done well or badly inprevious exams. You can learn from theirmistakes. It also gives an insight intowhat the examiner likes and dislikes.The examiners reports for Papers P1 toP7 start on page 15.

SkIll requIred for PAPer P5

Paper P5 is a Professional level paper,and the examiner expects candidates todemonstrate the skills that they wouldneed when working in a professionalenvironment as an advisor or consultant.This is more than is required at Paper F5.

In Paper F5, you are required to beable to apply given techniques to the

short scenarios in the exam. For example,a question may ask you to calculatematerials mix and yield variances for thelast month. You are also required to beable to interpret numbers at Paper F5, forexample, using pre-calculated variancesto assess the performance of the salesmanager. The scenarios in Paper F5 areusually fairly short, and the questionsspecify very clearly what is required of you.

In Paper P5 questions, particularly inSection A, you will need to be able to dealwith much longer scenarios. The examineris seeing if you can apply your knowledgeto real life situations. This tests your abilityto deal with a larger amount of data, andidentify the most important issues. Canyou see the big picture when presentedwith a lot of detail?

You may also have to decide for yourselfwhat particular techniques you will use toanswer the question. In a recent question,

the examiner asked candidates to analysethe business environment within whichan organisation was operating, and theimplications on this for its strategy. Theexaminer did not tell you which techniqueto use to answer this. So you could haveused PEST analysis, or any other approachthat was sensible.

One Paper P5 question may well focuson several different parts of the syllabus:at this level you cant just view each topicas being in a separate box, you have toappreciate how they are all linked. Thisis much more like real life. If you are amanagement accountant in the real world,the management of the company mayask you to assess the performance of aparticular division. They are not likely totell you to assess the performance ofthe division using residual income withannuity based depreciation. They would

leave it to you to decide how to assess theperformance. The Paper P5 examiner triesto do the same.

concluSIon

The P5 syllabus builds on the knowledgecovered in Paper F5, and there are certainPaper F5 topics that you should knowwell before embarking on Paper P5. Muchhigher skills are required at Paper P5,and there is much greater application ofyour knowledge to life like scenarios. Inorder to improve your chance of success,it is good to read around the subject andpractise past exam questions.

Nick Ryan is a tutor at ATCInternational

To ImProve your chAnce

of SucceSS, IT IS good To

reAd Around The SubjecT

And PrAcTISe PAST

exAm queSTIonS.

STudenT AccounTAnT essential exam guide 10/2011 39


6/34

soundunderstanding

The aim of Paper P6, AdvancedTaxation(UK), is to ensure thatcandidates can provide clients bothindividuals and businesses with theinformation and advice they requireregarding the impact that the majorUK taxes may have on their financialdecisions and situations. The emphasisis on the practical application oftax rules to client scenarios and theproduction of professional documentsincorporating helpful, clear advice.It should be noted that the abilityto communicate with clients, HMRevenue & Customs and with otherprofessionals, is one of the five maincapabilities required of candidatessitting Paper P6 (UK).

The syllabus

Paper P6 (UK) is directly underpinned

by Paper F6, Taxation (UK). Knowledgeand understanding of the technicalcontent of Paper F6 is, therefore, vitalif candidates are to be successful atPaper P6 (UK). It is quite possible thatthe technical content of a Paper P6 (UK)question could be drawn almost whollyfrom the Paper F6 (UK) syllabus.However, such a question will require theanalysis of information provided, andthe application of technical knowledgeto the situation in order to solvethe problem.

The Paper P6 (UK) syllabus extendsthe coverage of income tax, corporationtax, capital gains tax and inheritancetax and introduces stamp duty land taxand stamp duty. The syllabus is verywide, as befits an optional paper at thislevel. New technical content is clearlyidentified in the Study Guide and will beexamined regularly.

While no part of the syllabus is moreimportant than any other, it shouldbe recognised from the above thatknowledge of the technical areas thatare exclusive to Paper P6 (UK) willnot, on its own, be sufficient to passthe exam.

The technical areas included within thesyllabus are set out in the Study Guideon ACCAs website. Candidates shouldalways check the website for the latestStudy Guide relevant to their exam sessionto ensure that nothing has changed andhence the learning that they are about toembark on is up to date.

Candidates are required to explain,calculate and apply their knowledge ofthe system of taxation in the UK. Thisknowledge must be up to date. Candidatesmust familiarise themselves with thechanges introduced by the recent FinanceActs as summarised in the Finance Actarticles published in Student Accountant.

The sTyle and formaT of The paper

The Paper P6 (UK) exam is offeredin paper format only. Candidates aregiven three hours with an additional 15

minutes of reading and planning time(RAPT). (Read page 50 for advice onhow to use the RAPT appropriately.)

Paper P6 (UK) differs from Paper F6(UK) in that not all of the questions arecompulsory. Paper P6 (UK) consistsof two sections, A and B. Questions1 and 2 in Section A are compulsory,and are worth a total of between 50and 70 marks. Questions 3, 4, and5 in Section B each have the samenumber of marks, ranging from 15 to25. Candidates are required to answertwo of these Section B questions only.The whole of the syllabus is examinablethroughout both sections of the exam.

The Section A questions requirecandidates to analyse the informationprovided and to use any guidance givento help address the requirements. Bothquestions are likely to address a numberof different taxes and to require a reportor letter as part of the answer. BecauseSection A questions are relatively large,careful time management is important,and candidates are advised to use thenumber of marks allocated to eachrequirement to determine how muchtime to spend on each part.

The Section B questions contain anintroductory paragraph, which outlinesthe technical areas within the question,together with concise structuredinformation and sub-headings to makethem easy to assimilate and navigate.This enables candidates to determinewhich two questions to answer withouthaving to read the whole of the questionif they need to due to time pressure.

Throughout the exam, candidates areexpected to be able to identify issues, aswell as demonstrate detailed knowledgeof the tax system. In line with thisemphasis on practicality, questions mayrequire candidates to address the UKtax consequences of a given situationwithout indicating which particulartaxes to consider. It is up to candidatesto identify the relevant taxes, and theissues in respect of those taxes, beforebeginning their answers.

Calculations are normally onlyrequired in support of explanations andadvice, and not in isolation. Again, it isoften up to candidates to decide whatcalculations to produce in order to dothis in the most efficient manner. Adviceon how to approach a given problemmay be provided in the question.

There is no specific allocation of

numerical calculation versus narrativebalance within Papers F6 and P6.However, in practice, Paper F6 isweighted towards numerical calculationapproximately 60 to 85% whereas PaperP6 is weighted 60 to 70% towardsnarrative explanations. In both papers, theability of candidates to be able to explaintheir treatments and opinions is vital. It isimportant to note that this does not meanthat candidates need to have perfectgrammar or spelling; it means that theyneed to make themselves understood.

Paper P6 has approximately five marksacross the exam for professional skills,known as professional marks. In orderto score well, candidates first have tosatisfy the requirement in relation tothe style and format of the documentrequested. Further marks are thenavailable for providing clear explanationsand coherent calculations (see page 12for more about professional marks).

approach To The exam

Irrespective of whether a candidate ispreparing for Paper F6 or P6, there area number of stages that they need to gothrough in order to be successful. The

approach to be taken is as follows: Acquire the knowledge and obtain a

solid understanding of the subjectarea. At both levels within the taxationstream, a good understanding of theUK system of taxation is vital to asuccessful exam result. Knowledge canbe acquired using a range of differentoptions, and it is best to select amethod that is appropriate to you.

sTepping up from paper f6 (uk) To paper p6 (uk)

we look aT The knowledge you need To bring from your

paper f6 sTudies To be successful in paper p6

40 Technical


7/34

However you choose to acquire therelevant knowledge, you should alsouse the support resources available onthe ACCA website (technical articles,Study Guides, examiner reports,examiner interviews being just someof the available resources). Theseresources are there to support you asan additional source of informationand learning.

Consolidate understanding bypractising questions that focus onspecific topic areas. In order to havea good understanding, it is vital toattempt questions that are focusedon the topic. These questions assistunderstanding of the basic approachto the topic but do not necessarilyprovide a grasp of exam technique.

To improve your exam technique andapproach, practise examstandard

questions written by both ApprovedLearning Partners content(ALPc) and ACCA past examquestions. All of ACCAs examsrequire candidates to apply theirknowledge at an appropriatelevel for the stage of exam.Candidates who attempt examswithout practising examstandardquestions are unlikely to pass asthey are unlikely to have masteredthe required exam technique ortechnical understanding.

ACCAs website includes past examquestions and answers. Note, however,that these past exams are basedon the legislation that was in force(and was therefore examinable) atthe time of the exam session. Thismay mean that some of the contentof a question or answer may be outof date.

ALPc are allowed to use these pastexam questions in varying degreesdepending on whether they arePlatinum or Gold. They adapt thequestion or answer so that the contentis relevant for the exam session(s)to which the material (study text or

revision bank) relates. ALPc mayalso write their own exam standardquestions which may look at areasthat have not yet been examined.

When practising examstandardquestions it is vital to spend timereviewing your answer against themodel answer to learn what was donewell and where mistakes were madeso as not to repeat these errors.It should be noted that the modelanswers for written questions willalways contain more than a candidateneeds to write in order to achieve agood pass. When attempting a pastexam question it is worth also takingtime to review the examiner reportfor that question to see what thecommon mistakes were, what wasdone well and how candidates canimprove performance.

Finally, when actually attempting thereal exam, it is important to follow theinstructions of the exam and answer all

the questions required. So, in SectionA, both questions are compulsory andmust be answered.

In Section B candidates must answertwo of the three questions; no moreor less. This way a candidate will havethe best possible chance of passing byattempting the 100 marks available forthe exam in the time available for thosemarks. If a candidate does not answerall of the exam questions that they arerequired to answer, they are reducingtheir chance of passing as they will notbe marked out of a 100 marks but onlythe maximum marks attributed to thequestions or question parts that havebeen attempted.

In the exam

Candidates should pay particularattention to the following in order tomaximise their chances of success inthe Paper P6 (UK) exam:Address the requirement Read the requirement carefully

in the Section A questions thedetailed tasks that candidatesare to perform will be set outin one of the documents within

each question. It may be helpfulto tick off the tasks as they areaddressed. Marks are awarded forsatisfying the requirements and notfor other information even if it istechnically correct.

The requirements of each questionare carefully worded in order toprovide guidance as to the style andcontent of answers.

Candidates should note the commandwords (calculate, explain, etc), anymatters which are not to be coveredand the precise issues they have beenasked to address.

Candidates should also note anyadditional guidance given in thequestion or in any notes following therequirement regarding the approachthat should be taken when answeringthe question.

Pay attention to the number ofmarks available this provides aclear indication of the amount oftime that should be spent on eachquestion part.

Candidates should not provide generalexplanations or long introductions. If candidates are asked to calculate,

there is no need to explain whatthey are going to do before they do

it; they should just get on with it explanations should only be providedwhen asked for.

Candidates should think beforethey write. They should then writewhatever is necessary to satisfythe requirement.

Candidates should apply theirknowledge to the facts by reference tothe requirement.

Candidates should think before theystart and manage their time. This will: Ensure that they allow the correct

amount of time for each question. Provide an opportunity to identify the

relevant issues, and the calculationsnecessary, to support their advice.

Enable them to consider whetherthe necessary calculations could becarried out in a particularly efficientway. For example, it may be that theclient will be a higher rate taxpayerregardless of proposed changes toincome; the income tax implicationscan therefore be computed at themargin without the need to preparefull income tax computations.

Section A questions are relatively

long and may include a number ofrequirements. A separate article,Guidance on approach to questions inSection A of Paper P6 (UK) is available onthe ACCA website.

Rory Fish is examiner for Paper P6 (UK)

PaPer P6 Is dIrectly underPInned by PaPer F6. Knowledge and

understandIng oF the technIcal content oF PaPer F6 Is, thereFore,

vItal IF candIdates are to be successFul at PaPer P6.

student accountant essential exam guide 10/2011 41


8/34

f3tof7top2

This article looks at what candidatesneed to do in order to progresssuccessfully from Paper F3 to PaperF7 to Paper P2. As such the articleexplains the difference in syllabus,exam and the approach that candidatesshould take to each of these exams.

Progression o syllabusIt should be noted that Paper F3 ischanging from December 2011 onwardsand the differences are explained withreference to the Paper F3 syllabus fromDecember 2011.

D , dpp f The Paper F3 syllabus has beendesigned to provide a solid groundingin double entry. From this basis,candidates will be expected to

appreciate and be able to preparefinancial statements, or extracts ofthese, from a trial balance focusingon the standard year end adjustmentsincluding depreciation, closinginventory, irrecoverable debts, accruals,prepayments and areas related to thestandards listed within examinabledocuments. An accounting treatmentcan also be tested and regularly isin isolation so not in the context ofproducing the final financial statements.

There are only a limited numberof accounting standards thatare examinable within Paper F3(see Table 1).

In most cases, the accountingstandard is not examinable inits entirety and is examinable ata relatively superficial level. Fulldetails as to what is examinable canbe found within the Study Guide andexaminable documents listed on ACCAswebsite and on page 53. Candidatesshould always check the latest StudyGuide and examinable documentsrelevant to their exam session to ensurethat nothing has changed and, as such,that the learning that they are about to

embark on is up to date.

The Paper F7 syllabus builds onknowledge of double entry, accountspreparation and accounting standards

by requiring candidates to apply this toalmost all of the accounting standardsin issue. The level of detail is muchgreater than Paper F3. Candidates arerequired to define, compute, discuss,explain and apply their knowledgeof the accounting standards. Thismeans that a good working knowledgeand understanding of the accountingtreatment is required at this level.

The Paper P2 syllabus does notrequire candidates to prepare financialstatements for individual businessentities but does require a detailedunderstanding of almost all ofthe accounting standards listed asexaminable within Paper F7 plus someselected exposure drafts identifiedas examinable within the examinabledocuments list. Candidates are expectedto appraise the accounting treatmentsproposed within scenarios, apply thedetail of accounting standards andadvise on what the correct accountingtreatment should be. Further, candidatesare expected to be able to critiqueaccounting standards and discussproposed developments.

gp The Paper F3 syllabus introducesthe concept of group accounting

and covers the core techniques,issues and principles of accountingfor subsidiaries, this includes basiccalculation of goodwill with only simpleconsideration of shares and cash, fairvalue of non-depreciable assets, basicintercompany trading. Group accountingends with syllabus addressing the issueof what an associate is, how they areaccounted for within the group accountsbut does not require candidates to applythe techniques to a numerical scenario.

Paper F7 continues the theme of groupaccounting by looking at the same areasof subsidiaries but in more depth, forexample being able to understand andapply knowledge of how to account for avariety of different forms of consideration.Candidates are also required to applyknowledge of associates.

The Paper P2 syllabus focuses onthe more complex areas of groupaccounting, including issues withregard to acquisition date valuation,changes in group, complex groupstructures (eg vertical groups), andforeign subsidiaries.

ip f

The Paper F3 syllabus concludes withthe interpretation of single companyfinancial statements where the learningoutcomes are focused on understandingthe need for ratios and interpretation.Candidates should have the ability toconduct basic interpretation, and shouldfocus on the movement of financialstatement items, eg revenue, cost ofsales, and operating expenses.

climbing the inancial accounting anD rePortingexam laDDerrelevant to acca qualiication PaPers 3, 7 anD P2

table 1: accounting stanDarDs examinable within PaPer 3

ias 1 P sias 2 iias 7 s c

ias 10 e rp Pdias 16 Pp, P d epias 18 rias 27 cdd d sp sias 28 i aias 37 P, c l d c aias 38 i airs 3 b c*

* r D 2011 d J 2013

42 technical


9/34

The Paper F7 syllabus expandsthe level of skill required in the areaof interpretation as candidates arerequired to be able to interpret the mainfinancial statements and/or a selectionof ratios, usually in the context of aindustry scenario or for a particularstakeholder in mind.

While Paper P2 candidates arenot required to interpret financialstatements in a similar manner asPaper F7, there is an expectationthat candidates will be able toappreciate and explain the implicationof an accounting treatment on thefinancial statements and, therefore,consider how this will impactstakeholder understanding.

c The Paper P2 syllabus has a whole

question dedicated to current issuesincluding revisions of accountingstandards. The examinable documentslist any exposure drafts or discussionpapers that are potentially examinablewithin a given exam period. In orderto have an appreciation of the currentissues it is important to read widelyincluding following the accounting press,IAS plus or IFRS Foundation releases,Student Accountantand Accountant inBusiness articles.

examination style anD formatThe Paper F3 exam is offered in bothpaper and computer-based exam (CBE)format. It is two hours long and fromDecember 2011 will initially have 50two-mark objective test questions whichfor the paper version will be multiplechoice only but within the CBE formatalso includes number entry, multipleresponse, and multiple responsematching question types. In the future,the exam format will move to comprise35 two-mark objective test questionsplus two longer 15-mark questions.The first of the long questions will beon group accounting and the second

on accounts preparation (with somequestions including a small elementof interpretation of no more than fivemarks). Pilots for both these exampaper formats are available on theACCA website.

Paper F7 and P2 exams are currentlyoffered in paper format only and arethree hours with an additional 15minutes of reading and planning time(RAPT). Read page 50 for how to use theRAPT appropriately.

All of the questions within thePaper F3 and F7 exams are compulsory.The Paper P2 exam comprises oneSection A compulsory question and thencandidates need to select two questionsfrom three within Section B.

Both the Paper F7 and P2 examshave questions dedicated to particularquestion types or areas of the syllabus(see Table 2).

The Paper F7 and P2 examinersdo not state a specific allocation ofnumerical calculation versus narrativebalance within their papers. However, inpractice, Paper F7 is weighted towards

numerical calculation approximately60 to 70% and Paper P2, 55 to 65%towards narrative explanations. As suchin both papers the ability of candidatesto be able to explain their treatmentsand opinions is vital. It is importantto note that this does not mean thatcandidates need to have perfectgrammar or spelling; it means that theyneed to make themselves understood.

The Paper P2 exam has marks acrossthe paper awarded for professionalism.In order to score well, candidates needto ensure that they have attempted tofocus their written answer on what wasasked within the requirement, attemptall parts of the question, and adopt alogical flow and clear presentation totheir answer (see page 12 for more onearning professional marks).

app Many candidates feel that objectivetest questions are easier to pass thanlonger-form questions. This is not trueas objective test questions can and, dotest, exactly the same detail and skill,and in many respects precise points ofdetail are even more important.

Irrespective of whether a candidate ispreparing for Paper F3, F7 or P2, thereare a number of stages that they needto go through in order to be successful.The approach to be taken is as follows: Acquiring the knowledge and obtain

a solid understanding of the subjectarea. At all levels within the financialaccounting and reporting stream agood understanding of double entry,the principles of accounting and theconceptual framework is vital to botha successful exam result and a career

within accountancy. Knowledge canbe acquired using a range of differentoptions, and it is best to select themethod that is appropriate to you.

many canDiDates feel that obJective testquestions are easier to Pass than longer-formquestions. this is not true as obJective test

questions can anD, Do test, exactly the sameDetail anD sKill, anD in many resPectsPrecise Points of Detail are evenmore imPortant.

stuDent accountant ESSENTIAL EXAM GUIDE 10/2011 43


10/34

However you choose to acquire therelevant knowledge, you should alsouse the support resources available onthe ACCA website (technical articles,Study Guides, examinable documents,examiner reports, examiner interviews

being just some of the availableresources). These resources are thereto support you as an additional sourceof information and learning.

Consolidate understanding bypractising questions that focus onspecific topic areas. In order to havea good understanding it is vital toattempt questions that are focused onthe topic. For example, within PaperF3 the treatment of depreciationor revaluation is just one of manyareas where this is required. Thesequestions assist understanding of thebasic approach to the topic but do notnecessarily provide a grasp of examtechnique.

To improve your exam technique andapproach, practise exam standardquestions written by both ApprovedLearning Partners content (ALPc)and ACCA past exam questions. Allof ACCAs exams require candidatesto apply their knowledge at anappropriate level for the stage ofexam. Candidates who attempt examswithout practising exam standardquestions are unlikely to pass asthey are unlikely to have mastered

the required exam technique ortechnical understanding. ACCAswebsite includes past exam questionsand answers for all papers going backa number of years.

These past exams are based on theregulations, accounting standardsand legislation that were in forceand were therefore examinable atthe time of the exam session. Thiscan mean that for some subjects the

content of the question or answer isout of date. ALPc are allowed to usethese past exam questions in varyingdegrees depending on whether theyare Platinum or Gold. They adapt thequestion or answer so that the contentis relevant for the exam session(s)that the material (study text orrevision bank) relates. ALPc alsotend to write their own exam standardquestions which may look at areasthat have not yet been examined. Veryfew examiners address the same topicin exactly the same way as they did inprevious exam sessions.

When practising exam standardquestions it is vital to spend timereviewing your answer against themodel answer to learn what was donewell and where mistakes were madeso as not to repeat these errors.It should be noted that the modelanswer for written questions normallycontains more than a candidateneeds to write in order to achiever agood pass. When attempting a pastexam question it is worth also takingtime to review the examiner reportfor that question to see what thecommon mistakes were, what wasdone well and how candidates canimprove performance.

reaD the requirementsFinally, when actually attempting thereal exam whether by paper or CBE, it

is important to follow the instructionsof the exam and answer all thequestions required. So if all questionsare compulsory answer all of them,if there are some questions that areoptional (eg two from three questions)answer the required number of theseoption questions (so two questions)and not more or less. This way you areensuring you have the best possiblechance of passing by attempting the100 marks available for the exam in thetime available for those marks. If youdo not answer all of the exam questionsthat you are required to answer, you arereducing your chance of passing as youwill not be marked out of 100 marks butonly the maximum marks attributed tothe questions or question parts that youhave attempted.

Sharon Machado is ACCA qualificationscontent manager and has responsibilityfor the financial reporting exams

table 2: DeDicateD questions in PaPers f7 anD P2

q Pp f7 mk Pp P2 mk1 gp 25 gp 50

dd, p

2 a pp 25 a dd 253 c fl d/ a dd

p 25 d 25

4 a dd 15 c 255 a dd 10

when actually attemPting the real examwhether by PaPer or cbe, it is imPortant tofollow the instructions of the exam anDanswer all the questions requireD.

44 technical


11/34

F8TOP7

This article explores the similaritiesand differences between Paper F8 andP7 and identifies how best to preparefor the step up to the Professional level.

It comes as no great surprise thatthe audit papers are among the hardestACCA exams to pass. Although there aremany different reasons for this perhapsthe most fundamental is that there is alack of scope for repetition of pre-learntknowledge in audit. Candidates liketo learn tables, formulae, definitions,laws, standards and, put simply, auditdoesnt work like that. Of course, thereare things that need to be learnt butaudit is more concerned with how thatknowledge is applied in practice.

Audit is, after all, a very practicalaspect of the profession. It is concernedwith gathering and presenting evidence,analysing that evidence and using it to

inform a single but very important decision: are the financial statements freefrom material misstatement? You cantsimply perform the same procedures onevery audit as each client is different andeven recurring clients change continuously.

Audit is therefore about understandingthe specific circumstances of thoseclients, selecting procedures to reflectthis and interpreting the specific resultsobtained. It rarely involves standardformulae or repetition of laws orstandards. So why would the exam?

SIMILARITIES BETWEEN PAPER F8 AND

PAPER P7

Paper F8 underpins Paper P7. The keytopics in Paper F8 (the audit framework,planning and risk assessment, controlassessment, audit evidence, review andreporting) are all fundamental elementsof performing an audit and are thereforeassumed knowledge for Paper P7 aswell. In fact the Paper P7 examineridentified planning, risk assessment,obtaining evidence, and reportingas topics that are likely to feature inevery Paper P7 exam in her examinersapproach article (January 2007).

There are further similarities: theopening questions are usually based onlengthy scenarios that commonly focuson elements of planning, risk assessmentand audit procedures; both contain threequestions based on shorter scenariosthat focus on a range of topics thatcommonly include ethics, specific aspectsof auditing and reporting. The latter topictypically forms the basis of Question 5.

Candidates need to make sure theyare comfortable will these similaritiesto ensure the transition from Paper F8to Paper P7 is as smooth as possible.However, Paper P7 is different. Putsimply it is harder: it has more advancedsyllabus requirements; it has a largersyllabus and is based on more complexfinancial reporting standards, and thequestion requirements are largely appliedin nature, meaning that few, if any, marksare awarded for rote-learning.

SYLLABUS DIFFERENCES BETWEEN

PAPER F8 AND PAPER P7

The most obvious difference betweenPaper F8 and Paper P7 is theadditional topics in the latters syllabus.These include: Professional issues, such as money

laundering, professional liability and

practice management includingadvertising, publicity, obtainingprofessional work and fees, qualitycontrol (ISA 220 and ISQC 1),and tendering.

Auditing groups (ISA 600). Business risk. Non-audit assignments, including

due diligence, prospective financialinformation reviews, and forensicaudit (ISAE 3400 and 3042, ISR4400, ISRE 2400 and 2410).

Current issues and developments. The accounting concepts developed

in Paper P2 (including related partiesISA 550).

In addition, the UK and Irish adaptedpapers include auditing aspects ofinsolvency in the syllabus.

Some knowledge accumulation will,therefore, be required. For candidateswho have reached Paper P7; manyof the principles will have beencovered in some way in previousstudies. It should also be rememberedthat the professional componentrequires commercial judgment andcommon sense.

EXAM FORMAT, STYLE AND REQUIREMENTS

The fundamental difference betweenPaper F8 and Paper P7 is the way inwhich they are examined. Candidatesshould be aware that there are threeintellectual levels relevant to the exams:level 1, knowledge and comprehension;

level 2, application and analysis; andlevel 3, synthesis and evaluation.

Paper F8 focuses purely on levels1 and 2, while Paper P7 is primarilyfocused on levels 2 and 3.

This is emphasised in the examinersapproach articles for each paper. In thePaper F8 version (March 2010), the

TAKING THE STEP UP FROM PAPER F8 TO P7

RELEVANT TO ACCA QUALIFICATION PAPERS F8 AND P7

PAPER P7 IS ABOUT SELECTING THE RIGHT TOOLS

AND APPLYING THEM TO THE OFTEN

NARROWLY DEFINED AND SITUATION SPECIFIC

QUESTION BEING ASKED. IF CANDIDATES CAN LEARN

HOW TO DO THIS THEN THEY SHOULD BE ABLE

TO DO WELL IN PAPER P7.



12/34

examiner states that the aim of Paper F8is that it can be passed by a candidatewho understands the underlying theoryof auditing and can apply that theoryto relatively basic audit situations.The emphasis on application is alsoapparent in the Paper P7 examinersapproach article (January 2007)but the examiner also stresses thatcandidates need to be able to display: anindependent opinion backed by reasonedargument,an appreciation of commercialfactors which influence practicemanagement and an appreciation of thefastmoving developments in audit andassurance practices.

It is of vital importance thatcandidates understand the practicalimplications of these conceptualdifferences. Few people would take thesame approach to a multiplechoice

style exam as they would to a discursiveone; they require different techniquesand thought processes. For the reasonsexplained above the same should be trueof Papers F8 and P7.

The easiest way to appreciate thesedifferences is to compare the exampapers. The June 2011 papers can bedownloaded from the ACCA websiteand even a quick scan will reveal someobvious differences. Please note thatthe analysis below is based on theinternational versions, however theprinciples discussed are equally valid forall papers.

First, in the Paper F8 exam there are24 marks available for basic knowledgethat requires no application. The samecan be said for only six or seven marksin the Paper P7 exam. In both cases itshould be clear that students cannotpass either exam simply with prelearntknowledge.

Second, the language of therequirements is different. Paper F8favours explain, describe, state,and list, with recommend usedsparingly. Paper P7 also uses explaina lot but there is a significant emphasis

on recommend requirements witha number of discuss and criticallyevaluate type questions as well.

Finally, the wording of the scenariosand the complexity of the questions aremore advanced in the Paper P7. Thisis perhaps best illustrated with someexamples. The first uses the topic ofaudit risk, which is common to bothPaper F8 and Paper P7.

In Question 3, Donald Co, of theJune 2011 Paper F8 exam, candidatesare presented with a scenario basedon an airline. The scenario statesthat Donald Co offer a 90day creditperiod to travel agents but due to theeconomic environment a number ofreceivables are struggling to pay. Thereis a clear risk of noncollection ofreceivables and therefore an increasedrisk that receivables may be overstated.

In Question 1, Bill Co, of the June2011 Paper P7 exam, candidates areasked to perform a financial statementsrisk assessment (a component of auditrisk) of two specific issues; one beingthe reassessment of the profitability ofa construction contract, and the secondbeing the discontinuance of a specialistdivision of Bill Co.

Most people would agree that

receivables accounting is a relativelymore straightforward topic that requireslittle more than knowledge gainedduring Paper F3. The topics encounteredin Paper P7 can include much morecomplex financial accounting matters,such as: group accounting, financialinstruments, pensions accounting,leases, share options, and deferred tax.

The differences continue beyondthe topics. In the Paper F8 questionDonald candidates are asked todescribe five audit risks... in planningthe audit of Donald Co. In the Paper P7equivalent candidates are requested toprepare briefing notes for my (the auditpartners) use, in which you explain thematters that should be considered inrelation to the treatment of these twoissues in the financial statements, andalso explain the financial statementsrisks relating to them.

The Paper P7 version is much moreopenended. The matters in thisquestion include anything that affectsthe planning and conduct of the auditand the way in which the financialstatements are prepared. Candidatesare also required to present their

responses in a professional mannerand marks are awarded accordinglyfor this.

Another good example is the way inwhich substantive audit proceduresare tested. In Paper F8 the items to beaudited are identified in the syllabusand they are all basic elements ofthe financial statements studied inPaper F3.

In Question 1, Tinkerbell Toys Co,of the June 2011 Paper F8 exam,candidates are asked to describesubstantive procedures the auditorshould perform to confirm Tinkerbellsyearend receivables balance. Althoughsome application is required, awellprepared candidate would be ableto suggest sufficient prelearned auditprocedures to pass this question.

This is not possible in Paper P7;candidates could be asked whatsubstantive procedures they wouldperform on any element of the financialstatements. In addition, they may notjust be asked how they would audit anasset or liability, they may be askedhow they audit a specific element ofthe calculation or a specific assertion.Examples include the audit proceduresto be performed on:

The classification of noncontrollinginvestments (June 2010).

The training costs capitalised inrespect of new machinery (Dec 2009).

The recoverability of a deferred taxasset (Dec 2008).

It is not possible to prelearn auditprocedures for these; they are toonarrowly defined and it is impossibleto second guess which elements of theaccounts are going to be scrutinised.The only way to approach questions ofthis nature is to thoroughly understandthe basic principles of planning andperforming audit procedures and thento learn how to apply them to never seenbefore requirements. Candidates needto learn the process of answering thesequestions and not focus on trying tolearn the answers.

How to approacH tHe step up to

paper p7

In some ways Paper F8 is perhapsmore challenging than Paper P7: it isunfamiliar to most; there is a lot ofnew material to learn; and it is one ofthe first application style papers that

candidates come across. However,many candidates, having masteredPaper F8 wrongly think that they canapply the same principles to studyingPaper P7. Usually this means learningdiagrams of how control systemsoperate, lists of controls tests, lists oftests for sales, receivables, purchases,payroll, etc, lists of advantages anddisadvantages of internal auditing and

46 tecHnical


13/34

computerassisted auditing. Practice ofapplying this knowledge to past examquestions is often left until the latterstages of study (this is not an approachI would advocate).

Paper P7 is about process; you areplaced in unique, never seen before,real world situations with a set oftools at your disposal and you areasked what do you need to do now?.Would someone take exactly the sameapproach to building a factory in twodifferent countries? The answer mustsurely be no. The basic principles ofconstruction will be the same but youneed to consider what resources (land,labour, materials) you have available,what the differences in pricing will be inthe two locations, local building laws,interest rates and exchange rates.

This is Paper P7: the tools and

the processes are the same but theenvironments and circumstances arealways different. You cant bludgeona prelearnt response into a questionwhere it simply does not fit, in exactlythe same way as you cannot force onecountrys building principles on the restof the world.

There is only one way to learn how toapply these tools: practice! The sharpintakes of breath are unmistakable butit is the painful truth of Paper P7; itcannot be learned from reading alone.Junior auditors spend years learning

how to audit by doing it; they start withthe audit of noncurrent tangible assetsand cash because they are the simplestthings to audit. Only with years ofpractise can they move on to the auditof subsidiary accounts, pensions andcomplex financial instruments.

If you seriously wish to pass Paper P7do as many past paper exam questionsas possible. In fact, do them all.

conclusions

The problem with professional studiesis that all too often people and notjust candidates are too concernedwith learning the right or wronganswer. In all honesty I doubt thatanyone ever writes a response toa Paper P7 question that matchesthe examiners answer, not like itwould for a tax or financial reporting

question anyway. Paper P7 is aboutselecting the right tools and applyingthem to the, often narrowly defined

and situation specific, questionbeing asked.

If candidates can learn how to dothis then they should be able to do wellin Paper P7. Unfortunately this is nota skill that is easily or quickly gained.This process begins on day one ofstudy and, for those who continue theirauditing careers, it never ends.

Simon Finley is a content manager forKaplan Publishing and an audit tutor

tHis is paper p7: tHe tools anD tHe processesare tHe saMe But tHe enVironMents anD

circuMstances are alwaYs DiFFerent. You

cant BluDGeon a pre-learnt response into a

Question wHere it siMplY Does not Fit, in eXactlY

tHe saMe waY as You cannot Force one countrYs

BuilDinG principles on tHe rest oF tHe worlD.

stuDent accountant ESSENTIAL EXAM GUIDE 10/2011 47


14/34

FOCUS ON P3/

This article explains the rationalefor introducing certain changes toPapers P3 and P5 from June 2011.The article clarifies the differencein approach taken to the potentialexamination of the new cost andmanagement accounting areas in thePaper P3, Business Analysissyllabusand contrasts this with the approachtaken by the Paper P5, AdvancedPerformance Managementexaminer.

The article also contains examples ofthe type of requirements that could beincluded in future exam papers to takeinto account these changes and howsuch requirements are set in differentcontexts in these two papers.

rationale For changeS

Since the major changes to the ACCAQualification syllabus in 2007, ACCAs

policy on qualification development isto make regular changes and updatesto qualifications on a continuousimprovement basis, introducing,amending and removing syllabusareas as required, to anticipate andrespond to external stakeholder needsand requirements.

As part of this regular qualificationreview process, it became necessary tomake specific changes to Papers P3 andP5, alongside revisions to other areas ofthe ACCA Qualification syllabus.

To comply with regulatoryrequirements and to make Paper P3more relevant and fit for purpose asa comprehensive business analysispaper it was necessary to makesome material changes to its syllabus.These were first explained in an articlepublished in Student Accountantin 2010.The most significant changes were toincrease the financial content of thesyllabus, particularly in Section G,and to include forecasting, budgeting,costing and decision-making techniques.The section on quality was removedcompletely from the syllabus to makeroom for the new areas. This removal

also reduced the potential overlapbetween Papers P3 and P5.

These new additions now help thePaper P3 examiner introduce a widerrange of quantitative and financialinformation into business scenarios,allowing scope to examine thesescenarios more comprehensively andin a wider range of different contextsthan was previously possible. These newareas also allow the examiner to presentinternal management information, inaddition to externally reported financialinformation, as well as enabling a widerand more holistic analysis of any givenbusiness situation.

To support this even further, anew subject area within Section G ofPaper P3 will also be added from June2013. This will read as follows:G3e Evaluate the role and limitations

of cost accounting in strategydevelopment and implementation,

specifically relating to:(i) direct and indirect costs in

multi-product contexts(ii) overhead apportionment in

full costing(iii) activity-based costing in

planning and control.

underPinning knoWledge For

PaPerS P3 and P5

Knowledge areas of the costing andmanagement accounting techniques,as covered in Atrill (2010) Chapters 7and 9, are assumed knowledge fromPaper F5, Performance Management.Paper P3 questions could potentiallydraw on this knowledge and, therefore,Paper P3 candidates are expected to befamiliar with it. Paper P3 students arereferred to the additional reading thatreviews and reinforces their Paper F5knowledge. Understanding thesetechniques will help candidates providea more rounded analysis of businessfinancial and quantitative data in futurePaper P3 exam questions.

Neither Papers P3 nor P5 wouldassess these techniques in the samelevel of technical detail as Paper F5

does. They are more likely to form partof an overall analysis of any financialinformation given. Paper P5 could,however, focus in depth on certainindividual techniques or processesintroduced in Paper F5, but woulddo so from a much broader businessperformance perspective.

What PaPer P3 could

Potentially examine

Before these changes, Paper P3 examquestions could often require candidatesto interpret financial accounting orfinancial reporting data, usually aspart of an analysis of the success ofa companys strategy, or as part of anassessment of a companys strategicposition. From June 2011 and onwards,cost accounting, budgeting and varianceinformation could also be included withinthe financial and quantitative informationgiven in the scenario. This data couldbe used to help the candidate select orevaluate the current strategic position ofan organisation or to assess or preparestrategic options available to an enterprise.

From the June 2013 exam session,Paper P3 could also potentially requirecandidates to use or critically evaluate

methods of costing and of costapportionment to products and divisionsin the context of strategy formulation,implementation or evaluation.

Paper P3 also now includes a specificlearning objective concerning pricing. Thislearning objective requires candidatesto describe a process for establishing apricing strategy for products and services.This process would usually includequantitative issues (covered in Paper F5)and softer factors, such as the needto align price to strategic positioning.Notice the focus of the learning objectiveis on process. The examiner might seta scenario describing the launch of anew product and then set a questionasking how such a product should bepriced, given the context of the product,organisation and market. Similarly,a Paper P3 scenario might requirecandidates to question the usefulnessof crude allocation and apportionmenttechniques in cost-plus pricing.

Different budgeting techniques wouldnot be directly assessed in Paper P3,but basic principles of sound budgetingas a business process could be part ofa requirement of a Paper P3 question.

Budgeting assists the short-termplanning and control of a businessstrategy. Questions could concernthe basic principles, benefits anddisadvantages of budgeting. They couldalso include the notion of controllingcosts and revenues and of flexing thebudget to identify variances. An exampleis provided in Question 3 of the revisedPilot Paperavailable on the ACCA website.

We take a cloSe look at What the changeS to the PaPer P3

and PaPer P5 SyllabuSeS mean to candidateS Planning on taking

either PaPer in december 2011

P5

48 technical


15/34

Paper P3 may also requirecandidates, as part of a strategicanalysis, to analyse the variable costsof a division or factory and offer adviceon, for example, the outsourcing ofa particular product or the wisdomof taking on a special contract. Upuntil the syllabus revision, outsourcingquestions only examined the principlesand qualitative advantages anddisadvantages of outsourcing. Thesyllabus change now means thatfinancial data might be included in suchanalysis, which of course, in reality,it would be. Again, such questionsuse and build on material in thePaper F5 syllabus.

Paper P3 also includes a specificlearning objective concerning theproduction and interpretation ofdecision trees to assist in strategic

and operational decision making. Theconstruction of a tree might be required,or candidates might be asked to considerthe accuracy of the data (particularlyprobability estimates) and interpret theresults of a decision tree analysis.

Finally, note that quantitativeforecasting methods (least squaresregression and time series analysis)have been added as a specific learningobjective. No formulas have to bememorised (except y = ax + b) as thearithmetic work will be complete, as inQuestion 3 of the revised Pilot Paper.However, candidates should be ableto extrapolate the data (for example,through substituting values into anequation) and interpret not only itsfindings but also the robustness andusefulness of the forecasting technique.

What PaPer P5 could

Potentially examine

Paper P5 is a high-level performancemanagement exam. This syllabusalso heavily builds on knowledge andunderstanding acquired from studyingand passing Paper F5.

Paper P5 could potentially examine

types of budgeting relevant in theprivate versus the public sector,including fixed, flexed, rolling andincremental budgeting in a performancemanagement context. Questions couldbe detailed, asking for the differenttechniques to be evaluated againsteach other (involving calculations) anda suitable recommendation made for aspecific scenario.

Paper P5 may potentially examine, indepth, the application of activity-basedand zero-based budgeting and beyondbudgeting as performance managementtechniques again, in much greaterdepth than Paper P3. Paper P3might only question the relevanceand appropriateness of incrementalbudgeting as a valid business planningmethod in more general terms,for example.

Paper P5 would treat pricingdifferently to Paper P3, being morelikely to focus on such areas as transferpricing as a performance managementcontrol technique and as a method ofmotivating or rewarding performance.Paper P3 would not examine transferpricing as a technique at any level.

Cost accounting techniques suchas activity-based costing (ABC) will be

covered in more depth than would everbe the case in Paper P3, which mightonly examine this as part of an overallrequirement on cost-plus pricing, or onthe effectiveness of such informationfor product portfolio management in astrategic context. These techniques linkPaper P5 to pricing issues. However,Paper P5 will be interested in pricingonly in so far as this is an obviouscommercial implication of the costingtechniques addressed in a question.Strategic issues associated with pricingare examinable only in Paper P3.

Paper P5 may set a specificrequirement where quantitative dataon cost drivers and set-up costs etc,would be included in a scenario, andcandidates would be expected either tocalculate a product cost or commenton the validity of the costs arrived atusing one method as compared toanother, specifically from a performancemanagement perspective.

Outsourcing is examinable as astrategy at Paper P3 and, while thisalso has relevance at Paper P5, PaperP5 will be interested in the termsand conditions of an outsourcing

agreement (for example, service levels,quality implications) and how these aremanaged from either the supplier or thecustomer perspective.

Summary

Paper F5 is now assumed knowledge forboth Papers P3 and P5, but the detailedcalculations required in Paper F5 areunlikely to form a substantial part of anyquestion in Paper P3. Paper P5 couldassess areas already covered in Paper F5,but at a more advanced level and indifferent contexts. Clearly, students optingto take the Paper P5 option need to ensurethat they review their knowledge of thePaper F5 syllabus before undertaking studyfor Paper P5 by referring to the Paper F5approved study texts and revision kits.

Chapters 7 and 9 of Atrill are usedas part of the reading list for Paper P3to specify the assumed knowledge andprovide revision for those who havepreviously studied or been exempted fromPaper F5. From June 2013, Chapter 8 ofPeter Atrills book also becomes relevant

to cover the new learning objective definedearlier in this article (G3e).

Paper P3 includes high-level coverageof budgeting, forecasting, pricing, costingand quantitative decision making to allowa more comprehensive analysis of acompanys strategic position or strategicoptions. This contrasts with exam papersbefore the syllabus changes, where onlyexternally reported information was usedin this type of analysis. Paper P5 wouldexamine transfer pricing as a techniquein more technical depth at the divisionalor corporate level in a performancemanagement context and, more broadly,the general implications of costingtechniques on pricing. Paper P3 wouldmainly examine pricing considerationsor alternatives as part of a strategicapproach, such as to gain market shareor achieve cost leadership. Paper P5would not cover pricing in this way.

Paper P3 will only assess principlesof management accounting as part ofa wider analysis of a business situation,whereas Paper P5 may discretely examinea particular management accountingarea such as a specific budgeting, costingor pricing technique as appropriate to

alternative business sectors. Paper P5might also require the candidate to showan in-depth knowledge and understandingof the particular technique and itsadvantages and disadvantages in relationto planning, measuring and controllingbusiness performance.

Gareth Owen is ACCA qualificationsdevelopment manager

PaPer F5 iS noW aSSumed knoWledge For both

PaPerS P3 and P5, but the detailed calculationS

required in PaPer F5 are unlikely to Form a

SubStantial Part oF any queStion in PaPer P3.PaPer P5 could aSSeSS areaS already covered in

PaPer F5, but at a more advanced level and in

diFFerent contextS.

Student accountant essential exam guide 10/2011 49


16/34

Reading and planning time (RAPT) isa 15-minute time allowance given toall students taking three-hour exampapers.

WHAT CAN YOU DO IN RAPT?This additional time, to be spent atthe beginning of each three-hour examallows you to familiarise yourselfwith, and to navigate around, theexam paper. During RAPT you can

read and understand the questionson the paper and begin to plan youranswers before you start writing inyour answer books. You can also usecalculators to make some preliminarynumerical calculations.

RAPT begins when instruction isreceived from your centre supervisor.You must not open your question paperuntil advised to do so, and during RAPTyou may only write or make notes onyour question paper. You must not writeanything in your answer booklets untiladvised to do so by the supervisor.

HOW CAN YOU MAKE THE BEST USEOF RAPT?RAPT gives you the opportunity tomake sure you are clear about what theexaminer is assessing. It also allowsyou valuable extra time for thinkingand planning. To use this additional 15minutes most effectively: carefully read and understand all

question requirements, making aninformed choice about which optional

questions to attempt where applicable read through and highlight relevant

information and financial data, notingwhy it is included

take note of the marks awarded foreach question and the allocation ofmarks between different requirementswithin a question

start to plan your answers,particularly for discursive questions

think about the order in which toattempt questions

make preliminary calculations.

Reading the questionrequirements

You should use some ofthe RAPT to carefullyread through the mainrequirements in eachquestion. This isparticularly importantin exams where youneed to decide which

questions to answer.Even where there is

no choice of question,it is still importantto read the question

carefully so that youunderstand what theexaminer is askingyou to do. All toooften, examinersreports containreferences to students

who have answeredquestions they wanted

to answer rather than

the ones the examiner was asking. Thebest way to avoid this is to use RAPTto ensure that you fully understand theverbs used by examiners. For example,if the examiner has asked you tocompare and contrast two theories ortechniques, they are not looking for afull description or explanation of each,but an explanation of the similaritiesor differences.

Read and highlight relevant informationand financial data, noting why it is includedRAPT allows you to have a first readthrough of all the information containedin each question. Having already carefullyread the question requirements, you cannow highlight any relevant informationor data which you feel are of most

relevance with reference to each questionrequirement. You can use calculatorsduring RAPT, which allows you to makequick calculations of key financial orquantitative data contained within theexam paper.

Reading through the paper will allowyou to familiarise yourself with andfind your way around the exam paper.As a result, when you come to writing inyour answer book, you will already havea good idea what is relevant information,where it is located, and possibly how touse it.

In case study or scenario questions,RAPT is a particularly good opportunityto familiarise yourself with the facts anddata contained within the case studyand to decide what information maybe the most relevant. RAPT also allowsyou to gain an initial understandingof the main facts of a case study. Thismeans that when you come to readit again during the exam, things willbecome much clearer, and more pointswill become apparent, as happens whenwatching a film or reading a book for thesecond time.

As would be expected, most ACCA

exam questions contain financialdata and information that must beconsidered and analysed. During RAPTit is useful to think about why suchinformation is included, with referenceto the question requirements, and toconsider which of this information ordata is of particular relevance andhow it might be needed to answerthe questions.

READINGANDPLANNINGTIMERAPT IS AN ADDITIONAL 15 MINUTES WHICH IS TO BESPENT AT THE BEGINNING OF EACH THREE-HOUR EXAMALLOWS YOU TO FAMILIARISE YOURSELF WITH, AND

TO NAVIGATE AROUND, THE EXAM PAPER.

50 EXAM GUIDANCE


17/34

Take note of the mark allocation betweendifferent requirements within questionsYou should also use RAPT to help youplan your approach to answering thequestions. This is particularly importantwhen you are deciding which questions

to attempt at the Professional level ofthe ACCA Qualification.

When you are first reading thequestion requirements, you shouldundertake a personal exam SWOTanalysis matching your own strengthsand weaknesses to the opportunitiesavailable and thereby identify anypotential threats to your performancewithin the exam paper.

Where you have a choice, you shouldidentify those question requirements(and their specific parts) which offer youthe best opportunity to earn marks. It isparticularly important that your choice ofquestions enables you to give your bestperformance in the exam. When makingyour question choices you need to beaware of the mark allocation. A questioncould look very attractive if you see oneor two requirements in areas you havestudied and revised. However, if theserequirements only attract a few marks and the main requirement, which attractsthe most marks, is one which you feelunprepared for it may be advisable toattempt another question.

By doing this you will make a moreinformed choice of question, where

choice exists. Even where there isno choice, it is still important toassess which parts of which questionrequirements attract most marks andwhere you need to focus your attention.

Start to plan answers particularly fordiscursive questionsIf time allows, after reading the paper,it is worth planning answers to certain

but there may be good reasons why youshouldnt do this. For example: There is a question you believe you

can answer well, that you have revisedfor thoroughly and therefore, byanswering it first, you get yourself offto a good, confident start.

There is a question which, if youdont answer it first, could worry anddistract you during the exam, andmay be more difficult to answer lateron when you become more tired.

You want to tackle the question withthe highest mark allocation whileyou are at your freshest and mostdisciplined, both to ensure that youperform well and that you leaveenough time to attempt all other

questions. You prefer to start with a shorter

question and leave a longer case studyquestion until you have settled intothe exam.

There may be other reasons why youmight want to tackle a paper in aparticular order, so RAPT is the idealtime to make that decision and todecide on your exam strategy.

It is important that you always answerevery part of a question before movingon to the next question clearlylabelling all parts of your answer.Ideally, you should answer all partsof a question in order, and there aretwo main reasons for this. First, theremay well be a logical and progressivestructure to the requirements of aquestion, and so answering these inthe wrong order could put you at adisadvantage. Second, if your mind isengaged with the information containedwithin a particular question, and youleave it part way through to move onto another, you will need time to get togrips with that information again whenyou return to that question later. This is

not a good idea.

SUMMARYMaking the best use of RAPT, ratherthan rushing ahead to write down asmuch as you can in the time allowed,will help you develop a better and moreeffective exam strategy. It will also helpyou develop a more relaxed, positive, andcontrolled approach.

questions, particularly to longer-formdiscursive questions. Start by tryingto identify the relevant main themeswithin a question; normally relevantpoints can be classified under a fewbroad headings. There is usually

insufficient time to identify specificpoints during RAPT, but it is veryuseful to identify the main headingsunder which to put these points.

Identifying these headings orthemes also acts as a way for you tostructure your answers logically, forwhich some professional marks areavailable at the Professional level of theACCA Qualification. It will also help toremind you about the types of pointsyou should be making under eachheading so that you can maximise themarks you can earn. For example, aPaper P1 exam question could containthe following requirement: Explainfour roles of a non-executive directorand how cross-directorships couldundermine these roles.

During RAPT, you could identifythe four roles that you would need toexplain, and quickly write these downas an aide-memoire. For example, youcould identify the following roles: strategy scrutiny risk people.

When you answer this question in theexam you can develop these roles andexpand on them before you go on toidentify how cross-directorships couldundermine these roles.

Think about the order in which you shouldattempt the questionsYou can answer questions in the orderthey are presented in the exam paper,



18/34

PER: Pathway tomEmbERshiP

Becoming an ACCA-qualifiedaccountant does not just involvepassing your exams and theProfessional Ethics module, youalso need to complete the practicalexperience requirement (PER).

You can gain your practicalexperience before, during or after youcomplete the exams.

What is PER?

PER provides a structure for youto follow by setting you a rangeof performance objectives. Theperformance objectives ensure you gainthe experience to demonstrate that youhave the abilities required to become anACCA member.

The performance objectives areclosely linked to the exam syllabusand many students try to coordinatetheir studies and practical experienceachievement to gain the mostfrom both.

What do i havE to do?

To begin achieving your PER, you needto be working in an accounting orfinance-related role. You will need to: find a workplace mentor complete 36 months

employment in an accounting orfinance-related role(s)

achieve 13 performance objectives record your progress using the

trainee development matrix (TDM) make a PER return each year.

If you think the opportunities to achieveyour PER in your current role are

limited, consider other options availableto you before you choose to findalternative employment. Aim to get youremployers support to help you gainyour PER; consider work shadowing,secondment or an internship; and workclosely with your workplace mentor.

aRE you a full-timE studEnt?

If you are a full-time student or youare not working in a relevant role, startthinking about what steps you willneed to take in the future to gain thepractical experience you need in orderto become a member.

For a more information on thepractical experience requirement, readour PER Guide for Trainees available atwww2.accaglobal.com/students/acca/

per/support.

36-months PRactical ExPERiEncE

It doesnt matter what sector ororganisation you work in or choose towork in. ACCA trainees can work inany sector and size of organisation.Whats important is to look for theopportunities to help you meet yourPER and to obtain a total of 36-monthsexperience in a relevant role or roles.

Ideally, this means that you have ajob where the majority of your timeis spent on activities and tasks thatare accounting, finance, audit andassurance related, or in other relatedtechnical areas such as taxation,insolvency and forensics.

Even if your job includes only asmall amount of accountancy andfinance work, it can count as long asyou pro rata the time you spend onthese activities.

For example, if only a quarter ofyour working time (equivalent tothree months) during the year is spentin an accounting capacity, you may onlyclaim three months as relevant time inyour PER return. This may mean that it

will take you more than three years toachieve the relevant experience becausesome of your experience is not relevantand will not count.

Your experience doesnt have tobe gained in a single role or onecontinuous period and relevantexperience gained before you joinedACCA may be counted, providing it canbe verified by a workplace mentor.

PERfoRmancE objEctivEs

Performance objectives are ACCAsindicators of effective performanceand set the minimum standard of workthat you are expected to achieve anddemonstrate in the workplace.

They describe the kind of workactivities you may carry out and thevalues and attitudes you are expectedto possess and demonstrate as atrainee accountant.

Performance objectives are dividedinto key areas of knowledge which areclosely linked to the exam syllabus

reinforcing that any knowledgedeveloped through the exams will havea clear application in the workplace.

You will demonstrate yourachievement of the performanceobjectives to your workplacementor by answering three uniquechallenge questions for eachperformance objective.

challEngE quEstions

For each performance objective youcomplete you will need to answer threechallenge questions which are thensubmitted to your workplace mentor forreview and sign off.

The challenge questions help yousummarise your work activity so yourworkplace mentor ca

article student accountant

Documents