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q1 reply to an email from a partner about a new audit assignment /
assurance engagement planning exercise – maybe where there was a suspicion
of fraud last year and a change in management
q2 an ethical problem with conflict of interest implications
q3 roles and contrast of internal / external auditors, the need for and
justification of an internal audit function
q4 criticise an audit report
Make sure to read Lisa’s article from October 2011 student Accountant about “Completing the audit”
possible question – comment on the matters and identify the evidence you
would expect to find in the review process of an audit file

BPP
There are a number of areas that candidates can expect to see in their exam, such as:
•A risk-based planning scenario in the compulsory section
•Questions based on articles published in Student Accountant (although not necessarily from the last six months)
•A number of requirements asking for audit procedures and required evidence in respect of specific financial reporting issues and ISAs
•A practice-based scenario looking at professional, ethical and quality control issues
•A reporting scenario of some sort – probably testing candidates’ knowledge of either the various modifications to the standard audit report or other forms of communication available to the external auditor.
We would also recommend that candidates read the examiner’s report from the June 2011 exam (in the context of the June 2011 exam paper) and keep the following additional issues in mind as part of their revision:
•Don’t forget key brought-forward knowledge from Paper F8 which candidates have traditionally struggled with at P7(audit risk, audit procedures and audit reports).
•Candidates should also not forget about practice-related issues (such as the terms of audit engagements, sampling and documentation) where topics such as quality control procedures, ACCA firm practising requirements and the ethical implications of one firm providing both internal and external audit services could be discussed.
•The correct accounting treatment of complex issues, such as IAS 19 Employee benefits or a newcomer for 2011 IAS 21 The effects of changes in foreign exchange rates or even the associated issues of disclosure (such as IFRS 8 Operating segments or IAS 33
Kaplan tips
•Engagement planning and risk assessment
•Ethics and professional issues
•Engagement reporting (ISA’s 700, 705, 706 in particular)
•Unmodified audit reports (ISA 700)
•ISA 540 Audit of Accounting Estimates
•Auditing in a Computer Based Environment
First Intuition
Business risk in a scenario
Identifying ethical and other professional issues in a scenario
Audit reports
Group audits
Money laundering
Forensic audits
Icount
•Audit opinion
•Evidence
•Transnational audits
•Business and financial statement risk
•Ethics
•Quality control
ATC
History shows that the “well prepared candidate” stands by far the highest probability of passing examinations.
Exam Tip
BE WELL PREPARED.
Being well prepared means, at the very least:
* Working through all of the sessions within your study system (on the basis that a good study system covers the whole syllabus and not just a “best guess” 70%).
* Working through all past examination questions and completing all
monitoring/progress tests and mock examinations under full examination conditions.
* Reading all of the examiner’s and other subject articles – they do not write for fun.
Note that examiners no longer write articles for the forthcoming examination – so articles that are at least six months old could be very relevant.
* Being fully aware of current issues (e.g. review the PQ magazine, ACCA and IFAC websites for many current issues)
* Having an awareness of key real world issues (e.g. review the IFAC, ACCA, FRC websites)
* Careful study of the examiner’s reports on past examinations. These contain excellent tips of what students should NOT be doing.
* Ignoring “Exam Tips” that are just a list of somebody’s favourite topics.
* Regularly visiting http://www.accaglobal.com/students
At the 2011 ACCA Teachers’ Conference ALL examiners, whilst understanding the desperation of students for examination tips, clearly stated that such tips were a danger to a student’s ability to pass and MUST be ignored. Giving such tips should be outlawed.
So, blindly following “exam tips” is a danger to your health, wealth and sanity.
Liz Weaver
Liz Weaver, the examiner, is now well into her style. Do not expect any changes in her examination approach BUT be aware that question requirements may now be phrased in a different way to what you have experienced in past examinations. This does not mean that the answer will be different, but does give you broader scope for how you answer. If you have no idea what I am talking about READ LIZ’S ARTICLES ON THE CHANGES and review the June 2011 examination.
Remember that P7 is a required examination on the road to becoming a registered auditor – so expect the hurdle to be high and tough.
Read all of her past examiner’s reports and articles – as well as the articles of her predecessor, Kim Smith (you may need to go to the 3.1 archive on the P7 web pages).
Students continually make the same mistakes, so it is very clear that the majority do not read these reports and article – make sure you are in the minority and PASS!
AREAS TO CONCENTRATE ON:
• New audits, tendering
• Planning, materiality, sampling, analytical review
• Audit, business or financial statement risk
• Group audits, joint ventures, goodwill, joint audit
• Assurance services, PFI, KPI, due diligence, forensic audit, reviews, insolvency (UK and Ireland students only)
• Ethics, practice management and other professional issues
• Any audit matter covering IFRS (IAS 1 to 41 and IFRS 1 to 9 – see P2 syllabus)
• Close down procedures, opening balances, comparatives, other information, going concern, subsequent events, representation letter, emphasis of matter, audit reports
• Outsourcing, service providers, use of an expert
• Corporate governance, internal audit (relating to ethics, outsourcing), audit committees
• Current issues
Or, in other words, the whole syllabus.
Exam Technique
At this high level there is no excuse for not having read the examiner’s articles covering examination technique nor past examiner’s reports. It is critical that you fully understand how the examiner thinks and what she expects to see in your answers.
Understand the requirements of the question before reading through the detail of any scenario. Having done so – PLAN your answer before writing it. Does your plan cover all of the requirements? Are you answering the question set? Have you used the scenario?
Are you demonstrating the higher level skills expected, e.g. critical analysis and appropriate extrapolation?
As with any examination, question practice under examination conditions is critical. Ensure you do at least the last two papers under examination conditions and a further two papers planning each question. If your plan ties in with the suggested solution, you are thinking in the right direction.
Lastly, download the examiner’s September 2009 SA article on examination technique, as well as all her articles over the last two years (and relevant articles from the 3.1 archive).
You may also find the two recent articles on how to tackle exams and passing the professional level papers useful. Fail to read them at your peril.
EXP
• Outsourcing of the accounting function and its impact on the audit
• Going concern issue and its impact on the financial statements
• Ethical issues –tendering and lowballingto get business
• Forensic audit
• A group audit question

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EVA
Non financial performance measures
Information needs of different business structures
Different approaches to budgeting; beyond budgeting

BPP
Performance analysis:
The new examiner has indicated that his questions will require more skill in interpreting data and discussing strategies to improve performance rather than performing calculations. You may be asked to analysis performance vs budget to identify underlying problems that a company needs to address. This analysis could include the use of activity-based approaches, learning curves or non-financial performance measures.
‘Beyond budgeting’ is an important area that can be tested either as a discussion or a numerical question.
Performance appraisal requires effective information systems, expect to be asked to identify the key strategic, tactical and operational information requirements of a business.
Risk analysis:
Analysis of the risk of a new proposal could include numerical techniques such as expected values and probabilities; but strategic frameworks such as PEST analysis could feature here.
Strategic performance measures in the private sector:
Divisional performance measurement is another key area; ROI, RI , EVA, NPV or even cost of quality could feature here and transfer pricing could feature as an aspect of these questions.
EVA is especially likely given the recent articles published in this area – make sure you have read them. Modified IRR is new to the syllabus so make sure that you are comfortable with this area.
Reward systems:
HR issues are new to the syllabus from June 2011; the examiner is interested in the impact of reward systems on performance management.
Alternative views of performance measurement:
Questions are commonly set that require a good understanding of the balanced scorecard, the building blocks model and the performance pyramid. Questions will often require you to analyse data that has been collected using one of these models. The balanced scorecard and performance pyramid were tested heavily in June 2011.
Performance hierarchy:
Linking strategic decisions to mission statements or suggesting strategic options using models such as Ansoff’s matrix or the BCG matrix lend themselves to questions containing a mixture of financial and discursive elements that could easily include a simple NPV or profit analysis.
Kaplan tips
•CSFs and KPIs
•Strategic analysis tools
•Ethics / CSR
•Budget preparation/forecasting
•League table and targets in the public sector
•Evaluation of financial and non-financial performance
First Intuition
Performance pyramid
Performance management hierarchy
Quality costs
EV and risk
Impact of external factors on performance
Activity based principles
Icount
•Quality measurement
•PEST/Porters 5 forces
•Incremental Budgeting
•Public sector performance measurement
•Activity Based Costing
ATC
The examiner has warned candidates against relying on tips, and the dangers of question spotting, so I do not propose to try to provide a list of my best guesses.
Many of the topics in P5 were covered in other papers, so for a student at the final level, it is more important to focus on applying your knowledge to real life situations, or more specifically, the case studies in the P5 exam, than accumulating new knowledge.
Exam Tips
Rather than tipping specific topics therefore, I would just like to give some general advice.
The examiner for P5, Alex Watt, only took over as examiner for the December 2010 session. His style is different from that of his predecessor, so it is important that you work through all the questions in the December 2010 exam and June 2011, and also the sample question that Alex published ahead of the December 2010
exam – this is available on the ACCA web site.
Alex has also mentioned that candidates appear to focus too much on the area of performance evaluation- and ignore the other important areas – particularly management accounting systems. These are likely to feature more often in Alex’s papers. Alex’s advice for a management accounting systems type question is to
focus on the objectives of the organisation, before deciding on what type of management accounting system would be most appropriate for that type of
organisation.
Alex has said that his case studies will be very wordy – you will have to digest a lot
of information in a short space of time. Practicing past exam paper questions is clearly important- although try to avoid those that contain a lots of number-crunching. So question 1 from the December 2010 and June 2011 exams and the examiner’s sample question are most important. Two other good case studies to practice are The Superior Business Consultancy (June 10 exam) and the Glasburgh Trust (June 2009).
Exam Technique
− Spend at least 15 minutes planning the long Section A questions. Read the requirement first, before reading the scenario. As you read the scenario, underline key pieces of information and relate these to the requirement of the case study. Finally, do a quick plan of what you will write, taking into account the marking guide. Then start writing.
EXP
Paper P5 is described as a “high-level performance management exam” and that is exactly what the exam itself demands of participants. Adopting a stratetegic/managerial approach to performance management, you will be expected to write good, focused, relevant answers to discursive questions, while processing and interpreting data provided in Section-A (long scenario)-type questions.The topics that are key in the syllabus include:
• Budgetary forecasting (including learning curve effects):There may be mention of “beyond budgeting” issues.You certainly need to be ready to handle scenarios that involve “dysfunctional” behaviorand require an assessment of reward systems and impact on motivation;
• Quality concerns: This can range from the costs of quality to six sigma measurement (in a descriptive way).The identification of CSFsand the design of suitable performance metrics (KPIs) may also be tested;
• Management information systems design: Taking a high-level approach to specifying what constitutes a suitable and effective managerial accounting system able to capture relevant data and process it in a way which relevant for performance benchmarking and target costing;
• Non-financial performance indicators: The Balanced Scorecard and the Performance Pyramid remain favourites (and don’t forget Fitzgerald and Moon!);
• Non-profit and public sector organisations: It is important that you are prepared to assess performance management metrics to schools, charities and hospitals;
• Transfer pricing (possibly also in an international taxation context) is likely to remain a “popular” topic. Don’t forget to relate this also to inter-divisional performance measures, such as ROCE, RIand EVA (also, check out the ACCA website for articles on EVA);
• Do you remember Ansoffand the BCGmatrices?Above all, make sure that your answers are well-organised and neatly presented. Remember that answers in the exam kit are often comprehensive and exceed (in length) the possibility to reproduce them in an exam. Writing concise answers (but full sentences please!) without repetition and verbosity is preferable. Avoid copying entire tables of data from the question as this is a waste of time.

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Q1 Normal appraisal and advice. Perhaps with takeovers and expected values
Q2 Marketing, particularly pricing
Q3 Project – project initiation documents and gateways
Q4 Strategic use of IT
Q5 Strategy and people

BPP
Important areas to cover:
Strategy models
Analysis of the environment and/or internal factors has featured in most exams. Key models include PESTEL, Porter’s Five Forces and the value chain. Expect something on forecasting soon.
Evaluation of strategic options is usually tested one way or another (although wasn’t in the last paper).SAF can be a useful framework to generate ideas but don’t feel you need to follow it slavishly.
Strategic action (largely change management and organisational configuration) is often overlooked, but has featured in the last two papers, emphasising the need for good syllabus coverage.
Business Process Change
A popular area, which may be based around models such as Harmon, or completely unstructured, describing a process and asking for improvements. Expect to see some numbers coming in to questions in this area to help with decisions such as automation and outsourcing.
Information Technology
A pervasive theme in many questions. Make sure you are comfortable with some of the more important recent concepts in technology such as cloud computing, viral marketing and new business models.
Project Management
This is a major topic and was not tested in the last sitting so may well be this time. Questions could well focus on analysis and realisation of benefits and again are likely to include a numerical element.
Financial Analysis
Lots of management accounting knowledge from F5 is assumed knowledge here, including budgeting, variance analysis and relevant costing. The lessons from Q1 in the last paper are that, 1) this may be in the compulsory question and 2) you may not be specifically told which techniques to use, but have to work it out from the data given.
People
This is most likely to be tested in conjunction with one of the other topics, as it was in the last paper.
Most importantly…
Knowledge alone will not get you close to a pass on this paper. You need to be able to apply your knowledge to specific situations. Practice this using past questions and stories in the press or on the web as often as you can and you will be ready for whatever the exam throws at you!
Kaplan tips
Question 1 may be less strategic than we have seen in the past and feature a large element of project management. It should have some element of strategic analysis, possibly a SWOT.
Section B will combine all elements of the syllabus (strategic analysis, choice and implementation) possibly including:
•Pricing
•Project appraisal
•Strategy and people
•Change management
First Intuition
Section A
Environment analysis, people with financial analysis
Section B
Project management
Strategic action
Information technology – pricing strategy
Icount
•Project management skills
•Internal resources and competences
•Supply chain management
•Decision tree
•Budgeting
•Change management
ATC
During the ACCA conference this year, the examiner, Steve Skidmore, confirmed that good coverage of the syllabus will help candidates to succeed in this paper. The key syllabus topics are:
1) Strategic position
2) Strategic choice
3) Strategy in Action
4) Business process change
5) Information technology
6) Project management
7) Financial analysis
8 ) People
The exam consists of two sections. Section A is a compulsory 50-mark question, with up to 4 parts. Candidates must select 2 questions from 3 25-mark questions in Section B. The examiner tries to test as much of the syllabus as possible, often combining several topics within one question. Hence candidates must have solid knowledge of all the subject areas listed above.
The most useful and recent technical articles, in student accountant, written for this paper are by Ken Garrett.
Business strategy and pricing, Feb 2011 considers influences on price and exam questions are likely to ask candidates to explain the process companies should go through to set price in the context of their overall business strategy.
Business forecasting and strategy, Jan 2011 focuses on forecasting techniques. No difficult calculations are expected in this area but candidates will need to pick on a likely scenario where characters have used a technique inappropriately (e.g. linear regression) and explain how the variables really relate to each other.
The Strategic Use of IT, Oct 2010, analyses how technology can be harnessed in the supply chain management and customer relationship management, a highly examinable areas. Some interesting, real-life examples are given.
Position-based and resources-based strategies, Oct 2010, provides insight into the interaction between internal and external elements of strategy formation. Models such as PESTL, Porter’s 5 forces, Porter’s Value Chain and SWOT (corporate appraisal) have come up in almost every exam.
All these articles can be downloaded from the ACCA website.
Exam “Tips”
• Environmental analysis, using PESTEL or Porter’s 5 forces
• How to harness the use of IT in the value chain
• The role of outsourcing in realising business strategies
• Using Johnson, Whittington & Scholes model to evaluate strategic options under the headings Suitability, Acceptability and Feasibility
• Highlighting key business processes for process redesign (through Harmon’s matrix) and setting in place a change management strategy (Lewin’s Forcefield Analysis)
• Project management, focussing on the cost/benefit analysis of the business case for a project, and in particular benefits management.
Exam Preparation
• Ensure that you cover and revise the whole syllabus. Many of the questions integrate a number of Study Guide learning outcomes.
• Practice scenario questions under realistic time constraints; this will help your time management in the exam. Always read the question requirement before reading the scenario. A scenario without context is meaningless.
• Make sure you use the quantitative data when it is provided in the scenario and apply your answers to the context of the question scenario. Re-read the scenario and ask yourself – “have I used all the information provided?” If you have not, consider where this information might be relevant.
EXP
• Project management
• Environmental analysis such as PESTELand Porter’s 5 forces
• Value Chain Analysis
• Ansoff’sMatrix
• Strategy Evaluation
• Business Process Change / Reengineering –possibly including IT aspects and “new technology” such as cloud computing
• International expansion or some form of business relationship between companies in different countries.

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q1 Vertical group, maybe a “D” shape, Statement of Financial Position,
some ethics or corporate governance
q2 Accounting treatment, possibly complicated inventory or substance over
form – but it could be any IAS / IFRS / Framework-based question / Reconstructions
q3 “Various IAS accounting treatment” ( 3 or 4 different IASs rather than
a specific one as in q2 )
q4 Role of IFRS, the need for and an understanding


BPP
Q1: group SOFP and/or SOCI including discontinued activities, acquisitions and disposals or a statement of cash flows, plus adjustments on other syllabus areas such as financial instruments, pensions, share-based payment and impairments. Written part on a linked accounting adjustment and social/ethical/moral aspects of corporate reporting.
Q2 & Q3:2 case study questions, one following a theme such as non-current assets, deferred tax, foreign currency, financial instruments, pensions, share-based payment, the other an industry-based question testing a range of standards such as accounting policies and the framework, leases, grants, IFRS for SMEs, reorganisations, provisions, events after the reporting period and related parties.
Q4:discussion question e.g. revenue recognition, fair values, management commentary, improvements in performance measurement, leasing, including an application part with some computations.
Kaplan tips
•Group statement of financial position
•Retirement benefits
•Financial instruments
•Non-current assets & assets held for sale
•Entity reconstructions
First Intuition
Q1 Group question on disposals, piecemeal acquisitions
Ethics
Revenue recognition – current issues
Deferred tax
Share based payments
Related parties
Icount
•Consolidation Statement of Comprehensive Income (with complex groups)
•Consolidated Statement of Cashflow
•Accounting treatment for Pension / Share based payments.
•Current developments within IFRS’/IAS’
•Financial instruments at FVTPL and amortised cost.
ATC
The examiners name is Graham Holt, he wrote 2 articles which were based on IFRS 3 (revised 2008) that appeared in the February and April 2009 Student Accountant. Make sure you have read these articles, Q1 will be a consolidation question which will include issues from these articles.
As at October 2011 the examiner has not written any recent articles which may feature in the forthcoming exam, be on the lookout for any articles by him in the weeks leading up to the exam. However, there are a number of technical articles written by other people on subjects that may appear in the exams, these articles are worth a read but they are not an indication of topics that are going to be covered by future exams.
Be aware that IFRS 9 is now the examinable document in respect of the recognition and measurement of financial assets, make sure you are up to date with this new standard as it is likely to feature in part during the exam, it did appear as a question in the June 2001 exam but is a favourite topic with the examiner and so is likely to appear on a regular basis.
The examiner stresses that students should read around the subject and keep themselves up to date. He encourages students to regularly read Economist or Financial Times and look into one of the Big 4 audit companies IFRS website, the examiner himself regularly looks at these sites and may take inspiration for a question from them. Also do look at the CPD section of the ACCA website where you will see articles written by the examiner.
Exam Tips
Areas that feature on a regular basis in the exam are as follows;
Consolidations in Q1
Disposals and complex groups (June 2010)
Disposals (December 2009)
Step acquisitions (December 2009)
Cash flow (Dec 2010)
Foreign Sub (June 2010)
Complex group
It is possible that the consolidation issue in the June exam could either be a complex group or a disposal/step acquisition.
Financial Instruments (IAS 39/IFRS 9) to include hedge accounting, questions on this topic tend to appear in most exams
Employee benefits (IAS 19)
Leases (IAS 17)
Share-based Payments (IFRS 2)
Impairment of assets (IAS 36)
Deferred Tax (IAS 12)
At the 2011 teacher’s conference the examiner did state that he expects to examine IFRS 1 First-time Adoption on a more regular basis and this topic did feature in the June 2011 exam.
Issues of a topical nature at the moment may include the financial crisis, Fair Value accounting, accounting for Financial Instruments and Revenue Recognition issues. New to the syllabus for 2011 exams is capital reconstructions and reorganisations and it is to be expected that this topic will feature in an exam in the near future.
Exam Technique
Don’t forget the following advice while in the exam: Answer all questions, including the written elements of questions. It is very difficult to pass the exam by learning the numbers. Cross reference your workings, they are an integral part of your answer. Answer the question set, not the one you wished had been set, focus on the requirements especially relating to the written part of the answers.
Look at the marks available for each part of the question, do not write pages of answers for a 3 mark part similarly if the question has allocated 6 marks then make sure you adequately answer that part, a line is not enough to get you 6 marks.
For a 25 mark question you should be spending no more than 45 minutes on it.
EXP
• Group question involving changes in group structure;
• Financial Instruments;
• Revenue Recognition;
• Deferred tax;
• Impairments of assets.

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q1 Internal control problems, role of the Chair, the contribution that neds
can make to corporate governance
q2 Corporate social responsibility – why and what
q3 Internal auditors and their role in managing risk
q4 Ethical problems – possibly a money laundering situation
possible question – instead of any of those last three – a numbers question

BPP
In the long 50 mark scenario question you can expect to see all areas of the syllabus being tested. For this reason you should ensure that you have not neglected any of the broad syllabus areas of governance, risk and ethics. The topic of risk can be further subdivided between risk and control.
Some good areas of governance to look at are agency, stakeholders and directors’ remuneration.
Don’t neglect internal control reporting.
Ethical theories get tested regularly, and professional codes of ethics are an important part of the syllabus. The examiner did not touch environmental issues in the June exam – you should ensure you brush up on these too.
Kaplan tips
•Corporate governance: external factors – stock exchanges & Company secretary
•Normative / instrumental stakeholder views
•Ethical Decision making – Tucker/AAA
•Risk perception and ALARP
•Directors Performance Evaluation
First Intuition
50 mark scenario question, to include: TARA risk model, ethics, absolutist v relativism, chairman and CEO powers need to be separate, also corporate social responsibility, ISO 14001
Optional questions to include: importance of internal control, NEDs and remuneration committee, business risks, Grays Owens and adams
Icount
•Transaction cost versus agency theories
•Board committees
•Risk management and the role of internal audit
•Controlling organisational risks
•Absolutist versus relativist ethical theories
•Professional ethics
ATC
History shows that the ‘well prepared candidate’ stands by far the highest probabiliuty of passing exams.
Exam Tip
Being well prepared means at the very least:
* Working through all of the sessions within your study (on the basis that a good study system covers the whole syllabus and not just a ‘best guess’ 70%.
* Working through all past exam questions and completing all monitoring/progress tests and mock exams under full exam conditions.
* Reading all the examiner’s and other subject articles – they do not write for fun. Note that examiners no longer write articles for the forthcoming exam – so articles that are at least six months old could be very relevant.
* Careful study of the examiner’s reports on past exams. These contain excellent tips of what students should NOT be doing.
* Ignoring ‘exam tips’ that are just a list of somebody’s favourite topics.
* Regularly visiting http://www.accaglobal.com/students
I have read various social pages, discussion of which tuition provider is the best at ‘tipping’ – none of us are! It is a myth – as this is P1, is it morally and ethically acceptable for a provider to mislead students into thinking that if they ‘go for’ the tips, they will pass?
At the 2011 ACCA Teachers Conference all examiners while understanding the desperation of students for exam tips, clearly ststed that such tips were a danger to a student’s ability to pass and MUSt be ignored.If you are not prepared to become a ‘well prepared student’ then I suggest you buy a Euro Lottery ticket. You will have a 1 in 75m chance of winning the jackpot and never needing to be a well prepared for any further ACCA exam – good luck!
The examiner – David Campbell
The examiner has now settled into his style and format. No changes are expected. Therefore attempting the last 4 real exams under exam conditions and then reviweing your answer along with the relevant examiner’s report is an essential pre-exam exercise.
David has made it perfectly clear that follwoing ‘exam tips’ is a sure way to fail the exam. He stresses the importance of covering the whole syllabus but even then students should not expect a pass just from being able to rote learn theory. Far too many students, for example, are able to list and describe ethical theories, but then completely fail to apply such theories to a practical scenario. Without real world thinking, exam tips are totally irrrelevant.
Do not be surprised to see a scenario within at least one of the questions, especially Q1, that you may recognise from a past corporate event. the examiner makes it clear that he bases his questions on real life – and the credit crunch/banking crisis of the last few years provides plenty of sources to cover just about every area within the syllabus!
Exam Technique
The diffreence between passing and failing is only one mark. Ensure you attempt ALL parts of Q1 and of the 2 questions you select from section B.
AREAS TO CONCENTRATE ON:
* Corpporate governance concepts, underlying fundamentals and arrangements.
* CG in other organisations eg public services, NGOs.
* Types and forms of CG, eg rules based, principles based, insoder, outsider systems, UK Corporate Governance Code, SoX (not sex – concentrate!)
* Agency theory, stakeholders, Mendelow.
* Board striuctures, CEO/chaiorman, directors, NEDs, committees.
* Internal control and business risk, Turnbull.
* Ethical theories and business codes – Kohlberg, Gray, Owen and Adams, Tucker, AAA.
* Professions and the public interest.
* Corporate social responsibility, corporate citizen, footprints and sustainability.
* Social and environmental auditing.
That just about covers the syllabus.
EXP
• Agency problem and agency monitoring costs.
• The harm to reputation that can be done by lack of transparency / openness.
• Absolutist/ relativist ethics
• Benefit of separation of chairman and CEO -possibly during a period of crisis (the chairman should deal with the public relations while the CEO manages the detail of the crisis)
• Balancing stakeholder claims.
• Corporate social responsibility perspectives.
• Risk and control –including internal control assessment.

Open tuition


1 Valuation of shares using PE ratio and using the dividend growth model (including using betas and using asset beta formula)
2 Investment appraisal – replacement and/or capital rationing and/or lease v buy
3 Receivables management (whether or not to offer discounts)
4 Part a) Rights issue and effect on some financial ratios
Part b) Foreign exchange risk management

BPP
Important areas to cover:
WACC: – any element of the WACC could be tested, including cost of equity, preference shares & different types of debt, along with their corresponding market values & then putting all of this together to calculate the WACC.
Investment decisions: the exam normally contains a question involving net present value (NPV), often with tax and inflation. In order to discount the NPV, you may be asked to first calculate a weighted average cost of capital (see above)
Working capital: questions on inventory management and receivables management are likely. Ensure that you are comfortable with working capital ratios as you may have to be able to put these in reverse
Sources of finance: a topical area, we would expect a part question on financing problems covering gearing issues and problems companies. Ratio analysis is likely to feature here with discussion of the numbers calculated. Ensure you are comfortable with the calculations of the different sources of finance. Islamic Finance was new on the syllabus for the June 11 exam but was not tested. It is possible it may come up in Dec 11, though if it does, it should be straightforward knowledge for a few marks only.
Business Valuations: commonly tested and a core syllabus area. The examiner often combines different syllabus areas within the same exam question – for example asking you to calculate a cost of equity and then use it to value a company.
Kaplan tips
Investment appraisal
The most common technique assessed is NPV with inflation and taxation although be prepared for a twist.
Working Capital Management
It’s been a while since we’ve seen the more numerical aspects surrounding receivables management or the models for cash management.
Risk Management
Foreign exchange risk has been examined more often than interest rate risk. However, both are fairly under-examined areas of the syllabus as a whole and so this is a topic worth being on top of.
First Intuition
Discussion of the economic environment and the impact on interest and exchange rates
Working capital management
Investment appraisal and cost of capital
Business valuation
Icount
•Net Present Value
•Working Capital Management
•Types of finance and WACC – change in Business Risk
•Analysing performance – financial & non financial measures
•PE and DVM valuations
ATC
The examiner identifies eight key areas of the syllabus:
• role of the financial management function
• impact of the economic environment on financial management
• working capital management
• investment appraisal
• alternative sources of business finance
• cost of capital
• business and asset valuations
• foreign exchange and interest rate risk management
The exam consists of four compulsory 25-mark questions. All questions will have computational and discursive elements. The examiner tries to test as much of the syllabus as possible, often combining several topics within one question. Hence candidates must have solid knowledge of all the topics listed above.
Candidates are provided with a formulae sheet and tables of discount and annuity factors. Candidates should bring a scientific calculator to the examination. It is essential to carefully work through the Pilot Paper and the December 2007 – June 2011 exams to become familiar with the style, time pressure and level of difficulty.
The examiner has written four articles in the Student Accountant magazine – “Capital Asset Pricing Model (parts 1-3)” and “Market matters”. In March 2009 an article called “Being an angel” appeared and, although shown on the ACCA website under the link to paper P4 Advanced Financial Management, is arguably more relevant to the paper F9 syllabus which specifically refers to finance for SME’s.
The September 2009 article “Receivables collection” focuses on the commonly tested topics of settlement discounts and debt factoring. Other key articles include “Advanced investment appraisal” (October 2010) and “Foreign exchange risk and its management” (July 2010). Islamic finance was added to the syllabus from June 2011 and has yet to be examined – ensure you read, summarize and memorize the March 2011 article on this topic. All these articles can be downloaded from the ACCA website. If you seek further insights into the examiner’s mind you could consider his book “Corporate Finance – Principles and Practice” (Denzil Watson and Antony Head). However your exam preparation should focus on question practice.
Exam Tips
• The Miller-Orr model and Baumol model
• IRR
• Islamic finance (for more detail refer to the March 2011 Student Accountant article)
• SME finance (for more detail refer to the September 2001 article “Business finance and the SME sector”)
• Rights issues
• Equity valuation
• Interest rate risk
Exam Technique
• Attempt all parts of all questions
• Allow yourself 45 minutes per question and allocate you time carefully between the requirements
• Do not try to pass the exam by only performing calculations (or by only making discussion)
• In calculations show your workings and write your assumptions
• When asked to comment upon your calculations do not be afraid to do so even if you think your calculations contain errors – you can still get maximum marks for comments. If you could not perform the required calculation then write an assumed result and comment upon that.
• Structure your comments using sub-headings and bullet points (but write a full sentence after each bullet).
• Give real life examples where appropriate to support your comments – extra marks may be awarded
• Keep your presentation clear
EXP
• Using the Dividend Valuation Model;
• Working capital management calculations;
• The impact of gearing on the cost of equity;
• Calculating the cost of redeemable and irredeemable debt;
• The definition of Free Cash Flow;
• Calculating written down allowances and taxation effects;
• Calculating the value of a right (rights issues);
• Comparing leasing vs. borrowing alternatives;
• Understanding treasury hedging techniques using derivatives;
• Basic familiarity with Islamic finance instruments

Open Tuition

Q1 Inventory; stock count; computer assisted auditing techniques
Q2 Internal audit v external audit; parts of an assurance engagament
Q3 Corporate governance
Q4 Going concern and audit reports
Q5 Sampling


BPP
Q1 (30 marks)
This question will be based on a scenario and incorporate between 3 and 5 distinct requirements.
The areas most likely to be tested in this question include audit planning and the identification and explanation of audit risk, audit procedures (substantive tests and/ or tests of control) and internal control.
Q2 (10 marks)
This will be a factual or knowledge based question. It is likely to cover several areas of the syllabus with 2 or 3 separate requirements worth between 2 and 5 marks each.
Topics for Question 2 can be drawn from all areas of the F8 syllabus and questions could include the responsibilities of directors and auditors as well as other definitions such as audit risk, audit assertions, audit regulation and corporate governance.
Q3, Q4 & Q5 (20 marks each)
These questions will be scenario based but will also include some knowledge based requirements.
Areas which are likely to be covered in these questions include ethics, planning, the audit of specific transactions or account balances (including estimates), subsequent events, management representations, going concern, audit reports, internal control and corporate governance.
Note that the scenario may be set in the context of a profit making or non-profit making organisation.
Kaplan tips
•Ethics including fundamental principles/confidentiality
•Evidence: payroll, inventory, share capital, reserves, opening balances
•Specific standards/topics:
− ISA 530 (sampling)
− ISA 220 (review of working papers)
First Intuition
Q1 Substantive audit procedures and tests of control on a key area of the Statement of Financial Position eg inventories or non-current assets
Q2 Short 10-marker on ISAs eg audit reports, fraud & error
Q3 ‘Identifying and explaining’ the threats to auditor independence and ways of managing them
Q4 Management letter; identify the weaknesses, consequences and recommendations in a particular company
Q5 Subsequent events
Icount
•System deficiencies and controls
•Corporate governance
•Audit assertions and appropriate audit procedures.
•Written representations
•Ethics and safeguards.
ATC
History shows that the “well prepared candidate” stands by far the highest probability of passing examinations.
Exam Tip
BE WELL PREPARED.
Being well prepared means, at the very least:
Working through all of the sessions within your study system (on the basis that a good study system covers the whole syllabus and not just a “best guess” 70%).
Working through all past examination questions and completing all monitoring/progress tests and mock examinations under full examination conditions.
Reading all of the examiner’s and other subject articles – they do not write for fun. Note that examiners no longer write articles for the forthcoming examination – so articles that are at least six months old could be very relevant (e.g. the articles on analytical review and ratios for the December 2011 examination).
Careful study of the examiner’s reports on past examinations. These contain excellent tips of what students should NOT be doing.
Ignoring “Exam Tips” that are just a list of somebody’s favourite topics.
Regularly visiting http://www.accaglobal.com/students
At the 2011 ACCA Teachers’ Conference ALL examiners, whilst understanding the desperation of students for examination tips, clearly stated that such tips were a danger to a student’s ability to pass and MUST be ignored. Giving tips should be banned as they do more harm than good.
Having said that, it is only fair that I share with you what I thought was a “slip of body language” by the F8 examiner, Pami Bahl, in one of her presentations at the ACCA conference. As always, make sure you take a calculator into the exam with you as there may be a question coming up on materiality, dealing with errors and extrapolation of test results. It may be in December or even next June (2012) as examiners tend to write two or three exams ahead. Or, of course, I completely misread the situation.
Pami Bahl
Pami Bahl, the examiner, does not leave an audit trail for you to follow to identify what will be in her next examination. Just because a subject was examined in the previous examination does not mean that it will not be revisited in December.
Ensure you regularly visit the ACCA student website for all F8 articles, e.g. her article on her examination approach is essential reading. Reading this article and Pami’s examiner’s reports makes it clear that her examination questions will be practical and a purely theoretical study approach is unlikely to bring success. Her past exams have also shown a tendency for her to ask some “off the wall” elements within the questions – “out of the box” thinking required.
In addition to noting the guidance set out above, students should make use of ACCA past examination papers, pay close attention to articles published in Student Accountant and should read the Examiner’s review of the last examination session at http://www2.accaglobal.com/students/acca/exams/f8/reports.
EXP
• The audit of bank balances and investments
• Going concern issue and its impact on the financial statements
• Ethical issues – providing non-audit services to clients
• Management letter with weaknesses of internal controls
• Differentiation between fraud and error

Open tuition
q1 Consolidated balance sheet with subsidiary and associate
q2 Preparation of SoFP and SoI ( maybe Statement of changes in equity
too ) after making adjustments to trial balance or draft accounts
q3 Cash flow ( probably with an element of interpretation )
q4 Development expenditure – chat and short calculation
q5 IFRS9 – 10 mark chat


BPP
Q1: Consolidated SOCI and/or SOFP with one subsidiary plus associate with intragroup adjustments and fair value adjustments. May include written part on a group topic.
Q2: SOCI and SOFP preparation from TB or restatement with usual adjustments for depreciation, revaluation, current/deferred tax plus others such as leases/substance, financial instruments (change in FV or amortised cost). May include discontinued operation/EPS/SOCIE.
Q3: Interpretation and/or statement of cash flows. Could focus on specific part of SOCF or specific ratios.
Q4 & Q5: One question in context of conceptual framework, and the other containing one or two discrete topics, such as regulatory framework, inflation, government grants, discontinued operations, impairments, deferred tax, leases or intangible assets.
Kaplan tips
Question 1
Consolidated statement of financial position including an associate.
Possible adjustments to include:
deferred consideration/share exchange
net asset fair value adjustments
intra-group loan/current account
Question 2
Preparation of financial statements from trial balance including a SOCIE
Possible adjustments to include:
revaluation
financial liabilities
revenue recognition
tax and deferred tax
Question 3
Possible mixed cash flow/interpretation question to include:
calculation of ratios and a short interpretation exercise using the statement of cash flow and ratio results.
Questions 4 and 5
Leases
Impairment
Intangible asset
Investment property
First Intuition
Q1 Consolidated SFP, with associate, deferred consideration, Pups and fair value adjustment downwards
Q2 Single company accounts questions, including contract, lease, and intangible assets
Q3 Statement of cash flow and comments there on with no ratios
Q4 The framework with computation for no current assets
Q5 IAS 37/IAS 12 and deferred tax computation
Icount
•Consolidated group accounts with parent, sub and associate – with intergroup trading, items in transit and FV adjustments.
•Redraft of single entity accounts with adjustments 3. Statement of Cashflow with liquidity ratios.
•EPS/Construction Contracts
•Features of a finance lease, with computations.
ATC
The examiner is Steve Scott, and he has written an article in July 2010 Student Accountant relating to IFRS 3 group accounts. This is no major indicator as we know that Q1 will be a consolidation issue, however, please ensure that you have read this article.
The June 2010 pass rate from this paper was very poor, at 28%, and ACCA have now enhanced the F7 guidance for students in their website. Please ensure that you do visit the F7 specific area of the website and read the various articles included. It should be noted that these articles have not been written by the examiner but they should all be helpful in increasing your knowledge base. The December 2010 pass rate showed a marked improvement to 47% but the June 2011 pass rate was again very poor at 38%.
Q1 will be a consolidation question.
Q2 will be a final accounts question.
Q3 will be a ratio analysis or cash flow question or a mixture of the two.
One of the main reasons students fail the exam is their inability to write and discuss accounting issues, many students focus on the numerical parts of the exam, which may only account for 65% of the marks. You must ensure that you are able to write and discuss about financial reporting issues.
Exam Tips
Common areas that feature on a regular basis in the exam are as follows
• Leases
• Revenue recognition
• Substance vs form
• Convertible instruments (IAS 39)
• Accounting for taxation
• Accounting for assets, particularly IAS 16
Important areas that have not been examined in either question 4 or question 5 include the following
• Accounting for Taxation
• Lease accounting
• Impairment of assets
In the October 2011 issue of Student Accountant the examiner has written an article on the conceptual and regulatory framework that underpins IFRS. This topic features on a regular basis as a question 4 in the exam.
Exam Technique
Don’t forget the following advice while in the exam:
• Answer all questions, including the written elements of questions. It is very difficult to pass the exam by learning the numbers.
• Cross reference your workings, they are an integral part of your answer.
• Make sure you get the sign the right way round with any cash flows, the examiner sometimes only awards the marks if the sign is correct.
• Answer the question set, not the one you wished had been set, focus on the requirements especially relating to the written part of the answers.
• Look at the marks available for each part of the question, do not write pages of answers for a 3 mark part similarly if the question has allocated 6 marks then make sure you adequately answer that part, a line is not enough to get you 6 marks.
• For a 25 mark question you should be spending no more than 45 minutes on it.
EXP
Q1: Consolidated income statement, with associate, fair value adjustments, provisions for unrealized profit, intra group dividends;
Q2: Single company accounts from trial balance, including finance lease, revaluations, provisions, investments;
Q3: Question on interpretation of ratios;
Q4,Q5: Mixed transactional: IAS8, IAS18, IAS12, IAS17.

Open Tuition

F6 is very predictable so no tips as such Practise as many exam standard questions as you can. Make sure you do to time.
After the 15 minute reading time you have 1.8 minutes per mark. If a question is split between part (a) 10 marks and part (b) 10 marks then only spend 18 minutes on part (a) and then move on to part (b).
Look at all the requirements of the question, can you answer an easy parts first, for example one part maybe standalone and on something very straightforward, so do this part first You do not have to answer the questions in the order they are set, if question 5 is the easiest do this one first.
Question 3 will be the hardest so leave this until last but make sure you leave 36 minutes to answer it. Do not panic if you can’t remember something in a question, don’t spend too much time trying to remember it, have a go or even guess. Then you can move on to other parts of the question. Above all you need 50% to pass, so find the marks you can do. There will always be more than 50% of the question which is examining core areas of the syllabus, only a few marks will be fringe areas, but you do not have to worry about these as you can find the 50 marks you need to pass.


BPP
Question 1 will test income tax with maybe a VAT section attached as a separate part. The income tax will focus on a self employed individual with property income and some investment income. The VAT section could look at calculation of VAT payable, penalties and special schemes.
Question 2 will test corporation tax and could involve a long period of account, capital allowance computations for plant and machinery, computation of corporation tax payable and payment of tax.
Question 3 will test capital gains tax from an individuals’ perspective. This question will involve a number of different disposals involving entrepreneurs’ relief, part disposals, chattels and shares with a computation of capital gains tax payable. It is possible this question could alternatively involve a company disposing of shares.
Question 4 & 5 will test anything else. Possible topics that may be examined here are:
- commencement, cessation and change of accounting date rules for sole traders and partnerships
- inheritance tax testing the inheritance tax liabilities on lifetime gifts and as a result of the individual’s death.
- Group relief
- Overseas aspects of corporation tax
- Self assessment system
- Badges of trade
- Corporation tax loss relief
Kaplan tips
Income tax
Husband and wife
Joint investment income
Adjustment of profits
Income tax trading loss
Corporation tax
Capital allowances including IBA
Penalties for late filing of return
Interest on late payment of corporation tax
VAT
VAT return – including some discounts and impaired debts relief
Cash accounting scheme/Flat rate scheme
First Intuition
Resident status
BIKS and employment v self employment
Badges of trade
Adjustment of profits
Basis periods – change of year end
Capital allowances
Partnerships
Property profit
Income tax computation
Corporation tax with group relief
CGT – chattels, PPR, rollover relief, gift relief
NI – Class 1,2 and 4
VAT – cash accounting, default surcharge
Payments on account
Icount
•Adjustments to accounting profits to calculate income tax of a sole trader.
•Corporation tax basic groups.
•Chargeable gains for individuals or companies.
•Accounting for VAT, including registration dates.
•Income tax losses.
EXP
• Income tax comprising employment income (including bank interest and dividends –remember to gross up at 20% and 10% respectively) and trading income. Possibly husband and wife scenario or individual that has both employment and trading income. Additional rate taxpayer and/or PA restriction.
• Employment income to include accommodation, car and fuel benefit with provision of benefit part way through the year (apportion the benefit)
• Adjustment of trading profits
• Calculation of corporation tax with a marginal relief calculation.
• Capital allowances calculation (including AIA, special rate pool and 100% FYA on low emission cars).
• Inheritance tax on lifetime gifts and as a result of the individual’s death.
• Capital gains reliefs including PPR, rollover, gift relief and entrepreneurs’ relief.
• Corporation tax group relief.
• VAT –VAT payable and special schemes

Open Tuition
Target costing / Lifecycle costing / Environmental Management Accounting (short written part)
Multi-product cost volume profit analysis
Budgetting (written part) / Time series / regression analysis
Planning and Operational variances
Performance measurement – financial and non-financial / Transfer pricing


BPP
Specialist Cost and Management Accounting Techniques: Environmental accounting techniques have not yet been tested under the new syllabus, so could feature. Throughput accounting featured numerically in June. ABC vs AC or target costing is also possible.
Decision making techniques: There is a trend for pricing to be examined with other areas of the syllabus, for example learning curves. Relevant costing, CVP, make or buy or other short term decisions could feature as dealing with risk and uncertainty and limiting factors have featured recently.
Budgeting: Discussion marks often focus on the appropriateness of budgeting types or the behavioural impacts of types of budgeting. Numerically it could be tested via time series as a forecasting method.
Standard costing & variance analysis: Variances are likely to feature in the exam, students should be prepared for mix and yield variances, planning and operational variances as well as the basic variances and operating statements. Questions typically require thought about the most appropriate layout and could include discussion of variances which have already been calculated.
Performance Measurement and Control: In June, there was a change in emphasis, with this being the first paper not to contain a question focusing on interpretation of performance and financial vs. non financial measures. Detailed knowledge could instead be required on any of the performance measurement tools. Transfer pricing has not been examined recently, so could feature.
Kaplan tips
Performance Management
•Payoff tables
•Multiproduct breakeven
•ABC
•Linear programming
First Intuition
Target costing
Life cycle costing
Relevant costing decision making
Forecasting
Fixed overhead variances
Financial and non-financial performance assessment
Transfer pricing
Icount
Linear Programming
Analysing Performance using Financial and Non Financial Indicators
Activity Based Costing
Relevant Costing
Budgeting
ATC
The examiner has warned candidates against relying on tips, and the dangers of question spotting were highlighted in the December 2010 exam, when two topics that had appeared in the June 2010 exam appeared again in December. The examiner said that the linear programming question had been done well in June 2010. It was done badly in December 2010. Many candidates had clearly assumed that since the topic was examined in June, it would not come up in December. They were wrong. Please don’t rely on any tips therefore.
Exam Tips
Rather than tipping specific topics therefore, I would just like to give some general advice. The big difference between F2 and F5 is that at F5 candidates are expected to be able to understand, and discuss the calculations they are performing, rather than just doing them, as in F2. So please make sure you are aware of the purpose of all the management accounting techniques.
Secondly, F5 requires a certain amount of interpretation. Many variance analysis questions, for example, require candidates to explain what the variance is actually showing management. The examiner has stated that many candidates are not good at this. There are many past exam questions that feature this type of skill- a good one is the question Chaff co from the June 2008 exam. Practice these types of question and review the examiner’s solution.
Finally, don’t get bogged down by the many different types of variance in your study texts. The most important variances are the “basic” variances, Materials Mix and Yield Variances, Sales mix and quantity variances and planning variances. The other variances, such as activity based are not likely to feature for a large number of marks in any exam. Your effort is better spent improving your interpretation skills than on trying to cover all the other advanced variances.
Exam Technique
Provide some short basic exam technique information for your particular paper (this can be copied and pasted from last year’s).
EXP
Advance budgeting techniques: Possibly target costing and /or lifecycle costing
Decision making techniques: CVPis a big possibility along with a “one-off” relevant costing question
Variance analysis: A mix of numbers +interpretation. Interpretation may revolve around manager performance appraisal
Budgeting: Possibly an entirely written question. If numbers are asked, learning curve is possible
Performance management:A key area, almost certain to be asked. As always, a mix of financial and non-financial factors should be considered. Make sure you are confident in this area.