ACCA Exam tips June 2015 – BPP

(source PQ Magazine/BPP)

Paper F5
The F5 exam has had the following exam format since the December 2014 exam sitting.

Section A
20 multiple choice questions each worth 2 marks each. The MCQs will largely be knowledge based and will balance out the questions in Section B to make sure that all aspects of the syllabus are examined. This means that you will need breadth of syllabus knowledge. There will be 5 questions on each syllabus area.

Section B
Q1-3: Three 10 mark questions. These will test any of the four syllabus areas and could combine syllabus in one question. The questions will be broken down into sub requirements and are likely to be based on a short scenario.

Q4 & Q5: Two 15 mark questions which will most likely be broken down into sub requirements and be scenario based. These questions will only cover syllabus areas B, C and D.

Areas expected to be tested in Q4 and % included performance management and further variances.

Important areas to cover for the June exam include (but not limited to):
A: ABC, throughput accounting, target costing & lifecycle costing.
B: Techniques to assit decision making, including: linear programming, CVP analysis, relevant costing, pricing and incorporating risk and uncertainty.
C: Approaches to the types of budgeting systems, variance analysis (both mix and yield and planning and operational variances) and forecasting techniques, especially learning curves.
D: Appraisal of performance of an entire company or a division, via financial performance measures including traditional ratio analysis, ROI and RI or transfer pricing often contrasted with non-financial performance measures including the Balanced Scorecard.

Paper F6 (UK)
ACCA F6 will be tested using a new exam format from June 2015.

Section A
15 multiple choice questions worth 2 marks each. The MCQs will largely be knowledge based and will balance out the questions in Section B to make sure that all aspects of the syllabus are examined. You should expect the administrative aspects of F6 (self-assessment filing, payment deadlines, penalties etc for both individuals and companies) to feature a little more than was the case before.

Section B
Q1 – Q4: Four 10 mark questions. The questions will be broken down into sub requirements and may also be based on a short scenario.
Areas expected to be tested in questions 1 to 4 include property income, pensions, 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) and value added tax (schemes for small businesses).

Q5 & Q6: Two 15 mark questions which will be broken down into sub requirements and be scenario based. One of the questions will test a range of aspects of income tax (likely to be employment income and/or trading income) and the other question will cover corporation tax. Capital allowances are likely to feature in one of these questions.

F6 has the following syllabus areas:
A The UK tax system and its administration
B Income tax and national insurance contributions
C Chargeable gains for individuals
D Inheritance tax
E Corporation tax liabilities
F Value added tax

General advice
The exam is predominantly computational which means that most of your marks will be available for number work. That does not mean you should ignore the narrative requirements which will make up a discernible number of marks.

At the beginning of the exam you are given 15 minutes “reading and planning” time. During this time you can read and annotate your question paper and so this is a perfect chance to make notes next to the information in the scenarios of things to include in your answer.

During this time you should also think about the order in which you will attempt the questions – start with your best question first but remember to watch your timing very closely – you seriously damage your chances of passing if you do not attempt all the questions set or if you significantly run out of time.

Presentation is important. If you do not use the proformas you have been using on your course your marker will find it harder to give you marks. It is your responsibility to convince the marker you deserve to pass, so make your computations, workings and narrative easy to follow.

Paper F7

Section A
Twenty 2 mark multiple choice questions on a wide range of topics including several on consolidation and interpretation of financial statements
Expect a few questions on non-core areas (e.g. inflation, specialised entities)

Section B
Q1 & 2: Two 15 mark questions
One likely to be an interpretation or statement of cash flows, 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: 30 mark financial statement preparation question. Could be for a single entity or a consolidation (statement of profit or loss and other comprehensive income and/or statement of financial position). Will include adjustments on other syllabus areas.
May include a short separate part, e.g. with a statement of changes in equity, statement of cash flows extract, earnings per share calculation or linked written topic.

A consolidation question would include one subsidiary and often an associate, with adjustments, e.g. fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit.

A single entity question could be preparation from a trial balance or restatement of given financial statements with the usual adjustments for depreciation, revaluation and current/deferred tax (including deferred tax on revaluations) plus a mixture of adjustments on other syllabus areas, e.g. leases, substance over form issues, financial instruments (change in fair value or amortised cost), share issues, government grants, inventory valuation, revenue recognition or construction contracts.

Paper F8
ACCA F8 has had the following exam format since the December 2014 exam sitting.

Section A
12 multiple choice questions of which eight are worth 2 marks each and four are worth 1 mark each. The MCQs will largely be knowledge based and will balance out the questions in Section B to make sure that all aspects of the syllabus are examined.

Section B
Q1 – Q4: Four 10 mark questions. These will test single topic areas of the syllabus and so will either test syllabus area A, B, C, D or E. The questions will be broken down into sub requirements and may also be based on a short scenario.

Areas expected to be tested in questions 1 to 4 include ethical threats and safeguards, corporate governance and internal audit, audit planning, materiality, audit procedures (especially substantive procedures), audit finalisation and audit reports.

Q5 & Q6: Two 20 mark questions which will be broken down into sub requirements and be scenario based. The majority of marks in each question will test syllabus areas B, C and/or D.

Areas expected to be tested in questions 5 and 6 include audit risk, internal control and audit procedures (both substantive procedures and tests of controls).

F8 has the following syllabus areas:

A Audit framework and regulation
B Planning and risk assessment
C Internal control
D Audit evidence
E Review and reporting

General advice
Where questions are based on a scenario it is essential that you use the information in the scenario to make your answers relevant.

At the beginning of the exam you are given 15 minutes “reading and planning” time. During this time you can read and annotate your question paper and so this is a perfect chance to make notes next to the information in the scenarios of things to include in your answer.

During this time you should also think about how you will present your answer – try to use a tabular format in your solutions where relevant as the examiner has stated that candidates who do this score better.

Finally pay attention to the verbs used in question requirements as these indicate the number of marks available. For example, the verb “explain” requires a sentence and will score one mark if properly explained whereas the verb “list” simply requires you to list out information with no further explanation and this will score ? mark per point.

Paper F9
ACCA F9 has been tested using this exam format since December 2014.

Section A
20 multiple choice questions worth 2 marks each. The MCQs will largely be knowledge based and will balance out the questions in Section B to make sure that all aspects of the syllabus are examined. It is likely that some of the MCQs will test the financial management and objectives (ratio analysis, the concept of shareholder wealth) as well as economic environment and financial institutions topics (financial intermediation, fiscal and monetary policies). The efficient market hypothesis is likely to be tested here too.

But bear in mind that the whole point of setting MCQs is to test good coverage of the syllabus in the exam.

Section B
Q1 – Q3: Three 10 mark questions. The questions will be broken down into sub requirements and may also be based on a short scenario.

Areas expected to be tested in questions 1 to 3 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 (most likely in the form of currency risk but it is possible that interest rate risk is examined here).

Q4 & Q5: Two 15 mark questions which will be broken down into sub requirements and be scenario based. These two questions will focus on these topics investment appraisal (likely to be an NPV with inflation and tax), working capital management and business finance (either an evaluation of financing options – interest coverage and gearing ratios are likely to be important here or a cost of capital calculation are most likely). Whichever of these three topics does not feature in question 4 or 5 will appear in question 1, 2 or 3.

F9 has the following syllabus areas:
A Financial management function
B Financial management environment
C Working capital management
D Investment appraisal
E Business finance
F Business valuations
G Risk management

General advice
The exam is written so that approximately 50% of the marks will be numerical in nature and the other 50% will be narrative (either knowledge or understanding in the case of multiple choice questions or requiring written answers in section B questions). You should not neglect your written skills. Try to explain your points in full sentences rather than simply leaving a bullet point answer.

At the beginning of the exam you are given 15 minutes “reading and planning” time. During this time you can read and annotate your question paper and so this is a perfect chance to make notes next to the information in the scenarios of things to include in your answer.

During this time you should also think about the order in which you will attempt the questions – start with your best question first but remember to watch your timing very closely – you seriously damage your chances of passing if you do not attempt all the questions set or if you significantly run out of time.

Presentation is important. It is up to you to make it easy for your marker to give you marks. It is your responsibility to convince the marker you deserve to pass, so make your computations, workings and narrative easy to follow.

Paper P1

We expect that the P1 exam in June will reflect previous sittings closely, with one compulsory question and a choice of two from three optional questions.

Remember, the compulsory question will be fixed at 50 marks, focusing on one scenario testing all three main syllabus areas, with up to 4 professional marks available for producing some form of written communication (a briefing note, press release or letter to shareholders).

The optional questions will score 25 marks each and can test up to two syllabus areas each by applying the syllabus to a real-world scenario.
The December 2014 exam tested content from two areas added to the syllabus for that sitting onwards – public sector governance and integrated reporting – so it is unlikely that you will see them tested again so soon, but make sure you have read the examiner’s technical articles just in case.

You can also expect to see the use of ethical and CSR theories applied to scenarios, as well as the use of risk and governance syllabus content – you should be aiming to revisit as many past-paper questions as possible as we are starting to see exam requirements that reflect those we have seen before.

Candidates should also take heed of the examining team’s recently published article content for P1 when preparing for this exam – at time of going to press, this included one article on CSR strategy and strategic CSR – so keep checking to make sure you don’t miss any last minute additions.

Paper P2 (International Stream)

Section A
This will be a 50 mark compulsory case study including preparation of a group statement of financial position and/or statement of profit of loss and other comprehensive income or statement of cash flows which may include a foreign subsidiary, discontinued activities, disposals and/or acquisitions. This will include other accounting complications such as financial instruments, pensions, share-based payment and impairments.
There will also be discursive requirements on a linked accounting adjustment and social/ethical/moral aspects of corporate reporting.

Section B
Section B normally includes:
Q2 & Q3: 2 case study questions: one a multi-part question covering a range of topics or a theme such as 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 or ratios; the other an industry-based question (NB: no specific knowledge of the particular industry is required) 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: a discussion question looking at current developments in corporate reporting and problems with existing standards, such as classification in profit or loss vs OCI (see exam team article), integrated reporting (see exam team article), 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. Will also normally include a related computational part based on figures from a case study.
One of these questions can also include elements of group accounting, especially if question 1 is a statement of cash flows question.

Paper P3

General advice
If we look back at the 2014 P3 exams we can see that the examiner has again required students to have a very good grasp of the syllabus, both breadth and depth, combined with an ability to apply that knowledge to the specific circumstances of the scenario.

In addition it is clear that the examiner likes to keep students on their toes by including substantial “random” elements within questions that are from areas that could be either be considered to be from the fringes of the syllabus or are based largely on knowledge carried forward from earlier papers. For instance in the June 2014 paper there was a 10 mark question on benefits owners, maps and realisation and in December 2014 risk management and linear regression were included.

It is therefore extremely dangerous for any student to focus on certain elements of the syllabus at the expense of others. To stand the best chance of passing P3 students need to have a good understanding of the entire syllabus. This will enable them to choose the questions where they believe they will find it easier to pick up marks (for instance because it is easier to understand the requirements, or easier to structure an answer, or easier to pick up knowledge marks) rather than having to choose questions because of the syllabus area.

In addition if students were to look at the exams in the past couple of years they will see that all of the key areas of the syllabus have been examined over the past four or five sittings which again shows the danger of question spotting or ignoring areas.

Important areas to cover for the June 2015 exam include:

It could be argued that the following areas, despite being key syllabus areas that have been regularly examined, have not been examined significantly in the past couple of papers, and therefore may be a little more likely to surface (however remember that this is a very dangerous game to play if it distracts students from other syllabus areas):

– Strategy Lenses and approaches to strategy
– Mission, Culture and Ethics
– Critical success factors and KPIs
– Role of the corporate parent including BCG matrix/Ashridge
– People, leadership, job design and staff development

It is certainly worth a reminder that a number of new elements were brought into the syllabus in 2014. It could be argued that the examiner may take the opportunity to test these specifically because they are relatively new and therefore students should ensure that they are familiar with:

– Integrated Reporting
– Change management frameworks (POPIT and the business change lifecycle) and
– Organisational Configuration – new definitions: Boundary-less organisations, – Outsourcing vs. Offshoring, Hollow and Modular structures

Finally it is worth pointing out first that the December 2014 paper saw a significant numerical element (two out of four questions, including Q1) requiring interpretation, calculation or both, and second, that the exam continues to feature visual aspects such a process diagrams, organisational charts and data tables, thus practising interpretation of these from past questions is recommended as we would fully expect both to continue in June this year.

Paper P4

Important area to cover include
Q1: We would expect section A questions to be mainly based on core syllabus areas such: project appraisal (often in an overseas context), business valuations (both are likely to include cost of capital calculations) and risk management (hedging).
Q2-4: Currency risk management, business re-organisation, real options.

General advice
The 50 mark compulsory question will, inevitably, draw from a number of different syllabus areas. The examiner has said that he does not plan exams by referring to past exams (ie checking that the whole syllabus is being tested over the course of a number of exam sittings). These factors mean that question spotting is extremely difficult for this paper. However, we would expect section A questions to test core syllabus areas as listed above.

In Section B one of the questions may be entirely discussion based (but this is not guaranteed from June 2013), and often involves ethical issues and general financing issues (eg dividend policy).

Remember that this paper is not a maths exam – in all exam questions the examiner is as interested in your ability to communicate well and to give good management advice as he is in your numerical ability.

Keep checking the ACCA website for articles written by the P4 examiner in the lead up to the exam, these are often tested.

Paper P5

Q1: section A (50 marks) contains one compulsory question. In recent exam Q1 has often required a significant level of data analysis using numerical techniques, eg KPIs, EVA. Any numerical techniques in this paper (eg transfer pricing, ratios, residual income, analysis of quality related costs, ABC) need to be mastered to prepare yourself for this question.

Performance management frameworks (eg Balanced Scorecard) are also commonly tested in Q1. The balanced scorecard and the buildings blocks are due to be tested.

Q2-4: In section B (2 25 mark questions from a choice of 3) commonly tested areas include quality management, information reporting (eg CSFs and KPIs), the application of strategic models (such as PEST, Porter’s % forces, the Value chain), HR frameworks (eg reward & appraisal systems) and risk management.

Keep checking the ACCA website for articles in the lead up to exam, these are often tested.

Paper P6 (UK)

The exam will comprise two compulsory questions within Section A which will both be of a case study style. The first question will be 35 marks in length and will contain four marks for professional skills. The second will be for 25 marks in total and will contain no professional skills marks. One of these questions will focus on personal tax issues and the other will focus on corporate tax issues.

Section B will comprise three questions, each of 20 marks in length of which only two are to be answered. These will be in a more succinct, note form style.
The whole syllabus is examinable throughout the paper.

The paper will examine candidates’ ability to analyse and evaluate the tax implications of various situations, numerical calculations will only be required to assist in producing an answer and no purely numerical questions will be set.

Topics we would expect to see are:

– 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
– Takeover
– VAT partial exemption
– Transfer of trade versus sale of subsidiary
– Disincorporation relief
– Pension contributions

Paper P7

We expect that the P7 exam in June will reflect previous sittings, with two compulsory questions making up the majority of the marks on offer and a choice of two from three optional questions. Remember, the compulsory questions will be fixed at 35 marks and 25 marks for Questions 1 and 2 respectively, with up to 4 professional marks available in one of these questions for professional layout of your answer, while the optional questions will score 20 marks each.

You should be aware that for exams from December 2014 onwards, the P7 INT syllabus includes examinable content on the audit of public sector performance information which you should be prepared for – watch out for technical article content right up to the date of the exam as the examining team may decide to supplement the study guide with additional information!

For this sitting, you can again expect a planning scenario in the compulsory section which should test risk assessment, audit procedures and professional issues, possibly in the context of a consolidated group, while we expect that optional questions will also test audit reports, audit evidence, ethical and other practice-related matters. Remember that this paper is called “Advanced Audit and Assurance” so you should make sure you are familiar with all the non-audit engagements on the syllabus too!

Candidates should also take heed of other recently published article content from the P7 examining team on audit quality and professional scepticism when preparing for this exam – each of these topics feeds into so many parts of the syllabus so you should consider how each one could be applied to what you have already learned.