BPP Exam Tips
• Q1–Q3: any syllabus area could be tested here – so study it all!
• Q4 & Q5: planning and operational variances.
• Mix and yield variances and evaluation of the company performance (either as a whole or on a divisional basis).
• Property income.
• A range of capital gains calculations – chattels, part- disposals, use of capital losses and business reliefs.
• Inheritance tax – death tax on lifetime gifts and/or death estate.
• VAT – small business schemes. Q5 & Q6
• Income tax – employment income and/or trading income.
• Corporation tax – capital allowances.
Q1 & Q2
• Interpretation or statement of cash flows.
• Conceptual framework.
• Intangible/tangible assets and impairment.
• Provisions and contingencies.
• Revenue and grants.
• Financial instruments discounted operations/assets held for sale or earnings per share.
• Could be single entity or a consolidation – statement of profit or loss and other comprehensive income and/or statement of financial position.
• Corporate governance and internal audit.
• Ethical threats and safeguards.
• Audit planning, materiality, audit procedures (substantive procedures), audit finalisation and audit reports.
Q5 & Q6
• Audit risk.
• Internal control.
• Audit procedures – both substantive procedures and tests of controls.
• Working capital management – the impact of a change in credit period or accepting a factor’s offer. • Business or security valuations – assets method and earnings valuation.
• Financial risk management – currency risk or interest rate risk. Q4 & Q5
• Investment appraisal – likely to be NPV with inflation and tax.
• Working capital management and business finance – evaluation of financing options, interest coverage and gearing ratios, or a cost of capital calculation.
• Use of stakeholder, ethical and other CRS theories – all applied to the scenarios.
• June tested the examiner’s technical article on CSR so ensure you are familiar with any new articles.
• Q1: preparation of a group statement of profit of loss and other comprehensive income and/or statement of financial position or statement of cash flows. This may include a foreign subsidiary, discounted activities, disposal and/or acquisitions. You can add other complications such as financial instruments, pensions, share-based payment and impairments.
• Q2 & Q3: Tests a range of topics such as deferred tax, foreign currency transactions, financial instruments, pensions, share-based payment, non-current assets, borrowing costs, and the effect of accounting treatments on earnings per share or ratios.
• Standards such as accounting policies and the framework, leases, grants, IFRS for SMEs, reorganisations, provisions, events after the reporting period and related parties.
• Q4: Revision of the conceptual framework.
• Regulatory issues over adoption and consistent application of IFRSs. • Implementation issues.
• Revenue recognition.
• Management commentary.
• Application of the definition of control and significant influence – equity accounting.
• Improvements in performance measurement.
• Classification in profit or loss vs OCI.
• Integrated reporting.
• Value chain.
• Critical success factors and KPIs. • Role of the corporate parent, including BCG matrix/Ashbridge.
• Managing strategic change – force field analysis.
• Project appraisal – cost of capital calculations.
• Business valuation – also likely to include cost of capital calculations. • Risk management – hedging.
• Currency risk management.
• Business re-organisation.
• Real options.
• Numerical techniques – KPIs, EVA, transfer pricing, ratios, quality related costs, and ABC.
• Building blocks model.
• Quality management.
• Information reporting – CSFs and KPIs.
• Application of strategic models – PEST, Porter’s 5 Forces, value chain.
• HR frameworks – reward and appraisal systems.
• Risk management.
• Environmental management accounting.
• Groups of companies involving overseas aspects.
• Unincorporated business particularly loss relief or involving a partnership.
• Capital gains tax versus inheritance tax.
• Overseas aspects, particularly the new rules on residence.
• Personal service company.
• Company purchase of own shares.
• Enterprise investment schemes/venture capital trusts.
• Change in accounting date.
• VAT partial exemption.
• Transfer of trade versus sale of subsidiary.
• Disincorporation relief. Pensions contributions.
• Patent box, research and development expenditure.
• Q1: planning, risk assessment, evidence gathering and practice management issues – including financial statements extracts.
• Q2: non-audit engagement – PFI, due diligence, audit completion or consolidated groups.
• Audit evidence and financial reporting issues.
• Practice management including ethics.
• Quality control and reporting – completion and communication.
Becker Professional Education Tips
• Consolidation issues.
• Revenue recognition.
• Substance vs form.
• Convertible instruments (IFRS 9).
• Accounting for taxation, as part of final accounts question.
• Provisions and contingencies.
• Audit risk.
• Auditor’s report.
• Read the examiner’s/exam team’s articles – capital asset pricing model, myopic management, equivalent annual costs and benefits, business valuation, advanced investment appraisal, foreign exchange risk and its management, and introduction to Islamic finance.
• Bond valuation.
• Dividend policy.
• Corporate governance (CG) concepts, underlying fundamentals and arrangements.
• CG in other organisations
(e.g. public sector, NGOs).
• Types and forms of CG (e.g. rules based, principles based, insider, outsider systems, UK Corporate Governance Code, SoX).
• Agency theory, stakeholders, Mendelow.
• Board structures, CEO/chairman, directors, non-executive directors, committees.
• Internal control and business risk, Turnbull.
• Ethical theories and business codes – Kohlberg, Gray, Owen and Adams, Tucker, AAA.
• Professions and the public HEALTH interest. WARNING • Corporate social responsibility, corporate citizen, footprints and sustainability.
• Integrated reporting, social and environmental auditing.
• Consolidations in Q1.
• Disposals and complex groups
(last examined June 2010).
• Disposals (December 2009).
• Step acquisitions (December 2011).
• Cash flow (Dec 2013).
• Foreign Sub (June 2010).
• Complex group (Dec 2012 and June 2013).
• Consolidated profit or loss was examined for the first time in over three years in the June 2014 paper.
• Foreign subsidiaries have not been examined for a few exams.
• Financial Instruments (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).
• Financial performance indicators such as NPV and MIRR.
• Activity based management.
• Fitzgerald and Moon building block model.
• Six Sigma.
• New audits, tendering.
• Planning, materiality, sampling, analytical review.
• Audit, business or material misstatement risk.
• Group audits, goodwill, joint audit, joint ventures.
• 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 40 and IFRS 1 to 15 – see P2 syllabus).
• Close down procedures, opening balances, comparatives, other infor- mation, 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 (e.g. quality control and professional scepticism) including integrated reporting.
• Independence threats.
• Audit risk/response with analytical procedures.
• Control procedures/tests for payroll, inventory.
• Substantive procedures for payroll, inventory, provisions.
• Audit report scenarios.
• Reliance on internal audit by external audit.
• Corporate governance advice to company.
• ISA 250, 260, 560, 570, 720.
• Unitary/two tier (last examined June 2012).
• Chair role/CEO chair split
(Dec ’09, Dec ’11).
• Reward systems (December ’13). • AGM/insider dealing (June ’11).
• Comply and explain or rules versus principle (Dec ’12).
• COSO failures (Dec ’12).
• Board responsibility for control (Dec ’12).
• Disclosure/information (Dec ’10, Dec ’12).
• Risk committee or risk manager (June ’12, June ’09).
• Strategic/operational risk (Dec ’12).
• Static and dynamic risk (June ’11)
• Risk diversification or ALARP (June ’13).
• Absolute/relative (Dec ’10).
• AAA model (June ’12).
• Tucker’s model (Dec ’12).
• Strategic analysis (perhaps with one of the less-used models such Ashridge).
• Strategic choice with numbers (perhaps close or continue or a decision tree).
• IT controls.
• Integrated reporting.
• Improving business processes.
• Investment appraisal using adjusted present values or capital rationing.
• Cost of capital using the principles of Modigliani and Miller, prepositions or geared and ungeared betas.
• Mergers and acquisitions – valuation using free cash flows/P/E ratio method, cash offer or share exchange and regulations of takeovers.
• Assessing the success of a given capital reconstruction scheme.
• Hedging exchange rate or interest rate risk using futures, options and swaps.
• Option pricing theory. Real options, example, option to abandon, expand and delay.
• Valuation of company using the Black-Schole option pricing model.
• Choice of suitable performance metrics for a specific organisation (perhaps EVA/Fitzgerald and Moon).
• Impact of the external environment (perhaps how to collect relevant information about changes).
• Modern management accounting techniques (perhaps TQM/JIT/ environmental management accounting).
• Analysis of performance of SBU’s (perhaps BCG matrix).
• Business risk and risk of material misstatement.
• Matters and Evidence for IAS 23, 24, 37, 38, IFRS 15.
• Ethics/professional issues including money laundering.
• Audit reports scenarios.
• New format audit reports.
• Due diligence and forecasts.
• ISA 250, 260, 550, 560, 610.
• Audit of group acquisition/disposal.
First Intuition’s tips
* Target costing.
* Lifecycle costing.
* Cost volume profit analysis.
* Limiting factors.
* Flexed budget and budgeting discussion.
* Financial and non-financial performance.
* Opening years and change of year end for sole traders.
* Capital allowances.
* VAT default surcharge and VAT invoice content and annual accounting.
* CGT: Principal private residence and entrepreneur’s relief, chattels.
* IHT lifetime and death transfers.
* Extracts from single company accounts including non-current assets, taxation and IFRS 15.
* Interpretation of accounts including a statement of cash flows.
* Consolidated SFP and/or SPL with associate, PUP and fair value adjustments.
* Audit risk and auditor response (including ratio calculations).
* Internal control – deficiencies, implications and recommendations (revenue and receivables or payroll cycle).
* Audit evidence and substantive testing.
* Subsequent events, written representations and going concern
* Modified auditors reports.
* Discussion of the economic environment and the impact on interest and exchange rates.
* Working capital management.
* Investment appraisal & cost of capital.
* Business valuations.
* Risk management.
* 50 mark scenario question, to include: ethics, Tuckers 5 questions, single v two tier board structures also corporate social responsibility.
* Optional questions to include: Importance of internal controls, governance committees and structure of directors remuneration, business risks, integrated reporting and environmental reporting.
* Q1: Group question on foreign subsidiary. Will contain a variety of non-group topics too.
* Revenue recognition or leases – current issue.
* Deferred tax.
* Share based payments.
* Environmental analysis, people with financial analysis.
* Project management.
* Strategic action.
* Information technology – pricing strategy.
* International investment appraisal techniques focusing on risk management tools such as value at risk.
* Impact on WACC following hedging of interest rate risk.
* Company valuation based scenario, possible MBO finance to structure.
* Adjusted present value with link to real options and Black Scholes option pricing model.
* Critique an existing performance management system and the performance hierarchy.
* Transfer pricing.
* Quality costs and six sigma.
* Activity based principles.
* Performance management models (performance pyramid or building block model).
* Value based approaches to performance management.
* Business Property Relief.
* Use of second spouse nil rate band.
* Related property.
* Groups of companies, trading and capital losses.
* Double tax relief for companies.
* De-grouping charges.
* Incorporation relief.
* Furnished holiday lets.
* VAT partial exemption.
* Appeals and the four track tribunal system.
* Benefits in kind or extra salary, income tax and national insurance implications.
* Business risks in a scenario.
* Identifying ethical and other professional issues in a scenario.
* Matters to be considered and audit evidence for a couple of core accounting issues.
* Audit reports.
* Money laundering.