ACCA Exam tips for Paper F4 English

Q1 Criminal law, civil law, arbitration December 7
Q2 Lifting the veil June 8
Q3 Meetings Pilot paper
Q4 Corporate governance – auditors December 7
Q5 Self-employed or employed June 10
Q6 Damages, measurement and remoteness June 9
Q7 Insolvent liquidation December 7
Q8 Treasury shares – new to syllabus
Q9 Intention to create legal relations December 7
Q10 Bribery – new to syllabus

ACCA Exam tips for Paper F4 Global

Q1 Criminal law, civil law, arbitration December 7
Q2 Lifting the veil June 8
Q3 Meetings Pilot paper
Q4 Corporate governance – auditors December 7
Q5 Sale of goods, anticipatory breach December 8 / June 9
Q6 INCOTERMS – the two new ones
Q7 Insolvent liquidation December 7
Q8 Treasury shares – new to syllabus
Q9 Sale of goods, passing of risk December 9
Q10 Bribery – new to syllabus

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ACCA Exam tips for Paper F5

Activity Based Costing
Cost volume profit analysis
Planning and Operational Variances
Budgets – mainly written, but with preparation of a flexed budget and commenting on it
Financial and non-financial performance measures (with main emphasis on non-financial)

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ACCA Exam tips for Paper F7

Question 1, Consolidated satement of Income, subsidiary and associate,
mid-year acquisition, share for share exchange, nci based on share price,
fair value adjustment, intra group sales and pup, 5 mark chat – exclusion
of subsidiary from consolidation
Question 2, Usual question 2, preparation of financial statements,
Financial Position, Income, Comprehensive Income, Changes in Equity from a
trial balance
Question 3, Report on financial performance – possibly a simple cash flow
included
Question 4, Framework, possible element of reliabilty, relevance, faithful
representation
Question 5, Development expenditure or a complex asset depreciation

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ACCA Exam tips for Paper F8

1 Inventory count.
2 Nature of an assurance assignment/internal audit
3 Going concern and analytical procedures
4 Computer assisted audit techniques
5 Contingent liabilities

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ACCA Exam tips for Paper F9

1 a) Investment appraisal – lease v buy decision
b) Written on replacement
2 a) economic order quantity calculation
b) cash budget
3 a) Capital asset pricing model (ungearing an equity beta)
b) foreign exchange risk management – forward rates and money markets
4 a) calculation of effect of raising finance (i) from equity and (ii) from debt on the earnings per share, interest cover, and gearing ratio of a company
b) written on other ways of raising finance.

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ACCA Exam tips for Paper P1

(Not in any particular sequence)
1 Different contributors to corporate governance ( internal auditors,
external auditors, non-executive directors )
2 Ethics, ethical dilemma, deontology / teleology, Kohlberg
3 Board sub-committees, unitary board cf two-tiered board
4 Role of risk manager, risk committee, Mendelow
Any of the questions could possibly include a computational element – so
TAKE YOUR CALCULATOR INTO THE EXAM ROOM

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ACCA Exam tips for Paper P2

1) Complex group – question Rod ( adapted past exam question ), or
Piecemeal acquisition / partial disposal – question Beth ( December 2007 )
or Base Group ( adapted past exam question )
2) Management commentary – question 52 in Kaplan revision kit
3) IFRS 10, 11, 12 and 13 – no past exam question – check the OpenTuition course notes
4) a question on “Various IASs / IFRSs” – many examples from past exams
5) Entity reconstruction – no past exam question – check the OT course notes
Any one, including question 1, could ask for “special” style – report,
memorandum, email or even letter! So make sure you answer in appropriate
style.

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ACCA Exam tips for Paper P3

1 Strategic position and analysis; corporate parenting
2 Communicating mission and core values (see recent ACCA SA article)
3 Project gateways, project lifecycle and project initiation document
4 Expected values/decision tree. Process improvement
5 Benchmarking

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ACCA Exam tips for Paper P4

Section A
Valuation of a business (for acquisition) – suggesting a range of values
(part including present value of cash flows requiring calculation of the discount rate to use with CAPM involved)
Foreign exchange risk management (forward rates/money markets/futures/options)
Section B
Option pricing
Written question on the European debt crisis
Portfolio theory including written on international diversification

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ACCA Exam tips for Paper P5

1 Critical success factors and KPIs
2 Activity based costing, ABB and ABM
3 Transfer pricing
4 Economic value added
5 Performance Prism and corporate failure

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ACCA Exam tips for Paper P7

1. Group audits
2. Material misstatement risk (article)
3. Non-audit services
4. Standard Q3 – matters to be considered (ethical, professional, practical, accounting);
state the evidence you should expect to find on the audit file
(or identify the procedures you would expect to be followed)
5. CAATs
6. Completion of audit (Make sure to read Lisa’s article from October 2011 student Accountant about “Completing the audit”)

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Tips for ACCA Paper F6 “Taxation” (UK)

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.

RELEVANT TO ACCA QUALIFICATION PAPER P3
© 2012 ACCA
Strategic planning in an age of turbulence
For an organisation, turbulence can be defined as unpredictable and swift
changes in its external or internal environments that affect its performance.
Internal events usually limit their effect to the organisation in which they occur.
External events are much more wide-reaching, often affecting all organisations
or all organisations within an industry sector. These events would often be
identified, though not necessarily predicted, through a PESTEL or Porter’s 5
Forces analysis.
Examples of turbulence
External events Internal events
The banking crisis  Loss of a major customer or contract
The Euro crisis  Loss of key staff
The ‘Arab spring’ Liquidity problems
The Japanese earthquake and tsunami A discovery
Rapid changes in technology Taking over another company
A decade ago, economic growth, interest rates, the impact of the internet and
so on were moving in fairly stable patterns. Of course, even during this period
of relative stability, music companies were trying to work out how to respond
to MP3 downloads, and a company like Kodak was trying to tackle the impact
of digital cameras. But the environment as a whole didn’t spring too many
nasty surprises and businesses felt confident to plan for the future. How
different the last few years have been, as shown above in the examples of
external events. Furthermore, once turbulence is established it can be some
time before things settle down again. So we are now, undoubtedly, in the
middle of a turbulent period.
Our current environment is not uniquely turbulent and there are many
examples of turbulent periods from the last 100 years or so: World War I, the
great depression of the 1930s, World War 2, social changes in the 1960s, the
disintegration of the Warsaw Pact, events following the attack on the World
Trade Center. Turbulence seems to be inevitable, though few people recognise
that, perhaps because its cause and effect cannot be predicted in any detail.
But we know something unexpected always happens. The inevitability of
turbulence should have very important implications for how organisations
should plan for their long-term survival.2
STRATEGIC PLANNING IN AN AGE OF TURBULENCE
APRIL 2012
© 2012 ACCA
Knowns and unknowns
All planning requires us to peer into the future as far as we can, and based on
what we see and our forecasts we devise plans. However, there is a huge range
in what we are capable of foreseeing and with what reliability. It is useful to
divide future events into three classes, as did Donald Rumsfeld, the former US
Secretary of Defense. He was derided at the time but – at least in this matter –
he made perfect logical sense, though somewhat clumsily expressed:
‘There are known knowns; there are things we know we know. We also know
there are known unknowns; that is to say, we know there are some things we
do not know. But there are also unknown unknowns – the ones we don't know
we don't know.’
• The known knowns – for example, an organisation might know that its
drug patents will expire in three years, or that it will be relocating in six
months. These events are relatively easy for planners to handle and to
build into budgets and objectives.
• The known unknowns – for example, an organisation might know that its
competitors are going to launch an important new product but it is not
sure exactly what the characteristics of that product will be. (Think of the
launch of the Apple iPad: everyone knew something was coming, but no
one outside Apple knew any details.) Or, organisations might know that
interest rates will rise but are not sure when or by how much. These
types of unknown can be handled by making estimates and possibly by
assigning probabilities to the various outcomes. Decision trees, expected
values, and sensitivity analysis are all very useful techniques.
• The unknown unknowns – do you know when there will be a powerful
earthquake that flattens the city of London? (Of course, by definition, we
don’t know if there will ever be one.) In 2007, no one knew, or
suspected, that Lehman Brothers would fail. Unknown unknowns cannot
be planned for, but organisations should assume that they will happen
and should therefore build into their plans robustness to protect
themselves against negative events and an ability to exploit positive
ones.
These unknown unknowns are by far the most difficult to manage. They are
sometimes termed ‘black swan events’ (1) because before black swans were
discovered in Australia, no one could imagine the existence of a swan that
wasn’t white. Black swan theory was developed by Nassim Taleb to explain:
• the huge impact of unpredictable, rare events that are outside our
normal experience and without historical precedent
• the non-computability of the effect of these rare events because there is
no data on which to base calculations3
STRATEGIC PLANNING IN AN AGE OF TURBULENCE
APRIL 2012
© 2012 ACCA
• the psychological bias that blinds us to the possibility and impact of rare
events. We tend to assume that things (such as property price increases)
will continue in a predictable way.
The phrase ‘black swan event’ is therefore used as a metaphor for the frailty
and limitation of any system of thought and planning: bounded rationality. This
means that we cannot know all-important factors that will affect the future
(and, anyhow, do not have time to evaluate them). We are, in practice, likely to
suffer from bounded rationality even with the known knowns because of
imperfect research or pressure of time. However, in a period of turbulence,
more events will be in the last two categories and this makes planning more
difficult. So how should organisations respond to the threat of unknowns while
still trying to move forward in terms of gaining competitive advantage?
Planning approaches
Three approaches to strategy are summarised in Johnson, Scholes and
Whittington’s strategic lenses:
(1) Strategy as experience. Here, strategic development is the adaptation
of past strategies based on experience. In this view, strategy is greatly
influenced by taken for granted assumptions, one of which is that the
world will advance in a gradual, linear and relatively predictable way.
(2) Strategy as design. Here, strategy development is a process of logical
and rational thought. Developments that arise are evaluated, resources
allocated and specific strategies are followed.
(3) Strategy as ideas. Strategies are needed to cope with uncertain,
unpredictable and changing environments.
There are analogies here with a suggestion made by Professor Vijay
Govindarajan – namely that organisations should place their planning projects
into three boxes:
• Short term – projects here are about managing the present and would
include process improvement, product and market development. These
projects are in response to linear (therefore non-turbulent) changes in an
industry.
• Medium-term – projects here concern ‘selectively forgetting the past’
and they are driven by non-linear changes such as the Internet and the
‘Arab Spring’. Projects here are aimed at moving into areas
neighbouring the organisation’s core activities.
• Long term – entirely new business ventures. Very speculative, and based
on many assumptions.
It is important to realise that the three approaches in each model are not
mutually exclusive and that all three will be carried on in parallel:
• It is important that the present is managed carefully and making use of
experience and expected developments.4
STRATEGIC PLANNING IN AN AGE OF TURBULENCE
APRIL 2012
© 2012 ACCA
• It is also important that organisations move forward steadily and adapt
to changing opportunities.
• At the same time, organisations should be aware of, or should attempt
to predict, more radical longer-term changes. Although those changes
might not be in place for 10–20 years, work to prepare for them might
have to begin now.
In relatively stable times, a company might divide its projects and efforts over
the three categories in the ratio 50/30/20. Note that even under conditions of
stability, substantial effort should be given to long-term projects.
In turbulent times, companies that are panicked will have projects in category
1 only. They become obsessed about clinging to the safe and familiar, and
important longer-term projects might be abandoned. However, a better
approach would be to keep projects in all three categories, but perhaps reduce
the number in each. Reducing the number in each provides some safety
because less investment spent on projects provides something of a buffer in
turbulent conditions. However, this approach allows attention still to be paid to
the long-term future of the organisation by insisting that longer-term projects
are always important.
Responsive, robust and resilient
Kotler and Caslione (2) address the problem of chaotic or turbulent
environments. They suggest that organisations need to plan to be:
• responsive – the ability to react quickly to change
• robust – the ability to withstand stresses and to cope well with change
without losing functionality
• resilient – the ability to rebound to a position of success.
Consider human resources management when there is a severe and
unexpected turndown in business. HR management would need to be:
• responsive – it might be necessary to block all hiring, to ban overtime, to
freeze pay and to make redundancies
• robust – care is needed when choosing who should go so as not to
jeopardise functionality; care is also needed to preserve motivation and
to try to keep good staff
• resilient – instead of redundancies, it might be better to ask employees
to move to shorter working weeks so that valuable talent is not lost for
ever. Then, when the economy recovers, the company is ready to bounce
back immediately without a delay for recruitment.
Practical approaches
Flexibility
Responsiveness, robustness and resilience are really an expansion of the 5
STRATEGIC PLANNING IN AN AGE OF TURBULENCE
APRIL 2012
© 2012 ACCA
concept of flexibility. It is essential to try to build flexibility into any strategic
plan – even in relatively stable conditions. One of the standard criticisms of the
rational planning approach is that it lacks or inhibits flexibility (though that is
more a criticism of how the plan is used rather than a criticism of planning
itself). Examples of building in flexibility include:
• leaving headroom in any financing plan. For example, arranging lines of
credit
• having break-clauses or extension options in lease agreements
• building in the ability to upgrade or extend operations
• use of currency options
• buying from a range of suppliers. For example, some companies that
relied on just-in-time inventory had problems after the Japanese
earthquake because their supplies were quickly exhausted. Now
manufacturers try to build flexibility into their supply chains
• stand-by and disaster recovery plans for IT systems
• a mix of permanent and sub-contracting staff
• pilot operations to gain experience in new ventures. If successful the
operations can be extended and can make use of experience gained
• joint ventures to spread risk and finance, and to make use of a wide
range of expertise.
Scenario planning
Scenario planning attempts to take into account the many things that could
happen and from those to build a number of believable, alternative futures. Not
all the events that could happen are likely to happen together, so those
permutations can be eliminated. For example, if an election is likely and we
believe that a change in government would lead to a cut in public spending and
a drop in interest rates, then there is no point considering a scenario of the
new government reducing public expenditure and increasing interest rates as
that is an implausible scenario. This greatly helps to reduce the number of
‘universes’ we have to consider and allows the organisation to concentrate on
the few most likely ones and plan its response to each of the plausible
scenarios.
Interest
rate = 5%
Interest
rate = 2%
Government 1
Lower public spending
Implausible
combination
Scenario 1
Government 2
Maintained public spending
Scenario 2 Implausible
combination
Sensitivity analysis
Investigate the effect of assumptions about the future changing. Investigate
sensitive assumptions more to get greater assurance. Look for ways of
defusing high risk areas.6
STRATEGIC PLANNING IN AN AGE OF TURBULENCE
APRIL 2012
© 2012 ACCA
Decision trees
Decision trees can be used to map out the various patterns of events that can
occur. Expected values can be used to evaluate the possibilities, or if
probabilities are too difficult to estimate, the possibilities can be examined
under conditions of uncertainty.
Note, however, that although expected values are often calculated, this
approach to strategic planning is almost always inappropriate. Expected value
calculations reduce detail into a single figure, that is usually not ‘expected’ to
occur, and this is the reverse of what is required to encourage responsiveness,
robustness and resilience. All of these require attention to detail.
For example, Quandary Co could spend $8m and then either have earnings of
$20m with a probability of 0.6 or could make a loss of $5m with a probability
of 0.4. Let us assume that the project lasts 10 years and that all financial flows
are in present value terms.
Outcome Probability $m
1 0.6 20
2 0.4 (5)
The expected value of this project is:
-8 + 0.6 x 20 + 0.4 x (-5) = $2m
However, this positive result conceals the 40% chance that the company will
have an adverse cash flow of $13m ($8m cost and then a $5m loss). Often,
that type of adverse outcome could lead an organisation into liquidation, so
ignoring the downside risk (and there might also be additional unknown ones)
is certainly not a robust methodology.
Furthermore, this approach, as presented, does not show responsiveness or
resilience. Cash flows and probabilities are both subject to change and the
company seems to be signing up to a 10-year project that is all or nothing.
Although sometimes the nature of a project will mean there is little or no
flexibility, it is beholden on companies to look for flexibility.
Now assume that further investigation shows that the project can be broken
down into two, consecutive five-year blocks. The initial cost will be $5m and
this will generate half of the original amounts: either a profit of $10m or a loss
of $2.5m. Assume that after the first five years have passed, the company will
have gained information that allows it to predict with certainty what the
outcomes of the second five years will be. This is not unreasonable as the
passage of time allows more information to be collected that can be used for 7
STRATEGIC PLANNING IN AN AGE OF TURBULENCE
APRIL 2012
© 2012 ACCA
further analysis. Also, events that had been a long way off are now closer and
easier to predict. Therefore, the income figures shown below for the second
five years are not known at the outset but are known after the first five years.
If the company wants to continue after five years, expenditure of another $4m
will be needed to generate the same earnings as would have been earned with
the original one-stage investment. ($3m to bring the cost up to the original
$8m plus a premium of $1m for the delay).
Alternatively, enhancement expenditure of $8m would then increase earnings
to $12m or $15m depending on the state of the world economies (this will be
known after five years). This possibility wasn’t even suspected at the very start
of the project, but has now opened up.
If Quandary didn’t wish to invest further funds after five years, the project
could be abandoned at the end of the first five years for no further cost. If the
outcome had been poor in the first five years, it will be poor in the second five
also, irrespective of any attempt at enhancement.
The choices and outcomes are now:
The company’s game plan could now be as follows:
(1) Assess the likely outcomes from the first five years. As far as has been
forecast, this will either be a net profit of $5m (10 – 5) or a loss of
$7.5m (-2.5 -5). The expected value of the first five years alone would
result in break-even (0.6 x 5 – 0.4 x 7.5 = 0). Within that figure there is
a high chance the loss will occur and the company should have a good
hard look at whether it is robust enough to stand a loss of $7.5m (plus
a bit more for headroom).
p = 0.6
Earnings =
 $10m 
p = 0.4  
Loss =
-$2.5m D
Initial
cost,
$5m
Abandon
Years 0–5              Years 6–10
A
C
Abandon
Cost, $8m, earnings $12m or $15m
 Loss = -$2.5m
Abandon
      Cost, $4m, earnings $10m
B8
STRATEGIC PLANNING IN AN AGE OF TURBULENCE
APRIL 2012
© 2012 ACCA
(2) If Quandary Co embarks on the project and makes a loss in the first five
years, then, to avoid further loss, the project can be abandoned. This
option provides responsiveness.
(3) If Quandary Co embarks on the project and makes a profit in the first
five years, the company can reassess what it should do then. Its
choices are:
• abandon the project. This could be done if the economy then
looked very poor so that the company didn’t want to risk a
further $4m or didn’t feel robust enough to do so
• spend $4m to earn $10m; a profit of $6m
• spend $8m in the hope of earning either $12m or $15m; profits
of $4m or $7m. (The company would, in fact, presumably not
spend $8m to earn $12m because that profit of $4m is less
than the profit of $6m that the first option gives.)
These provide responsiveness and also resilience because Quandary Co has
been able plan to spend to rebound if economies improve.
Of course, as it turned out, none of these happened. A black swan was
sucked into the cooling inlet pipe of the local nuclear power station causing
a meltdown of the core. All homes and businesses, including Quandary Co,
within a radius of 20 km had to be abandoned.
Ken Garrett is a freelance lecturer and writer
References
(1) The Black Swan, Taleb NN, Penguin, 2010
(2) Chaotics, Kotler and Caslione, Chaotics, Amacom, 2009

RELEVANT TO ACCA QUALIFICATION PAPERS P3 AND P5
© 2012 ACCA
Benchmarking
Benchmarking can be defined as: 'The establishment, by the collection of data,
of comparators that allow relative levels of performance to be identified.’
Benchmarking can be thought of as a scientific way of setting objectives that
will act as targets before and during the operating period, and comparators
during and after the period. The phrase ‘by the collection of data’ is crucial:
anyone can establish objectives without the collection of data, but these will be
of little use because they are likely to be arbitrary and without any validity.
Benchmark data validates objectives.
The sources of data that can be used include internal data (for example,
comparing the results of different branches), data about other companies (for
example, those in the same industry) and government data (for example, data
about employee sick days). We will examine the sources of data in more detail
later.
Benchmarking and the strategic planning process
Benchmarking can be used in all three steps of the classical, rational model of
strategic planning:
• Assess the strategic position (internal and external factors)
Frequently, strategic planning starts by defining the mission or mission
statement. For example, BMW states that its mission is: ‘The BMW
Group is the world’s leading provider of premium products and premium
services for individual mobility.’
So, without comparison through benchmarking, how does BMW know
that it is delivering premium products and services?
Assessment of an organisation’s current strategic position can be
summarised in a SWOT analysis. However, the use of comparators is
inherent in a SWOT analysis: if you can say that something is a
‘weakness’ or a ‘strength’ you must be carrying out some sort of
comparison when making that value judgement. Similarly with
opportunities and threats. A factor is a threat to us only because it is
better or stronger than we are in that area – whether it is an organisation
that is better financed, or one that produces products more cheaply, or a
technological development that promises a better product in terms of
cost-benefit, or an organisation that has a stronger brand name.

Open tuition


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

Open tuition


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.

Open Tuition


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.

Open Tuition


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.