BPP LSBF Kaplan Exam tips June 2014

P2
• Section A: a 50-mark compulsory case study, including preparation of a group statement of profit of loss and other comprehensive income and/or statement of financial position, which may include discontinued activities, disposals, acquisitions or a foreign subsidiary. 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: Q2 and Q3 – two 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 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 regulatory issues over adoption and consistent application of IFRSs, implementation issues, updating the conceptual framework, impairment in the current economic climate, management commentary, application of the definition of control, improvements in performance measurement.

P5
• Performance analysis.
• Risk analysis.
• Strategic performance measures in the private sector. Divisional performance measurement is another key area; ROI, RI, EVA, NPV, share price movement or even costs of quality could feature here.
• Reward systems – HR issues are new to the syllabus from June 2011 and the examiner is interested in the impact of reward systems on performance management.
• Alternative views of performance measurement. Good understanding of the balanced scorecard, the building blocks model and the performance pyramid is needed by students.
• 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.

P6

• Groups of companies, unincorporated business, capital gains tax versus inheritance tax.

P7
• Planning scenario – test risk assessment, audit procedures and professional issues.
•Audit reports, evidence, ethical and other practice-related matters.

• Q1: consolidation with usual mix of consolidation adjustments. Detailed goodwill calculation with various elements to the consideration for the subsidiary.

• Q2: trial balance & adjustments questions preparing SFP, statement of P&L and OCI and perhaps a statement of changes in equity.

• Q3: analysis question including cash flow.
• Q4 & Q5: asset based standards – calculating initial cost of assets, impairments, construction contracts, leases and investment properties.

• Provisions.
• Inventory, revenue recognition and substance.
F8
• Internal control assessment and testing.
• Audit risk assessment – linked to a new client acceptance and consideration of ethical issues.
• Ethics.
• Audit evidence – going concern issues.
• Audit reporting – content of audit reports, modified reports.
• External auditor’s right/duties.
F9
• Investment appraisal – more than likely calculating an NPV of a project with inflation and tax.
• Working capital management: managing accounts receivable, accounts payable, inventory levels, cash.
• Business valuation: work out the value of equity using the dividend growth model and/or P/E ratio.
• Foreign exchange risk management.
• Sources of long-term finance.
• Effects of a rights issue.
P1
• Need to know Kohlberg, Gary Owen and Adams and AAA.
• Ethical conflicts.
• Risk identification/analysis – identify controls.
P4
• Discount rates and valuation in a takeover scenario – ways to pay for a takeover target.
• Foreign exchange rate risk, real options, bonds and interest rate swaps.

F4

• English legal system: types of law, court vs tribunal, Human Rights Act.
• Contract law: exclusion clauses, offer & acceptance, intention to create legal relations.

• Tort of negligence: duty of care, breach of duty.
• Employment law: common law duties, redundancies.

• Agency/partnership: how agency relationship arises, termination of partnership.
• Company law: separate personality/lifting the veil, articles of association, dividends, class rights, corporate governance.

• Fraudulent behaviour: money laundering, bribery, fraudulent and wrongful trading.
F5

• Specialist cost and management accounting techniques.
• Decision making techniques.
• Budgeting.
• Standard costing and variance analysis.
• Performance management systems, measurements and control.

F6

• Income tax: detailed income tax computation, employment income, self assessment.
• Corporation tax: long period of account, chargeable gains to calculate, with rollover relief, property income, single company losses and/or group loss relief – with some tax planning.
• VAT: VAT return – including some discounts and impaired debts relief, deregistration, flat rate scheme, capital gains tax, husband and wife making disposals, wasting assets or chattels, rollover relief.
• Inheritance tax: transfer of unused NRB between spouses.

F7
• Q1: company SOFP or consolidated statement of profit or loss with SOFP workings to include goodwill, retained earnings, NCI. Adjustments to include: PURP, intra- group sales, deferred consideration, share exchange, impairment, revaluation, fair value adjustment.

• Corporate codes of ethics critique and improvements.
• Tucker’s ethical decision making model.
• Social and environmental footprint.
• Sustainability accounting.
P2
• Q1: groups and ethics, consolidation of an overseas subsidiary hasn’t been tested since 2011 so this is a possibility, and also statement of profit or loss and other comprehensive income seems more likely.
• Q2 & Q3: core areas that have not been examined in discursive form recently include: deferred tax, related parties, IFRS 10 and the definition of control, de-recognition and impairment of financial instruments
• Q4 (essay style): focus seems to have been on existing standards so the adequacy of the existing framework seems a possibility as well as how companies have accounted for and disclosed goodwill impairments (IAS 36).
P3
• Project management and benefits management.
• Supply chain management and the value chain.
• Strategy evaluation.
• Managing strategic change and culture.
• Decision making techniques.
P6
• Salary vs dividend.
• Lease vs buy assets: net cost.
• IHT vs CGT for gifts.
• Stamp duty and SDLT.
• Ethics.
P7
Core areas likely to be examined in every paper:
• Engagement planning and risk assessment (business risk & risk of material misstatement).
• Engagement procedures (or evidence).

F4

• Judicial precedent.
• Civil vs. criminal law.
• Offer and acceptance.
• Intention to create legal relations.
• Doctrine of privity.
• Breach of contract and remedies.
• Liability of auditors in tort.
• Volenti and contributory negligence.
• Redundancy.
• Types of worker.
• Agency position of partners.
• Doctrine of incorporation and company names, promoters and pre-incorporation contracts, issue of shares, duties of directors (including ultra vires), company meetings and resolutions, CVL v MVL v administration, fraudulent and wrongful trading.
F5
• ABC/target costing.
• Linear programming and limitations.
• Flexible budgets and budget revisions.
• Mix & yield, sales mix and quantity variances.
• Corporate performance, profit or non profit organisations.

F6

• Q1: employment income including the evaluation of benefits, savings income and dividend income and interest payable on special loans, ISAs and the rules for individuals, child benefit income tax charge, introducing a partner into the partnership with opening year rules, computing the income tax payable, computing national insurance.
• Q2: (a) corporation tax computation, adjustment of a trading loss including capital allowances for plant and machinery and relief for the trading loss, VAT or maybe a separate question, errors on the VAT return, VAT implications of a business offering a discount to customers, flat rate scheme for VAT.
• Q3: capital gains tax for individuals, a mixed bag.

• Q4: the cash basis of accounting vs. the normal or accruals basis.
• Q5: the residency position of a number of individuals, IHT on making lifetime gifts into a trust. F7
• Q1: consolidated statement of financial position (maybe with P/L) with associate – no associate last time.
• Q2: published accounts, possibly redrafting (missing for many years) and including SOCIE and EPS.
• Q3: interpretation with cash flow (15 marks on standards).
• Q4: mixed standards: EPS, fin inst, PPE, intangibles, provisions, substance, deferred tax, discontinued, etc.
• Q5: concepts with standards, for example, contracts, provisions, leasing, events after reporting period, impairment, etc.
F8
• Conflicts of interest.
• Threats to objectivity.
• Confidentiality.
• Audit risk with ratios to calculate.

• Internal controls (objectives, procedures, tests) over multiple areas.
• Substantive tests over payables.

• Subsequent events.
• Audit report scenarios.
• Reliance on internal audit work.

F5

• ABC.
• Linear programming.
• A budget calculation possibly including ABC.
• Variance – mix & yield variances and discussion.
• Performance measurement in service industries – Fitzgerald & Moon.
F7
• Construction contracts.
• Revenue recognition.
• Substance vs. form.
• Convertible instruments (IAS 32/IFRS 9).
• Accounting for taxation (part of Q2).
• Accounting for assets – IAS 16.

• Provisions & contingencies.
F9
• Rights issues.
• IRR.
• Capital rationing.
• Debt factoring.
• Dividend policy.
• Efficient markets hypothesis.
• Equity valuation.
• Bond valuation.
P2
• Consolidations in Q1.
• Disposals & complex groups (June 2010).

• Disposals (December 2009).

• Step acquisitions (December 2011).
• Cash flow (December 2013).

• Foreign sub (June 2010).

• Complex group (December 2012 and June 2013).
• Foreign subsidiaries – not examined for a few exams.

• Financial instruments (IAS 39/IFRS 9) to include hedging accounting, get this topic in most exams.

• Employee benefits (IAS 19) – this standard was amended by IASB in 2011 and is now examinable under the new standard.

• Leases (IAS 17), Share-based payments (IFRS 2), Impairment of assets (IAS 36), Deferred tax (IAS 12).

P3

• Project management focusing on documents (such as business case, benefits review, etc).
• Internal strategic capabilities or value chain.

• Finance – possibly sources of finance or working capital management.
• Organising business success – organisational structures and international strategy.

P5

• Budgeting – possibly including beyond budgeting.
• EVA or value based management.

• The performance prism.
• Reward schemes.

F4

• Sources of law.
• Formation of a contract – invitation to treat.
• Veils of incorporation.
• Directors.
• Professional negligence.
• Contract of employment.
• Remedies for breach of contract.
• Insider dealing.
• Fixed vs. floating charge.

F5

• Activity based costing.
• Target costing.
• Limiting factors.
• Profit tables.

• Budget systems.
• Mix/yield variances.
• Building block model.
• Performance assessment.
F7
• Q1: consolidated SFP, with associate, deferred consideration, Pups and fair value adjustment.
• Q2: single company accounts question, including taxation, lease, and intangible assets.
• Q3: statement of cash flow and comments thereon with no ratios.
• Q4: computation for non current assets.
• Q5: provisions.
F8
• Scenario-based ethics question. • Audit risk and auditor response. • Internal controls – deficiencies, recommendations and tests of control.
• Substantive testing and audit evidence.
• Going concern.
• Modified audit reports.
F9
• Working capital management.
• Investment appraisal and cost of capital.
• Business valuations.
• Discussion of the economic environment and the impact on interest and exchange rates.
P1
• 50-mark scenario question, to include: ethics, AAA model, rules vs. principles governance, also corporate social responsibility.
• Optional questions to include: importance of internal controls, NEDs and remuneration committee and structure of directors remuneration, business risks, Gray Owens and Adams.
P2
• Q1: group question on disposals, piecemeal acquisitions or foreign subsidiary. Will contain a variety of non-group topics too.
• Ethics.
• Revenue recognition or leases – current issue.

• Deferred tax.
• Share based payments.

P3
• Environmental analysis, people with financial analysis.
• Project management, strategic action, information technology – pricing strategy.
P4
• 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.
P5
• Critique an existing performance management system.
• Transfer pricing.
• ROI, RI and EVA.
• Activity based principles.
• Corporate failure prediction.
• Performance management models.
• Assess performance against financial/non-financial targets.
• Value based approaches to performance management.

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.
• Audit reports.
• Money laundering.