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14 August 2017


As any syllabus area could be tested in sections A & B the best advice is to study all areas of the syllabus.
For section C expect (but not limited to) planning and operational variance, mix yield variances & evaluation of the company performance (either as a whole or on a divisional basis).
There is no longer any formal reading and panning time at the start of the exam. You are strongly advised to plan answers to section C questions before starting to write. Ensure to make reference to the scenario in your answer!
The exam is approx. 40% calculation and 60% discussion – so doing the maths won’t be enough to pass this paper. Interpretation and application are crucial, especially in section C.

Expect at least a couple of the OTs to be devoted to the administration of income tax and corporation tax. So, you have to be comfortable with the following:
* Due dates for the payment of income tax (including payments on account).
* Due dates for the payment of corporation tax (including instalments for large companies).
* Filing dates for the income tax and corporation tax returns.
* Penalties and interest for late payments and returns.
Also likely to be tested in section A are:
* VAT rules on registration, impairment loss (bad debt) relief, and SME schemes relating to cash accounting, annual accounting and flat-rate schemes.
* IHT due to lifetime transfers both in the donor’s life and on death.
* Statutory residence test for individuals.
* Identification of groups of companies for corporation tax loss reliefs and gains.
* Trading loss reliefs for both companies and sole traders.
Section B – see section A and think longer scenario!
At least 50% of your revision time has to be spent answering section C questions in the practice and revision kit.
Remember to learn the income tax and corporation tax proformas.
Calculations which require no more than two or three entries into your calculator can be included on the face of your proformas (eg time apportioning a salary). Calculations which are more complex (eg company car benefits) need separate workings which are properly referred (W1, W2, etc) and have a heading.
Make sure to attempt the narrative parts of the requirement – aim for as many sentences as there are marks with each sentence containing something technical. Keep your paragraphs to no more than three sentences long.
The two longest questions will focus on income tax and corporation tax. These are likely to include the following:
* Employment benefits.
* Property income.
* Adjustments to profit to arrive at trading income for both companies and sole traders –in past sittings we have seen a number of questions whereby you have to correct errors in computations included in the scenario.
* Relief for pension contributions.
* Capital allowance computations.

Section A – a wide range of topics including several on consolidation and interpretation of financial statements. And expect a few questions on no—core areas such as inflation, & specialised entities.
Section B – scenario will usually consist of two/three calculations and two/three narratives. The questions are not dependent on each other and can be answered in any order.
Longer questions – two 20 mark questions, one covering interpretations and the other preparation of financial statements.
* One question likely to be in context of a single company and one in the context of a group, so you could have a single company interpretation and a groups preparation or vice versa.
* An accounts prep question may include extracts or stand alone calculations or full statements of profit or loss and other comprehensive income and/or statement of financial position.
* Both questions will cover the accounting for items from other areas of the syllabus.
* May include a short separate part, eg 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, eg fair values, deferred/contingent consideration, PUP on inventories/PPE, interagroup 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 area, eg leases, substance over form issues, financial instruments (change in fair value or amortised cost), share issues, government grants, inventory valuation, revenue recognition ort construction contracts.
* Interpretation questions are unlikely to be straightforward and you should be prepared to analyse a group or a single company with a significant change in the year.

Section A – each mini-case question will test syllabus area A, B, C, D or E. Expect questions to focus on syllabus areas A and E.
Section B - Q16 one 30 mark question. Q17, Q18 – two 20 mark questions.
The majority of marks in each question will test syllabus areas B, C and/or D.
Q16-18 expect:
* Audit planning.
* Audit risk (identification & explanation of audit risks from a scenario and explanation of the auditor’s response to each risk).
* Internal audit.
* Internal controls (identification & explanation of deficiencies in internal control and the recommendation of suitable internal controls r description of test of controls).
* Audit procedures (both substantive procedures and tests of control).

Section A – the MCQs/OTs will often be knowledge based and will out the questions in section B and C. Likely to be a good number of questions testing your understanding of financial management and objectives (ratio analysis, the concept of shareholder wealth), as well as the economic environment and financial institutions topics (financial intermediation, fiscal and monetary policies). The efficient hypothesis is likely to be tested here too.
Section B commonly tested areas are:
* Working capital management – operating cycle, the impact of a change in credit period or accepting a factor’s offer.
* Business or security valuations – methods of valuation.
* Financial risk management – currency risk or an interest rate risk.
Section C – two 20-mark questions, which will focus mainly on syllabus section C, D and E.
Section C is working capital management, section D is investment appraisal and is likely to feature NPV with inflation and tax. Section E is business finance – either an evaluation of financing options (interest coverage & gearing ratios) or a cost of capital calculation most likely.
Whichever of these three topics does not feature in section C is likely to appear in section B.

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