ti business analysis study guide 2013
DESCRIPTION
Technical Integration - Business Reporting study resourcesTRANSCRIPT
The Institute of Chartered Accountants in England and Wales
BUSINESS ANALYSIS Advanced Stage
www.icaew.com
Study Guide
For exams in 2013
Contents
1 Introduction 1
2 Aim of the papers and specification grid 3
3 Study guide 4
4 Skills assessment guide 17
5 Technical knowledge 20
6 Key resources 25
Study guide 1
1 Introduction
1.1 What is the Advanced Stage? Structure and progression
The Advanced Stage of the ACA qualification is designed to ensure that candidates are able to integrate and apply their technical, professional and ethical skills in a variety of business environments.
The diagram below shows the five modules which form the basis of the Advanced Stage. The Advanced Stage is comprised of two technical integration modules and the Case Study. The two technical integration modules will be examined in a business scenario context which draws together a number of different areas of technical knowledge.
The Professional Stage consists of knowledge modules and application modules. The knowledge modules introduce the core technical knowledge and skills required by a chartered accountant. The application modules further develop and assess practical application of technical knowledge and skills.
The technical knowledge acquired at the Professional Stage is developed to an advanced level and integrated in a broader range of business scenarios in the Advanced Stage technical integration modules. The application of technical knowledge in these modules requires an appreciation of the typical issues and problems facing businesses and their relationship to corporate reporting, assurance and taxation. A greater depth of business and financial analysis will be required to understand the implications and risks arising from the business issues.
New technical topics are introduced in the technical integration modules, that are not dealt with elsewhere in the syllabus. A deeper level of technical ability is expected of candidates across the entire ACA syllabus to reflect the greater financial and business awareness needs of trainee chartered accountants approaching qualification. This is reflected particularly in assessing candidates’ proficiency and ability to integrate knowledge and skills both within and across technical subjects in a range of complex business scenarios.
Candidates will also be required to apply professional knowledge using more advanced skills in the technical integration modules. These professional skills are then examined to a greater extent in the final
Business Analysis 2
ACA module: the Case Study. This module requires higher level cognitive skills, analytical and evaluative skills and emphasises the importance of communication and articulation skills.
Assessment
The two technical integration modules will be examined using traditional paper based assessments. Each paper based exam will be 3.5 hours in length. These exams will contain questions requiring the integration of knowledge both within technical disciplines and across technical disciplines. Questions integrated across all subject streams are an essential step towards the Case Study but will generally have more structure and guidance than those at the Case Study.
The Case Study will continue in its present format of a four hour written exam with ‘advance information’ provided to candidates ahead of the exam and ‘impact information’ issued in the exam, containing the Case Study requirements.
Flexibility
There are no regulations stipulating the order in which candidates must attempt the technical integration modules. The Case Study must be the final module attempted and can only be attempted in the final year of a training contract.
There is no restriction on the number of attempts permitted at each advanced stage module.
Open Book Policy
Candidates may take any written or printed material into the exam hall subject to practical space restrictions.
Study guide 3
2 Aim of the papers and specification grid
2.1 Module aim The aim of the Business Reporting paper is:
To ensure that candidates can apply analysis techniques, technical knowledge and professional skills to resolve real-life compliance issues faced by businesses.
Candidates may be put, for example, in the role of a preparer of financial statements, or other corporate reports such as on sustainability and corporate responsibility, an advisor or in an assurance role facing business issues where there are reporting implications. Compliance issues relating to taxation will also feature in this module.
Candidates will be required to use professional judgement to identify and evaluate alternatives and determine the appropriate solution(s) to compliance issues, giving due consideration to the commercial impact of their recommendations.
The aim of the Business Change paper is:
To ensure that candidates can provide technical advice in respect of issues arising in business transformations, mergers, acquisitions, alliances and disposals.
Candidates will be required to analyse and interpret both external and internal financial and non-financial data in order to plan for change and provide advice. In undertaking this analysis candidates will be expected to evaluate the impact of stakeholder influences on the data, including the impact of choice of reporting policies.
Taxation and practical business techniques are particularly important in this module, where business techniques include aspects of business strategy, business finance, performance management and costing. There will also be financial reporting, assurance, ethical and legal implications to be considered when developing and assessing strategic and business plans.
2.2 Specification grid This grid is a general guide as to the subject matter within this module and assessment coverage over a period of time.
BR BC Weighting (%) Weighting (%) Ethics and law 5 – 10 5 – 10 Taxation 20 – 30 25 – 35 Audit and assurance 30 – 40 10 – 20 Corporate reporting 30 – 40 15 – 25 Business analysis 0 30 – 35
Business Analysis 4
3 Study guide
3.1 Help yourself study for your ACA exams The right approach
1 Develop the right attitude
Believe in yourself Yes, there is a lot to learn. But thousands have succeeded before and you can too.
Remember why you're doing it You are studying for a good reason: to advance your career.
2 Focus on the exam
Read through the Syllabus in this guide
This tells you what you are expected to know.
3 The right method
See the whole picture Keeping in mind how all the detail you need to know fits into the whole picture will help you understand it better.
• The Practical significance and Working context to each chapter in the study guide put the material into context.
• The Learning objectives and Section overviews in the Study Manual show you what you need to grasp.
Use your own words To absorb the information (and to practise your written communication skills), you need to put it into your own words.
• Take notes. • Answer the questions in each chapter. • Draw mindmaps. • Try 'teaching' a subject to a colleague or friend.
Give yourself cues to jog your memory
The Study Manual uses bold to highlight key points.
• Try colour coding with a highlighter pen. • Write key points on cards.
4 The right recap
Review, review, review Regularly reviewing a topic in summary form can fix it in your memory. The Study Manual helps you review in many ways.
• Each Chapter Summary will help you to recall that study session.
• The Self-test actively tests your grasp of the essentials.
• Go through the Examples in each chapter a second or third time.
Study guide 5
3.2 Study cycle The best way to approach the Study Manual is to tackle the chapters in order. We will look in detail at how to approach each chapter below but as a general guide, taking into account your individual learning style, you could follow this sequence for each chapter.
Key study steps Activity
Step 1 Topic list
This topic list is shown in the contents for each chapter and helps you navigate each part of the book; each numbered topic is a numbered section in the chapter.
Step 2 Introduction
The practical significance and working context sections for each chapter set out in this study guide give you the big picture in terms of the context of the chapter. The Examination context guidance shows what the examiners are looking for and tells you why the topics covered in the chapter need to be studied.
Step 3 Section overviews
Section overviews give you a quick summary of the content of each of the main chapter sections. They can also be used at the end of each chapter to help you review each chapter quickly.
Step 4 Explanations
Proceed methodically through each chapter, particularly focusing on areas highlighted as significant in the chapter introduction or study guide.
Step 5 Note taking
Take brief notes, if you wish. Don't copy out too much. Remember that being able to record something yourself is a sign of being able to understand it. Your notes can be in whatever format you find most helpful lists, diagrams, mindmaps.
Step 6 Examples
Work through the examples very carefully as they illustrate key knowledge and techniques.
Step 7 Answers
Check yours against the suggested solutions, and make sure you understand any discrepancies.
Step 8 Chapter summary
Review it carefully, to make sure you have grasped the significance of all the important points in the chapter.
Step 9 Self-test
Use the Self-test to check how much you have remembered of the topics covered.
Step 10 Learning objectives
Ensure you have ticked off the Learning objectives.
Moving on...
When you are ready to start revising, you should still refer back to the Study Manual.
• As a source of reference (you should find the index particularly helpful for this).
• As a way to review (the Section Overviews, Examination Context, Chapter Summaries and Self-test questions help you here).
Remember to keep careful hold of the Study Manual – you will find it invaluable in your work.
Business Analysis 6
Stud
y gu
ide
7
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
1 Bu
sine
ss d
ecis
ions
do
not
exis
t in
is
olat
ion.
In r
ealit
y, b
efor
e an
y de
cisi
on is
mad
e –
whe
ther
fin
anci
al, m
arke
ting
or s
trat
egic
–
the
imp
act
on o
ther
par
ts o
f the
or
gani
satio
n m
ust
be a
sses
sed
to
ensu
re it
is n
ot c
onfli
ctin
g w
ith
othe
r st
rate
gies
. Dea
ling
with
co
mp
lex
scen
ario
s is
a fa
ct o
f bu
sine
ss li
fe –
it is
impe
rativ
e th
at
you
beco
me
fam
iliar
with
how
di
ffere
nt a
naly
sis
tool
s ca
n be
us
ed a
nd u
nder
stan
d th
e si
gnifi
canc
e of
fina
ncia
l str
ateg
y on
bus
ines
s de
cisi
ons.
Sto
p a
nd
th
ink
Wha
t ar
e th
e m
ost
sign
ifica
nt
barr
iers
to
chan
ge in
or
gani
satio
ns?
How
muc
h do
bus
ines
ses
need
to
wor
ry a
bout
whe
ther
the
y ar
e se
en a
s be
ing
soci
ally
res
pon
sibl
e or
sus
tain
able
?
You
may
be
aske
d to
ana
lyse
the
fin
anci
al im
plic
atio
ns o
f diff
eren
t st
rate
gic
deci
sion
s an
d ex
plai
n th
eir
sign
ifica
nce
to n
on-f
inan
cial
m
anag
ers.
For
exa
mpl
e, if
ex
pans
ion
is p
art
of t
he lo
ng-t
erm
st
rate
gy, h
ow w
ill t
his
impa
ct o
n th
e fir
m's
finan
cial
rat
ios,
de
pen
ding
on
the
finan
cing
m
etho
d ch
osen
? Y
ou m
ay a
lso
have
to
cons
ider
the
impa
ct o
f any
pr
opos
ed fi
nanc
ial d
ecis
ions
on
the
wid
er s
trat
egie
s of
the
or
gani
satio
n. F
or e
xam
ple,
how
w
ill t
he d
ecis
ion
to c
ut p
rodu
ctio
n st
aff c
osts
affe
ct p
rodu
ct q
ualit
y an
d po
sitio
ning
in t
he m
arke
t p
lace
?
Cha
pter
1 r
evie
ws
the
mai
n an
alys
is
tool
s co
vere
d at
the
Pro
fess
iona
l st
age.
Wor
k th
roug
h In
tera
ctiv
e Q
uest
ions
1 a
nd 2
bef
ore
mov
ing
onto
Sec
tion
5 on
how
to
app
ly t
he
tool
s in
a c
ompl
ex s
cena
rio. F
ollo
w
thro
ugh
the
wor
ked
exam
ple
cas
e st
udy,
mak
ing
sure
you
und
erst
and
how
the
too
ls a
re a
pp
lied,
bef
ore
atte
mpt
ing
Inte
ract
ive
Que
stio
n 3
and
the
self
test
que
stio
ns.
Syll
ab
us
lin
ks
A b
usin
ess
can
dem
onst
rate
its
corp
orat
e re
spon
sibi
lity
cred
entia
ls
by u
nder
goin
g a
soci
al o
r en
viro
nmen
tal a
udit.
The
se a
udits
ar
e co
vere
d in
Cha
pte
r 8
of t
he
Audi
t an
d As
sura
nce
Stud
y M
anua
l.
Esse
nti
al
po
ints
The
app
licat
ion
of d
iffer
ent
tool
s to
a
com
plex
sce
nario
Bus
ines
s A
nal
ysis
8
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
2 Ri
sk is
one
of t
he p
enal
ties
we
pay
for
bein
g in
bus
ines
s. E
very
or
gani
satio
n –
be it
a
mul
tinat
iona
l com
pany
or
a sm
all
sole
tra
der
– fa
ces
risk
ever
y da
y.
In a
wor
ld w
here
ris
k an
d its
ef
fect
s on
cor
por
ate
obje
ctiv
es a
re
view
ed w
ith in
crea
sing
con
cern
, or
gani
satio
ns n
eed
to h
ave
an
effe
ctiv
e ris
k m
anag
emen
t p
rogr
amm
e in
pla
ce t
o al
levi
ate
som
e of
the
mor
e se
rious
effe
cts.
A
lthou
gh m
illio
ns o
f pou
nds
can
be s
pen
t on
suc
h p
rogr
amm
es,
this
may
be
was
ted
if th
e p
rop
er
grou
ndw
ork
is n
ot d
one.
It is
es
sent
ial t
o un
ders
tand
the
pr
oces
ses
that
mak
e up
a r
isk
man
agem
ent
syst
em fo
r su
ch a
sy
stem
to
assi
st in
the
fulfi
lmen
t of
co
rpor
ate
obje
ctiv
es.
Sto
p a
nd
th
ink
How
diff
icul
t is
it fo
r di
rect
ors
to
asse
ss t
heir
risk
app
etite
?
On
wha
t ba
ses
shou
ld a
bus
ines
s de
cide
whi
ch r
isks
to
avoi
d an
d w
hich
ris
ks t
o re
duce
?
Mos
t w
orki
ng e
nviro
nmen
ts n
ow
have
som
e fo
rm o
f ris
k m
anag
emen
t sy
stem
. You
may
be
req
uire
d to
car
ry o
ut t
ests
of s
uch
syst
ems
or a
dvis
e on
how
the
se
syst
ems
coul
d be
impr
oved
. You
m
ay e
ven
be in
volv
ed in
the
des
ign
of a
ris
k m
anag
emen
t sy
stem
from
sc
ratc
h w
ithin
you
r ow
n or
gani
satio
n.
Cha
pte
r 2
star
ts w
ith a
rev
iew
of r
isk
man
agem
ent
issu
es c
over
ed a
t th
e Pr
ofes
sion
al s
tage
. Pay
clo
se
atte
ntio
n to
the
cas
e st
udie
s in
Se
ctio
n 1
as t
hey
show
how
ris
k m
anag
emen
t is
app
lied
in p
ract
ice.
Sect
ion
2 lo
oks
at t
he im
port
ant
area
of
Ent
erp
rise
risk
man
agem
ent.
Se
ctio
ns 3
– 1
1 ex
plo
re t
he d
iffer
ent
stag
es o
f the
ris
k m
anag
emen
t p
roce
ss.
Sect
ion
12 c
onsi
ders
the
issu
e of
ris
k m
onito
ring
and
cont
rol a
nd
eval
uate
s th
e lim
itatio
ns o
f ris
k m
anag
emen
t pl
ans.
Onc
e yo
u ha
ve c
omp
lete
d al
l the
in
tera
ctiv
e q
uest
ions
, try
the
sel
f-te
st
que
stio
ns a
t th
e en
d of
the
cha
pte
r.
Syll
ab
us
lin
ks
This
cha
pter
link
s to
the
bus
ines
s ris
k m
odel
dis
cuss
ed in
Cha
pte
r 4
Plan
ning
and
ris
k as
sess
men
t in
the
Au
dit
and
Assu
ranc
e St
udy
Man
ual.
Usi
ng t
his
mod
el e
nsur
es a
udito
rs
cons
ider
wid
er b
usin
ess
risks
, rat
her
than
focu
sing
too
hea
vily
on
cert
ain
area
s of
the
fina
ncia
l acc
ount
s.
Esse
nti
al
po
ints
Ente
rpris
e ris
k m
anag
emen
t
Prac
tical
ap
plic
atio
n of
ris
k m
anag
emen
t pr
oces
s
Stud
y gu
ide
9
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
3 C
ostin
g te
chni
que
s ar
e ve
ry
impo
rtan
t fo
r pl
anni
ng, d
ecis
ion
mak
ing
and
cont
rol p
urp
oses
. A
chan
ge in
tec
hniq
ue –
for
exam
ple,
usi
ng A
BC r
athe
r th
an
abso
rptio
n co
stin
g –
can
lead
to
diffe
rent
dec
isio
ns b
eing
mad
e, a
s pr
ojec
ts a
ppea
r to
be
eith
er m
ore
or le
ss fe
asib
le.
In a
bus
ines
s cl
imat
e w
here
cos
t re
duct
ion
has
incr
easi
ngly
be
com
e th
e no
rm, i
t is
ess
entia
l to
app
reci
ate
the
issu
es s
urro
undi
ng
how
, whe
n an
d w
hy t
o re
duce
co
sts
and
how
cos
t re
duct
ion
prog
ram
mes
inte
ract
with
exi
stin
g st
rate
gies
, pro
duct
and
ser
vice
q
ualit
y, a
nd m
arke
ting.
Bei
ng t
oo
ruth
less
with
cut
ting
cos
ts c
an b
e as
dam
agin
g as
not
dea
ling
with
un
nece
ssar
y co
sts
at a
ll. T
here
fore
kn
owle
dge
of t
he r
elat
ions
hip
betw
een
cost
red
uctio
n an
d su
stai
ning
add
ed v
alue
act
iviti
es
that
con
trib
ute
to lo
ng t
erm
co
rpor
ate
valu
e is
cru
cial
.
Sto
p a
nd
th
ink
How
hel
pful
in p
ract
ice
is a
te
chni
que
like
busi
ness
pro
cess
re-
engi
neer
ing?
In a
wor
king
env
ironm
ent
you
may
be
face
d w
ith m
akin
g de
cisi
ons
rega
rdin
g al
loca
tion
of s
carc
e re
sour
ces
or t
he b
est
way
s of
re
duci
ng c
osts
. The
con
tent
s of
thi
s ch
apte
r, t
oget
her
with
pre
viou
s kn
owle
dge
gain
ed in
ear
lier
stud
ies,
will
be
inva
luab
le in
suc
h si
tuat
ions
.
Cha
pte
r 3
look
s at
cos
t an
alys
is fr
om
a st
rate
gic
view
poi
nt. A
fter
brie
fly
revi
ewin
g tr
aditi
onal
tec
hniq
ues,
m
ove
onto
tec
hniq
ues
that
can
be
used
for
cost
red
uctio
n. E
nsur
e yo
ur
unde
rsta
ndin
g of
the
se t
echn
ique
s by
follo
win
g th
e w
orke
d ex
amp
les
and
atte
mp
ting
the
inte
ract
ive
and
self-
test
que
stio
ns.
Syll
ab
us
lin
ks
Aga
in t
his
chap
ter
cove
rs a
reas
tha
t w
ill im
pac
t si
gnifi
cant
ly o
n au
dito
r co
nsid
erat
ion
of k
ey b
usin
ess
pro
cess
es a
nd r
isks
, cov
ered
in
Cha
pte
r 4
of t
he A
udit
and
Assu
ranc
e St
udy
Man
ual.
Esse
nti
al
po
ints
Cos
t re
duct
ion
usin
g su
ch
tech
niq
ues
as s
upp
ly c
hain
and
bu
sine
ss p
roce
ss r
e-en
gine
erin
g
Bus
ines
s A
nal
ysis
10
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
Wha
t ac
tiviti
es s
houl
d bu
sine
sses
ne
ver
outs
ourc
e?
Stud
y gu
ide
11
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
4 In
vest
men
t is
the
life
bloo
d of
any
or
gani
satio
n's
grow
th. W
ith s
o m
any
inve
stm
ent
oppo
rtun
ities
av
aila
ble
– an
d lim
ited
reso
urce
s to
spe
nd o
n th
em –
org
anis
atio
ns
mus
t ha
ve k
now
ledg
e of
how
to
eval
uate
suc
h p
roje
cts
to
dete
rmin
e w
hich
one
s w
ill
incr
ease
sha
reho
lder
s' w
ealth
w
hile
at
the
sam
e tim
e co
mp
lem
entin
g th
e ov
eral
l bu
sine
ss s
trat
egy.
With
incr
ease
d gl
obal
isat
ion,
co
mpa
nies
nee
d to
eva
luat
e in
tern
atio
nal i
nves
tmen
t op
port
uniti
es. T
hey
mus
t ap
prec
iate
tha
t in
tern
atio
nal
inve
stm
ent
appr
aisa
l inv
olve
s no
t ju
st t
he e
valu
atio
n of
the
usu
al
reve
nues
and
ope
ratin
g co
sts,
but
al
so t
he c
onsi
dera
tion
of t
he
vario
us r
isks
invo
lved
in
unde
rtak
ing
over
seas
inve
stm
ents
. W
ithou
t su
ch a
naly
sis
proc
ess,
m
ulti-
mill
ion
poun
d in
vest
men
ts
can
quic
kly
go w
rong
, res
ultin
g in
m
ajor
loss
es, b
oth
mon
etar
y an
d of
rep
utat
ion.
Sto
p a
nd
th
ink
How
can
you
val
ue a
n op
tion
to
dela
y if
dela
y m
ay g
ive
com
pet
itors
In a
wor
king
env
ironm
ent
you
are
likel
y to
hav
e to
ass
ess
the
feas
ibili
ty o
f dom
estic
and
in
tern
atio
nal p
roje
cts.
Rea
l opt
ions
ar
e cl
osel
y lin
ked
to t
his
task
and
yo
u m
ay b
e re
qui
red
to v
alue
op
tions
to
exp
and,
aba
ndon
, del
ay
or r
edep
loy.
Cha
pte
r 4
is q
uite
a p
ract
ical
ch
apte
r. M
ake
sure
you
rev
iew
in
vest
men
t ap
prai
sal t
echn
ique
s in
Se
ctio
n 1
and
atte
mp
t th
e in
tera
ctiv
e q
uest
ions
to
test
you
r kn
owle
dge.
Lat
er s
ectio
ns a
re m
ore
com
ple
x –
read
and
rev
iew
the
m
seve
ral t
imes
to
ensu
re y
ou
unde
rsta
nd t
he t
opic
s. W
ork
thro
ugh
the
inte
ract
ive
and
self-
test
q
uest
ions
and
be
pre
par
ed t
o ap
ply
al
l the
tec
hniq
ues
cove
red
in t
his
chap
ter
to c
ompl
ex s
cena
rios
in t
he
exam
.
Syll
ab
us
lin
ks
Proj
ect
appr
aisa
l may
be
impo
rtan
t in
a fi
nanc
ial r
epor
ting
cont
ext
– fo
r ex
ampl
e, in
con
side
ring
impa
irmen
t of
a c
ash
gene
ratin
g un
it un
der
IAS
36. T
rans
latio
n an
d ot
her
curr
ency
ris
ks fo
r a
fore
ign
oper
atio
n ar
e al
so
linke
d to
IAS
21.
Esse
nti
al
po
ints
Real
op
tions
Inte
rnat
iona
l inv
estm
ent
appr
aisa
l
Bus
ines
s A
nal
ysis
12
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
the
chan
ce t
o ex
plo
it a
busi
ness
op
por
tuni
ty fi
rst?
Is a
n ex
pec
ted
valu
e ca
lcul
atio
n ev
er
a us
eful
mea
sure
?
Stud
y gu
ide
13
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
5 Th
ere
are
man
y re
ason
s fo
r va
luin
g co
mp
anie
s, o
r co
mpo
nent
s of
com
pani
es.
Acq
uisi
tions
, mer
gers
, pro
bate
an
d ta
x pu
rpos
es a
re ju
st s
ome
of
the
reas
ons
for
doin
g so
. A
lthou
gh v
alua
tions
are
ess
entia
lly
subj
ectiv
e an
d af
fect
ed b
y m
any
fact
ors,
und
erst
andi
ng t
he v
ario
us
avai
labl
e te
chni
que
s an
d ho
w t
o ap
ply
them
to
diffe
rent
situ
atio
ns
is a
n im
port
ant
skill
.
Sto
p a
nd
th
ink
Whi
ch m
etho
d(s)
of v
alua
tion
are
mor
e ap
pro
pria
te fo
r va
luin
g a
smal
l hol
ding
of s
hare
s, w
hich
m
etho
d(s)
are
mor
e ap
pro
pria
te
for
valu
ing
the
entir
e sh
are
capi
tal
of a
com
pany
?
How
do
you
valu
e a
com
pan
y th
at
has
mad
e lo
sses
rec
ently
?
How
do
you
valu
e a
com
pan
y th
at
has
neve
r m
ade
any
prof
its?
Whe
ther
you
wor
k in
fina
ncia
l ac
coun
ting,
tre
asur
y or
tax
you
m
ay b
ecom
e in
volv
ed in
the
va
luat
ion
of a
n en
tire
com
pany
or
som
e of
its
com
pone
nts
(deb
t,
equi
ty o
r fin
anci
al in
stru
men
ts).
Yo
u sh
ould
the
refo
re b
e aw
are
of
whe
n di
ffere
nt t
echn
ique
s sh
ould
be
use
d an
d w
hat
to lo
ok o
ut fo
r w
hen
choo
sing
bet
wee
n av
aila
ble
valu
atio
n m
easu
res.
Cha
pter
5 c
over
s so
me
quite
co
mp
lex
tech
niq
ues.
A k
ey s
kill
is t
o ch
oose
the
mos
t ap
prop
riate
te
chni
que
s to
use
in d
iffer
ent
circ
umst
ance
s.
Read
thr
ough
all
the
sect
ions
ca
refu
lly t
o m
ake
sure
you
un
ders
tand
the
tec
hniq
ues
and
whe
re t
heir
use
may
be
app
rop
riate
. Th
e w
orke
d ex
amp
les,
inte
ract
ive
and
self-
test
que
stio
ns w
ill t
est
your
kn
owle
dge
and
unde
rsta
ndin
g.
Syll
ab
us
lin
ks
This
cha
pter
sho
uld
be r
ead
in
conj
unct
ion
with
Cha
pte
r 16
Fi
nanc
ial s
tate
men
t an
alys
is fr
om t
he
Cor
pora
te R
epor
ting
Stud
y M
anua
l in
orde
r to
und
erst
and
mor
e fu
lly t
he
info
rmat
ion
that
can
be
used
in t
he
dete
rmin
atio
n of
a b
usin
ess’
s va
lue.
Th
e q
uest
ion
Pulle
r p
lc in
the
q
uest
ion
bank
pro
vide
s an
exa
mp
le
of a
n ex
am s
tand
ard
que
stio
n th
at
brin
gs t
oget
her
thos
e Bu
sine
ss
Ana
lysi
s an
d C
orp
orat
e Re
por
ting
issu
es in
a v
alua
tion
cont
ext.
Esse
nti
al
po
ints
Use
of a
pp
rop
riate
eq
uity
val
uatio
n te
chni
que
s
Valu
ing
debt
Valu
ing
shar
ehol
ding
s fo
r di
ffere
nt
pur
pos
es
Bus
ines
s A
nal
ysis
14
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
6 W
ithou
t fin
anci
ng, b
usin
esse
s w
ould
not
exi
st. T
here
fore
a
finan
ce p
rofe
ssio
nal m
ust
have
de
taile
d kn
owle
dge
of t
he v
ario
us
way
s in
whi
ch d
iffer
ent
met
hods
of
fina
ncin
g ca
n he
lp in
divi
dual
or
gani
satio
ns. N
ot e
very
one
wor
ks
in a
larg
e m
ultin
atio
nal –
sm
all-
and
med
ium
-siz
ed e
nter
pris
es fa
ce
thei
r ow
n ch
alle
nges
whe
n se
ekin
g fin
ance
. Tho
se in
volv
ed in
su
ch o
rgan
isat
ions
req
uire
in-
dept
h kn
owle
dge
of t
he v
ario
us
met
hods
of f
inan
cing
ava
ilabl
e.
Sto
p a
nd
th
ink
If a
busi
ness
has
sur
plu
s ca
sh,
shou
ld t
his
cash
alw
ays
be it
s fir
st
choi
ce s
ourc
e of
fina
nce
for
a ne
w
pro
ject
?
In w
hat
circ
umst
ance
s sh
ould
bu
sine
sses
not
aim
to
min
imis
e w
orki
ng c
apita
l?
Dep
endi
ng o
n w
here
you
wor
k,
you
may
bec
ome
invo
lved
in
rese
arch
for
the
best
met
hod
of
finan
cing
for
a p
artic
ular
pro
ject
, or
may
be
aske
d to
ass
ist
in a
fina
ncia
l re
cons
truc
tion.
Cha
pter
6 lo
oks
at c
ost
of c
apita
l an
d fin
anci
al s
truc
ture
. Thi
s is
a la
rge
chap
ter
with
som
e co
mp
lex
tech
niq
ues,
so
read
the
sec
tions
se
vera
l tim
es if
nec
essa
ry t
o en
sure
yo
ur u
nder
stan
ding
. Que
stio
n p
ract
ice
is p
artic
ular
ly im
por
tant
, so
atte
mp
t al
l the
inte
ract
ive
and
self-
test
que
stio
ns.
Syll
ab
us
lin
ks
The
taxa
tion
imp
licat
ions
of r
aisi
ng
finan
ce a
re c
over
ed in
Cha
pte
r 2
of
the
Taxa
tion
Stud
y M
anua
l.
The
finan
cing
of s
mal
l bus
ines
ses
will
obv
ious
ly b
e of
par
ticul
ar
conc
ern
to t
heir
audi
tors
, and
C
hap
ter
13 o
f the
Aud
it an
d As
sura
nce
Stud
y M
anua
l cov
ers
the
mai
n is
sues
invo
lved
in t
he a
udit
of
smal
l com
pan
ies.
Esse
nti
al
po
ints
Fina
ncia
l res
truc
turin
g
Smal
l com
pan
y fin
ance
Wor
king
cap
ital m
anag
emen
t
Stud
y gu
ide
15
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
7 Fi
nanc
ial i
nstr
umen
ts a
re n
ot u
sed
in is
olat
ion.
It w
ould
be
very
rar
e fo
r a
com
pan
y to
mak
e us
e of
one
ty
pe o
f fin
anci
al in
stru
men
t w
ithou
t co
nsid
erin
g th
e w
ider
ef
fect
s of
its
use
on t
he o
vera
ll fin
anci
al s
trat
egy
of t
he
orga
nisa
tion.
In r
ealit
y, c
ompa
nies
us
e a
num
ber
of in
stru
men
ts fo
r di
ffere
nt p
urp
oses
, inc
ludi
ng r
isk
man
agem
ent
and
spec
ulat
ion.
W
hat
is im
por
tant
is b
eing
abl
e to
ev
alua
te t
he e
ffect
s th
at t
he
finan
cial
inst
rum
ents
are
like
ly t
o ha
ve o
n fin
anci
al s
trat
egy.
Sto
p a
nd
th
ink
At
wha
t po
int
do c
ompa
nies
’ he
dgin
g ac
tiviti
es b
ecom
e so
co
mp
lex
that
the
y ne
ed t
o em
plo
y tr
easu
ry e
xper
tise?
How
muc
h im
pac
t w
ill t
here
be
on le
ase
vs b
uy d
ecis
ions
if
com
pani
es h
ave
to a
ccou
nt fo
r le
ases
cur
rent
ly c
lass
ified
as
oper
atin
g le
ases
on
thei
r st
atem
ents
of f
inan
cial
pos
ition
?
If yo
u ar
e w
orki
ng in
tre
asur
y or
co
rpor
ate
finan
ce y
ou m
ay b
e re
qui
red
to e
valu
ate
diffe
rent
co
mbi
natio
ns o
f fin
anci
al
inst
rum
ents
and
the
ir ef
fect
s on
st
rate
gy. Y
ou s
houl
d be
abl
e to
id
entif
y th
e va
rious
inst
rum
ents
th
at a
re a
vaila
ble
for
risk
man
agem
ent
purp
oses
and
de
term
ine
whi
ch in
stru
men
ts a
re
mos
t ap
prop
riate
in d
iffer
ent
circ
umst
ance
s.
Cha
pter
7 c
over
s fin
anci
al
engi
neer
ing
– th
e us
e of
diff
eren
t fin
anci
al p
rodu
cts
to p
rote
ct a
gain
st
such
ris
ks a
s in
tere
st r
ate
and
fore
ign
curr
ency
mov
emen
ts. W
hen
read
ing
thro
ugh
the
sect
ions
, pay
par
ticul
ar
atte
ntio
n to
the
situ
atio
ns w
here
di
ffere
nt p
rodu
cts
mig
ht b
e us
ed,
and
how
the
y m
ight
be
used
co
llect
ivel
y as
par
t of
ove
rall
finan
cial
str
ateg
y.
Att
empt
inte
ract
ive
and
self-
test
qu
estio
ns.
Syll
ab
us
lin
ks
IAS
39 F
inan
cial
inst
rum
ents
: Re
cogn
ition
and
mea
sure
men
t es
tabl
ishe
d p
rinci
ple
s fo
r ho
w
finan
cial
ass
ets
and
liabi
litie
s,
incl
udin
g de
rivat
ives
, sho
uld
be
reco
gnis
ed a
nd m
easu
red.
O
rgan
isat
ions
mus
t de
term
ine
wha
t de
rivat
ives
are
wor
th in
ord
er t
hat
app
rop
riate
dis
clos
ure,
rec
ogni
tion
and
mea
sure
men
t ca
n be
mad
e.
Cha
pte
rs 5
to
7 of
the
Cor
pora
te
Repo
rtin
g St
udy
Man
ual c
over
the
ac
coun
ting
stan
dard
s th
at r
elat
e to
fin
anci
al in
stru
men
ts a
nd C
hap
ter
12 o
f the
Aud
it an
d As
sura
nce
Stud
y M
anua
l dis
cuss
es t
heir
audi
t.
IFRS
2, c
over
ed in
Cha
pte
r 9
of t
he
Cor
pora
te R
epor
ting
Stud
y M
anua
l, re
qui
res
an o
ptio
n p
ricin
g m
odel
to
be u
sed
to e
stim
ate
optio
n fa
ir va
lue.
Esse
nti
al
po
ints
Dec
idin
g w
hich
pro
duct
s to
use
in
diffe
rent
sce
nario
s
Com
bini
ng p
rodu
cts
as p
art
of a
n ov
eral
l str
ateg
y
Bus
ines
s A
nal
ysis
16
Stud
y Pe
rio
d
Prac
tica
l sig
nif
ican
ce
Wo
rkin
g c
on
text
A
pp
roac
h
Sylla
bus
lin
ks a
nd
ess
enti
al p
oin
ts
Due
Dat
e
8 M
any
com
pani
es h
ave
to c
onsi
der
the
inte
rnat
iona
l asp
ects
of t
he
busi
ness
, whe
ther
it b
e se
lling
to
over
seas
cus
tom
ers
or s
ettin
g up
op
erat
ions
in o
ther
cou
ntrie
s.
With
inte
rnat
iona
l inv
olve
men
t co
me
uniq
ue p
robl
ems,
whe
ther
it
is d
ealin
g w
ith e
xcha
nge
rate
m
ovem
ents
or
deci
ding
how
to
finan
ce a
n ov
erse
as o
per
atio
n. A
s w
ith m
ost
area
s of
fina
nce,
m
akin
g m
ista
kes
can
be v
ery
cost
ly, b
oth
in m
onet
ary
term
s an
d in
ter
ms
of r
eput
atio
n. It
is
ther
efor
e es
sent
ial t
o un
ders
tand
th
e va
rious
issu
es s
urro
undi
ng
inte
rnat
iona
l ope
ratio
ns a
nd t
rade
an
d th
e nu
mer
ous
optio
ns
avai
labl
e to
fina
nce
them
Sto
p a
nd
th
ink
Wha
t ar
e th
e m
ost
imp
orta
nt
addi
tiona
l ris
ks fa
cing
a b
usin
ess
that
is in
vest
ing
over
seas
as
opp
osed
to
inve
stin
g in
its
hom
e m
arke
t?
How
doe
s a
busi
ness
dec
ide
wha
t fo
rm it
s ov
erse
as in
vest
men
t sh
ould
tak
e?
In a
wor
king
env
ironm
ent
you
may
ha
ve t
o as
sess
the
sui
tabi
lity
of
vario
us m
etho
ds o
f fin
ance
to
part
icul
ar in
tern
atio
nal t
rans
actio
ns
such
as
exp
orts
or
sett
ing
up a
su
bsid
iary
. Rem
embe
r to
tre
at e
ach
case
on
its o
wn
mer
its –
do
not
assu
me
that
the
sam
e m
etho
d of
fin
ance
will
be
suita
ble
even
if t
he
tran
sact
ions
ap
pea
r to
be
sim
ilar.
Cha
pter
8 c
over
s in
tern
atio
nal
finan
cial
man
agem
ent
issu
es. E
nsur
e yo
u un
ders
tand
how
fina
ncia
l m
anag
emen
t te
chni
ques
can
be
appl
ied
to in
tern
atio
nal s
cena
rios
and
mak
e su
re y
ou a
pp
reci
ate
the
issu
es t
hat
are
uniq
ue t
o in
tern
atio
nal t
rade
and
run
ning
in
tern
atio
nal o
per
atio
ns.
Att
empt
inte
ract
ive
and
self-
test
qu
estio
ns.
Syll
ab
us
lin
ks
Cha
pte
r 5
of t
he T
axat
ion
Stud
y M
anua
l Int
erna
tiona
l exp
ansi
on
disc
usse
s th
e ta
xatio
n co
nseq
uenc
es
of fo
reig
n tr
adin
g an
d op
erat
ions
.
Cha
pte
r 11
of t
he C
orpo
rate
Re
port
ing
Stud
y M
anua
l dea
ls w
ith
the
finan
cial
acc
ount
ing
impl
icat
ions
of
rep
ortin
g ov
erse
as a
ctiv
ities
.
Cha
pte
r 14
of t
he A
udit
and
Assu
ranc
e St
udy
Man
ual B
usin
ess
stru
ctur
es a
nd g
loba
l ent
erpr
ises
di
scus
ses
the
audi
t of
ove
rsea
s su
bsid
iarie
s, a
nd t
he r
isk
and
cont
rol
issu
es a
ffect
ing
wor
ldw
ide
busi
ness
es t
hat
will
par
ticul
arly
co
ncer
n au
dito
rs.
Esse
nti
al
po
ints
Fina
ncin
g ov
erse
as p
roje
cts
Inte
rnat
iona
l tra
de a
nd a
ssoc
iate
d is
sues
.
Study guide 17
4 Skills assessment guide
4.1 Introduction As a Chartered Accountant in the business world, you will require the knowledge and skills to interpret financial and other numerical and business data, and communicate the underlying issues to your clients. In a similar way to the required knowledge, the ACA syllabus has been designed to develop your professional skills in a progressive manner. These skills are broadly categorised as:
• Assimilating and using information • Structuring problems and solutions • Applying judgement • Drawing conclusions and making recommendations
4.2 Assessing your professional skills
The work experience requirements for students provide a framework to develop appropriate work experience, completion of which is essential in order to qualify for membership. Work experience is also an essential component for examination preparation.
The work experience framework is built around five key skills:
• Business awareness – being aware of the internal and external issues and pressure for change facing an organisation and assessing an organisation’s performance.
• Technical and functional expertise – applying syllabus learning outcomes and where appropriate, further technical knowledge to real situations.
• Ethics and professionalism – recognising issues, using knowledge and experience to assess implications, making confident decisions and recommendations.
• Professional judgement – making recommendations and adding value with appropriate, targeted and relevant solutions.
• Personal effectiveness – developing, maintaining and exercising skills and personal attributes necessary for the role and responsibilities.
Business Analysis 18
The examinations, and in particular the Advanced Stage, embrace all of these skills.
The link between work experience and the examinations is demonstrated by the skills development grids produced by the examiners.
This will help students see that their practical knowledge and skills gained in the workplace feed back into the exam room and vice-versa.
4.3 Assessment grids The following pages set out the learning outcomes for Business Analysis that are addressed under each of the four skills areas. In addition, for each skills area, there is a description of:
• The specific skills that are assessed • How these skills are assessed
Using these grids will enable you to determine how the examination paper will be structured and to consider whether your knowledge of Corporate Reporting is sufficiently strong to enable you to apply it in the required manner.
Study guide 19
Business Analysis 20
5 Technical knowledge The tables contained in this section show the technical knowledge covered in the ACA Syllabus by module.
For each individual standard the level of knowledge required in the relevant Professional Stage module and at the Advanced Stage is shown.
The knowledge levels are defined as follows:
Level D
An awareness of the scope of the standard.
Level C
A general knowledge with a basic understanding of the subject matter and training in its application thereof sufficient to identify significant issues and evaluate their potential implications or impact.
Level B
A working knowledge with a broad understanding of the subject matter and a level of experience in the application thereof sufficient to apply the subject matter in straightforward circumstances.
Level A
A thorough knowledge with a solid understanding of the subject matter and experience in the application thereof sufficient to exercise reasonable professional judgement in the application of the subject matter in those circumstances generally encountered by Chartered Accountants.
Key to other symbols:
→ the knowledge level reached is assumed to be continued
Study guide 21
BUSINESS ANALYSIS Professional Stage
Topic
Man
agem
ent
Info
rmat
ion
Bus
ines
s &
Fi
nan
ce
Fin
anci
al
Man
agem
ent
Bus
ines
s St
rate
gy
Ad
van
ced
Sta
ge
STRATEGIC ANALYSIS Environmental and market analysis tools PESTEL analysis C A Porter’s five forces B A Product life cycle B A Boston consulting group matrix B A Competitor analysis B A Positional and other analysis tools Resource audit C A
Resource-based strategy C A Value chain analysis B A SWOT analysis C A Gap analysis C A
Marketing analysis B A Competitive advantage C A Benchmarking C A Directional policy matrix B Business process analysis B A Strategic risk analysis A Balanced scorecard C A STRATEGIC CHOICE Strategy formulation, evaluation and choice C A Business risk management C A Financial analysis and data analysis A Stakeholder analysis B A Objectives and stakeholders preferences C B Corporate responsibility and sustainability C B A STRATEGIC IMPLEMENTATION Business plans C B A Organisational structure C B A Information management C B A Change management A Project management A COST ANALYSIS FOR DECISION MAKING Costing Cost classification A Costing systems – direct, marginal, absorption B Activity based costing (ABC) C B Break even analysis B A Multi-product break even analysis B
Budgeting and performance management B A Pricing Pricing decisions B A Transfer pricing B A BUSINESS AND SHAREHOLDER VALUE Valuation Techniques Income – dividend yield B A Income – P/E B A Income – discounted cash flow B A Asset based measures B A
Business Analysis 22
Professional Stage
Topic
Man
agem
ent
Info
rmat
ion
Bus
ines
s &
Fi
nan
ce
Fin
anci
al
Man
agem
ent
Bus
ines
s St
rate
gy
Ad
van
ced
Sta
ge
Options approach Shareholder value Value based management (VBM) Value drivers B A Shareholder value analysis (SVA) B A Short and long term growth rates and terminal values A Economic profit A Cash flow return on investment (CFROI) A Total shareholder return (TSR) A Market value added (MVA) A INVESTMENT APPRAISAL AND BASIC RISK ANALYSIS Project appraisal NPV B A IRR B A Payback B A
Relevant cash flows A Tax and inflation A Replacement Analysis A Capital rationing A Adjusted present value (APV) A Assessing risk Project appraisal and sensitivity analysis B A Project appraisal and simulation B A Expected values B A Scenario planning A Gap analysis B Continuous vs. event risk B FINANCIAL ANALYSIS Cost of capital Cost of equity B A Cost of debt B A Cost of preference shares B A Cost of bank loans B A Weighted average cost of capital (WACC) B A Effective interest rates A Splitting convertibles into equity and debt elements A Public sector discount rates A Portfolio theory and CAPM Portfolio theory B A CAPM B A APT and MCPM A CAPM and cost of capital B A International cost of capital A Bonds Bond pricing using NPV A Yields to maturity A Duration and price volatility A Convexity A Term structure of interest rates A Corporate borrowing and default risk A SOURCES OF FINANCE AND FINANCING ARRANGEMENTS
Study guide 23
Professional Stage
Topic
Man
agem
ent
Info
rmat
ion
Bus
ines
s &
Fi
nan
ce
Fin
anci
al
Man
agem
ent
Bus
ines
s St
rate
gy
Ad
van
ced
Sta
ge
Short, medium and long term sources of finance B A Loan agreement conditions (warranties; covenants; guarantees)
B A
Raising capital B A Gearing and capital structure A Loan agreements and covenants A Dividend policy A Financing reconstructions (eg: group reconstruction, spin off, purchase of own shares, use of distributable profits)
B A
Working capital management C A FINANCIAL ENGINEERING Futures, options and swaps Options B A Interest rate futures B A Interest rate options B A Interest forward rate agreements (FRAs) B A Interest rate swaps B A Foreign exchange Currency forward contracts B A Currency money market cover B A Currency options B A Currency swaps B A
Operational techniques for managing currency risk B A Theoretical determinants of foreign exchange rates B A Option value Value of a call and put option C Black Scholes option pricing model B Binomial Option Pricing Model B Real options C B
Business Analysis 24
Ethics Codes and Standards
Ethics Codes and Standards
Level
Professional Stage modules
IFAC Code of Ethics for Professional Accountants (parts A, B and C and Definitions)
A
ICAEW Code of Ethics
A
Assurance Business and Finance Law Principles of Taxation Audit and Assurance Business Strategy Financial Reporting Taxation
APB Ethical Standards 1-5 (revised) Provisions Available to Small Entities (revised)
A Assurance Audit and Assurance
Study guide 25
6 Key Resources
STUDENT SUPPORT TEAM T +44 (0)1908 248 250 E [email protected]
STUDENT WEBSITE
icaew.com/students student homepage icaew.com/exams exam applications, deadlines, regulations and more icaew.com/cpl credit for prior learn/exemptions icaew.com/examresources examiner's comments, syllabus, past papers, study guides and more icaew.com/examresults exam results
TUITION
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If you aren’t receiving structured tuition and are interested in classroom, online or distance learning tuition, take a look at our tuition providers in your area on icaew.com/exams
ONLINE STUDENT COMMUNITY
The online student community allows you to ask questions, gain study and exam advice from fellow ACA and CFAB students and access our free webinars. There are also regular Ask an Expert and Ask a Tutor sessions to help you with key technical topics and exam papers. Access the community at icaew.com/studentcommunity
THE LIBRARY & INFORMATION SERVICE (LIS)
The Library & Information Service (LIS) is ICAEW's world-leading accountancy and business library. You have access to a range of resources free of charge via the library website, including the catalogue, LibCat. icaew.com/library
Business Analysis 26