*** P5 December 2015 Exam was.. Instant Poll and comments ***

Is it just me or does the hybrid paper appear to have the ‘easier’ questions from the Sept/Dec sittings? Why is this?

same with me!

@sammajamma1974

Well that ain’t gonna help you achieving a pass mark. To be honest it can only make things worse… 🙁

@mantonova said:
After two attempts of passing this paper I have the following understanding about the examiner’s approach:
This paper does not test your knowledge of theory. The examiner stated that the difficulty level is compared to postgraduate degree. At this level you are not expected just the repeat the learned words and phrases. You need to be able to analyse, compare, make conclusions, give recommendations. The same will be required at your real job. Nobody cares that you can name all five Porter’s forces. You will need to propose how to change the performance of the company to deal with these forces and stay competitive.

i totally agree. but then we dont resolve such a cases within 3 hours in our real job. one case maybe..but 3 cases? i mean like overall this paper is doable but as the examiner wish he would love us to analyse and how terrifying it is to analyse within 1.8minutes per mark given.

i’m hoping for a pass but God knows right, all the best to all of us!

The most difficult choice to make ever, Q2 and Q4. Both seemed easiest at first sight but when i started doing Q2, i just the read the question and skipped to Q4. When started with Q4, i had no idea what i was writing and what was required. how can the company manage forces and why is it difficult to measure :s examiner tried to confuse us all but my answer will confuse him the most.

I have similar adjustment to EVA, though I was not sure how to deal with the inconsistency of the lease so ignored it s there wre not enough info regarding the lease I think.
I added one more year of the marketinfI think, 23.10m to capital employed only a the info said it was expense in a previous year as well. My EVA was higher then as well as the NOPAT was higher as well as CE and WACC was lower.

Tax paid instead of tax charged should be used
Marketing expenses (about 23 M for last TWO years) – 23M for this year adjusts NOPAT (this year), 23M for last year corrects opening balance of CE (within retained earning).

Debt/Equity = 100% – is tricky question, there was finance cost in IS, so I supposed 50*50 was ok

Reading this forum it is clear to see that most people had similar issues with this paper.

Students that have reached this far in their studies are not stupid. The examiner and ACCA must accept this. The examiner has written (slightly condescending) articles about the importance of reading the requirements and exam approach that I’m sure all of us have read and taken note of prior to taking this paper.

So why is it that many of us on this forum have expressed the same problems regarding understanding the requirements of the paper? Th examiner wants to create real life scenarios where the remit given by a CEO or MD is sometimes unclear. However, in my career I have always been taught that best practice is to ask questions to ensure I have fully understood the requirement so as to not waste time doing something not required (“Quality is free”, Mr Watt?).

So why is it that the examiner continues to set requirements that even after having read several times still come across ambiguous and vague?

I had similar issues with P2 but at least with that paper there is some recognition and mitigation with a lenient marking scheme.

Honestly, I think either the questions set and/or the marking scheme for P5 is grossly unfair or… we really are all stupid!

hmm… was tough.. but i used a structured approach and walked away feeling that i put down enuff stuff as according to the marking scheme, therefore it depends on the quality so am hopeful to at least pass 🙂

Q1- yeah
Debt/equity ratio was ok at 50/50 and
had to include the tax part for pretax debt in WACC calc, and also use opening Capital not the closing figure…
add back the R&D to profit and capital….
and also only use Tax Paid for NOPAT not tax calculated..
and also the after tax Interest added back etcetc…
wasnt too sure about the marketing capex bit, so left it in Capital but took out of NOPAT.. haha…
Assumptions =easy ? =book depreciation is economic; no other non cash expenses; no GW written off…
-then i wrote almost a page on EVA being ok measure for shareholder wealth but that it was not good for division comparisons and therefore direct company comparisons and blabla, included those bits on ROI for example and mentioned that some non-financial stuff would give them clearer pic… (i did this cos in the text of the question is said that the CEO? wanted to know if EVA was any good, so i went beyond the direct Question bits on EVA calcs only… hope it gives me the marks i need 🙂 )

weakness in KPIs was easy i think (3 marks)
alternative KPIs was ok (3marks)

the rest of Q1 was a bit of this and that…
couldnot tie it all up in shorter paragraph so effectively linked bits directly… took a lot of time… but got thru it…
looked like the improvement projects would have varying effects on the CSFs and KPIs etc… for eg; JIT =Reduction in Waste, but for Greater Staff productivity No cos JIT might cause start-stop type system in production which would potentially increase idle time etc, yet for wastage reduction would be perfect..

also the new info system… ERP -integration -perfect for JIT…
for Kaizan gives more info so can do the incremental improvements etc… (damn it!! forgot to mention the culture required… hmm..)
Quality control maybe better cos management has up to date and live info at hand etc…

in general, i saw on the P5 ACCA pre-exam video that in P5 there was no right or wrong answer… so as long as you logically piece your stuff together and if it goes into some depth then i guess a pass should be had 🙂

Q2-Transfer Pricing…
geez… got stuck in like others then got really stuck…
then used structured approach going for the mark allocation…
realised the problem was that easily could see the planned change in TP policy being 625margin plus 10%, but what was the original… wouldve said the total 965(?) figure but via the overall text Hoots was wanting the proposal to give them more profit in low tax environment.. so figured the original might have just been RM charging them the marginal cost… and then the tax authorities wanting full cost meant the 965 value plus import tariffs…

i think i got it ok in the end… in general it all fit together so i think that i pulled out of the “being stuck” bit ok… not 100% sure, but i think that i did the rest ok, cos it flowed with logic etc…

the specific factors… well…
tax rates; tax authorities regs; fx control; fx rates; internal policy etc…

as to the proposed changes to performance measurement…
i stated straightforward bla about TP;
its for accountability, profits, motivation, comparison of divisional performance…
but that if they were loading the profits to Hoots due to getting the group better after tax profits that they would need to change the performance measurement manner so that RM was like a cost centre, whereas Hoots the profit centre…
i reckon i did the logical things, so would expect more than hope for a pass..

Q4 -Balanced scorecard…
yeah… mentioned that it was non-fin and fin stuff, then listed thru the perspectives stating that fin (which was main one being used) was only for short-term but the other perspectives would give longer term stability etc… also the ROCE tied into that too… top heavy on old assets already depreciated etc, but would be bad results based on new costlier investments…
as i went thru the perspectives and explained them with couple sentences, i added one example of what performance measure the company could have for it… so hope that do really well in part A

part B i left for last, and i did the calcs on total people just as invigilator said stop writing… but i did all the text et al before it… so i potentially did not get a very easy mark or two, but whatever…

partC i did before partb cos thought it was rather logical and easy;
problems in selecting new performance measurements;
systems cant handle them; people not cooperating; management not understanding; unhappy shortterm shareholders cos shortterm fin ratios go down etcetc.. but also mentioned the obvious ways to sort them out, like better systems, training and education for management etc… just now remembered that it could be linked to appraisals/rewards…

nevertheless, i think that i should have scored at least 50%…
my handwriting was horrible, but hope i passed cos i got the gist of everything 🙂

The Paper was Hard, time pressured as its nature. Q1 I did not recalculate the full EVA as they stated calculate if needed. I only made discussions as to where I thought the Junior Accountant did it wrongly, say WACC should have used post tax cost of debt of (1-30%) * 6.8% * cost of equity. Treatment of branding cost being capitalised should have added back the expenditure to Profit whilst recognising it as CAPEX. Such discussion and the story that other value based methods include NPV, Payback blah blah blah. Q2 Transfer Pricing appeared easy at first glance before I tackled. I regretted attempting it as I found it more difficult on 2b and 2c. Q3 was not answered completely living about 20marks unattempted for the whole paper. Hoping to get a 50%.

I am having a rest for Christmas then study for March sitting( I knew I won’t make it this time). Good luck everyone.

@mathonestler said:
I think there was not enough information regarding the lease already booked in CE; therefore , I just added the amount being expensed in the current year and ignored the timing of lease.

eva treats all leave as finance lease.

I agree that not enough information was given so i treated it as 115/4 and charge that as economic depreciation.

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