ACCA Exam tips December 2015 – BPP, LSBF, First Intuition

source: https://www.pqaccountant.com

BPP Exam Tips

Paper F6
• Employment benefits.
• Property income.
• Relief for pension contributions.
• Adjustments to profit to arrive at trading income for both companies and sole traders.
• Capital allowance computations.

Paper F7
• Q1 & Q2: One likely to be an interpretation or statement of cashflows; the other may be a consolidation question if Q3 is not a consolidation.
• Other possibilities – conceptual framework, intangible/tangible assets and impairment, provisions and contingencies, revenue and grants, financial instruments discontinued operations/assets held for sale or earnings per share.
• Q3: could be a single entity or a consolidation (statement of profit or loss and other comprehensive income and/or statement of financial position).
• Statement of changes in equity, statement of cash flow extract, earnings per share calculation or linked written topic.
• Consolidation question with adjustments, eg fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit.

Paper F8
• Ethical threats and safeguards.
• Corporate governance and internal audit.
• Audit planning.
• Materiality.
• Audit procedures (especially substantive procedures).
• Audit finalisation and audit reports.
• Audit risk.
• Internal control and audit procedures (both substantive procedures and tests of controls).

Paper F9
• Calculations on improvements to receivables management (eg early settlement discounts and factoring).
• Weighted average cost of capital calculations (including its component parts).
• Ratio analysis to support financing decisions.
• NPV calculations.

Paper P1
• Corporate social responsibility strategy – check out recently published article.
• Ethical and other CSR theories – apply them to the scenarios.
• Use of risk and governance – board of directors, remuneration and reporting.

Paper P2
• Preparation statement of financial position and/or a group statement of profit of loss and other comprehensive income or statement of cash flows – including a foreign subsidiary, discounted activities, disposals and/or acquisitions.
• Linked accounting adjustment and social/ethical/moral aspects of corporate reporting.
• Q2 &Q3: deferred tax, foreign currency transactions, financial instruments, pensions, share-based payment, non-current assets (recognition and/or impairment of tangible and intangible assets),
borrowing costs, the effect of accounting treatments on earnings per share to ratios.
• Other question will test 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: revenue recognition, revision of the conceptual framework, regulatory issues over adoption and consistent application of IFRSs, implementation issues, application of the definition of control and significant influence (equity accounting) , improvements in performance measurement, classification in profit and loss vs OCI, integrated reporting.

Paper P3
• Value chain.
• Critical success factors and KPIs.
• Role of the corporate parent, including BCG matrix/Ashridge.
• Managing strategic change, including force field analysis.

Paper P4
• Q1: expect core subjects such as project appraisal (domestic or overseas), business valuations (cost of capital calculations), and risk management (hedging).
• Q2-4: risk management (currency or interest rate), business re-organisation, real options.

Paper P5
• Q1: performance management frameworks (building blocks model or the balanced scorecard). Also need to master transfer pricing, ratios, analysis of quality related costs, ABC.
• Q2-4: common tested areas include quality management, information reporting (CSFs and KPIs), the application of strategic models (such as PEST, Porter’s 5 forces, the Value Chain), HR frameworks (reward & appraisal systems), risk management and environmental management accounting.

Paper P6
These are on the PQ magazine website (www.pqmagazine.co.uk).

Paper P7
• Test planning.
• Risk assessment.
• Evidence gathering and practice management.
• Non-audit engagement, such as prospective financial information (PFI) or due diligence.
• Audit completion.
• Consolidated groups.
• Audit evidence and financial reporting issues.
• Quality control and reporting, including completion and communication.

First Intuition

Paper F5
• Lifecycle costing.
• Environmental accounting.
• Limiting factors.
• Relevant costing.
• Flexed budget and budgeting discussion.
• Divisional performance.
• Mix and yield variances.

Paper F6
• Employment/self-employment.
• PAYE.
• Opening years and change of year-end for sole traders.
• Capital allowances.
• VAT default surcharge and VAT invoice content and annual accounting.
• CGT: Entrepreneur’s relief, chattels.
• IHT lifetime and death transfers. F7
• 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.

Paper F8
• Ethics.
• 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.

Paper F9
• Discussion of the economic environment and the impact on interest and exchange rates.
• Working capital management – receivables and payables plus operating cycle.
• Investment appraisal and cost of capital.
• Business valuations.
• Risk management (currency risk calculations).

Paper P1
• 50-mark scenario question to include: ethics, governance, single v. two-tier board structures, also corporate social responsibility.
• Optional questions to include internal controls, governance committees and directors’ remuneration, business risks, integrated reporting and environmental reporting.

Paper P2
• Q1: group question on foreign subsidiary. Will contain a variety of non-group topics, too.
• Ethics.
• Revenue recognition or leases – current issue.
• Deferred tax
• Share based payments.
• Pensions.

Paper P3
• Environmental analysis, people with financial analysis.
• Project management.
• Strategic action.
• Information technology – pricing strategy.
Paper P4
• International investment appraisal techniques focusing on risk management tools.
• 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.

Paper P5
• Critique an existing performance management system and the performance hierarchy.
• Transfer pricing.
• Activity based principles.
• Performance management models (performance pyramid or building block model).
• Value based approaches to performance management.
• Effective use of information systems.

Paper P6

• 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.

Paper P7
* 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.
* Money laundering.
* Insolvency issues.

LSBF

Paper F5
• Lifecycle costing with environmental accounting.
• Relevant costing/decision trees.
• Budgeting theory/flexed budgets. • Mix and yield/sales mix and quantity variances.
• Divisional performance (ROI, RI).

Paper F6
• Q1: Capital gain tax question with shares including bonus/rights issue and chattel rules or maybe corporation tax with rollover and holdover relief.
• Q2: VAT – deregistration due date, surcharges, accounting for VAT, the annual accounting scheme and contents of a VAT invoice.
• Q3: Inheritance tax – including lifetime gifts into a trust, the diminution in value principle and the death estate.
• Q4: Property business profits/ losses or maybe a sole trader, with adjustment of the trading profits and opening or closing year rules.
• Q5: Income tax – computing income tax with employment income with car benefit, fuel benefit and accommodation benefit, interest income/dividend income.
• Q6: Calculating corporation tax possibly including a straddling CAP or maybe a long period of account with capital allowances and possibly adjustment of a trading loss with loss relief and group relief.

Paper F7
• Expect one of the 15 markers to be on ratios and interpretations with (possibly) adjustments to be reflected before a valid comparison.
• Expect the big 30-marker and the 15-marker to be on consolidations and published accounts with standards.

Paper F8
• Ethics, threats to independence.
• Confidentiality, when to breach.
• Audit risk and response, written scenario.
• Internal controls objectives/ procedures/tests on sales cycle.
• Inventory and stocktaking – controls and substantive tests.
• Substantive tests on receivables. • Advise company on improving its governance.
• Role/benefits of audit committees. • Roles of internal audit and comparison with external audit.
• Know your ISAs, especially 210, 250, 260, 450, 560, 570, 720.

Paper F9

• WACC, maybe with capital structure theory thrown in.
• Investment appraisal NPV with working capital and tax, possibly also asset replacement.
• Risk with forward market hedge and money market hedge and a bit of yield curves.
• Working capital management with inventory and cash, overtrading.
• Theory questions possibly on EMH, sources of finance (including Islamic finance), economics.

Paper P1
• Rules vs principles.
• Importance of stakeholders.
• Internal control disclosure.
• Risk diversification.
• AAA model.

Paper P2
• Q1: There are only three possibilities: p/l or b/s or cfs, so to ignore one seems foolish. However, given there was a p/l in September it does seem reasonable to focus less on that. Perhaps 20/40/40.
• Q2 & 3: There are subtle differences between these two. But essentially both require a discussion of key FR applied to a scenario. Expect the usual suspects – goodwill, groups, NCA, revenue, HFS, EARP, FI and so on.
• Q4: Only in the last question does tipping become meaningful. Here are some hot current issues: revenue, financial asset impairment, equity accounting, changes, SMEs.

P3
• Strategic analysis.
• Strategic choice and financial implications of a strategic choice.
• Evaluating software and controls over IT.
• Project management.

Paper P4

• Investment appraisal using adjusted present values/net present values or capital rationing.
• Valuation of business using free cash flows and price-earnings ratio methods, defensive tactics or cash offer or share exchange.
• Cost of capital using principles of Modigliani & Miller prepositions or geared and ungeared betas.
• Hedging exchange rate risk using forward contract, futures contract and options contract.
• Capital reconstruction schemes – designing a capital reconstruction scheme or assessing the success of a given scheme.
• Real options – option to abandon, expand or delay using the Black- Schole option pricing model.

Paper P5
• Balanced scorecard.
• Non-financial indicators.
• Assessing impact upon performance management systems.
• Value management systems.
• Technology and the change of PM systems.

Paper P6
• IHT with the death estate including BPR and APR and lifetime gifts into a trust and gifts with reservation. Domicile including deemed domicile.
• Group question involving losses, group relief and consortium relief.
• Transfer pricing, overseas branch vs overseas subsidiary.
• Partnership with a partner joining/ leaving with opening year rules, choice of accounting date and conditions for a change of accounting date.
• Personal pension schemes versus occupational pension schemes.
• SEIS, EIS and VCT conditions and tax advantages.
• Capital gains tax including entrepreneurs’ relief, shares matching rules.
• SEIS reinvestment relief.
• Group registration for VAT and overseas aspects of VAT.
• Purchase of own shares.
• Share options schemes – tax implications.
• Ethics.

Paper P7
• Audit risk/risk of material misstatement.
• Matters and evidence (accounting issues and audit work on those issues).
• Audit report scenarios/ implications.
• Discussion of benefits of new style audit report.
• Assurance on prospective financial Info.
• If sitting International stream, audit of public sector performance information.
• Threats to independence.
• Advertising.
• Reliance on work of internal audit.
• Know your ISAs, especially more interesting ones such as 250, 402, 540, 550, 560, 600, 720.
• If sitting UK Stream, insolvency.