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ACCA June 2017 Examiner Reports

Here’s our take on the ACCA June Examiner Reports. They really are worth a proper read

August 2017

Section B range of topics covered in June was: costing; pricing; risk; cost-volume-profit (CVP) analysis; learning curves; budgeting; variance analysis, and limiting factors.
The examiner stressed graphs are still important, although you won’t be asked to draw them – you will be asked to interpret them. So you must know your CVP, linear programming and decision trees.
Candidates were presented with questions drawn mainly from the areas of: performance management; variance analysis; relevant costing; transfer pricing, and budgeting.

The range of topics covered in section B of the June 2017 exam was: CGT on gift of shares; IHT, and VAT.
The examiner said you must know the treatment of a chargeable lifetime transfer where the donor paid the lifetime tax and dies within 7 years. This part of IHT is commonly examined. And, remember to gross up for the lifetime tax paid, and several forgot to deduct the previous gift from NRB!
Section C candidates were presented with questions drawn mainly from the areas of: basic tax planning focusing on reducing or postponing tax liabilities; computation of an individual’s taxation income; pension annual allowances; computation of taxable total profits for a company, and acquisition of a 51% group company.

Strong candidates continue to use good workings for the preparation of financial statements, says the examiner. Those who fail to provide workings often score much lower marks on both the preparation of financial statements and the calculation of ratios.
The examiner wants you to use headings for each area requested, such as ‘performance’ and ‘position’. Make just one or two points per paragraph and leave space between paragraphs. Too many candidates try to make all their points in one block of text – it’s difficult to mark and not a professional layout.
A sensible conclusion summarising the main points of the analysis is important, and marks will be give for it, the examiner reminds candidates.

Section A in the June 2017 exam included questions on the following areas: professional ethics & application of the ACCA’s code of ethics and conduct; internal audit; corporate governance; substantive testing (testing on tangible assets, receivables, banks & cash, using the work of others); subsequent events, and auditor’s reports.
Section B tested: audit framework & regulation; planning & risk assessment; internal control; audit evidence, and review & reporting.
Good exam technique is vital for success in F8. The examiner was especially pleased to see so many candidates structure their answer in columns, especially for audit risk and internal control questions, Not only does this make it easier to mark, it makes it easier for a candidate to review their answer and ensure they have covered all of the relevant areas, as for example it is clearer to see if a test of control has been omitted.

Overall June candidates were well prepared in techniques such as calculating NPV. However, they became ‘less well prepared’ in discussing knowledge and explaining concepts.
Candidates were reminded that when it comes to section B there is no partial marking: so an answer which only selects one statement when two are asked for will be awarded no marks!
In June the examiner said that some candidates were unable to demonstrate appropriate methods for dealing with both risk and uncertainty.
A common error when it came to business valuation was the inability to identify correctly the required rate of return when valuing shares. And, do you know the drawbacks of the valuation method?
The examiner also wants you to be able to understand the features of different methods of foreign exchange hedging. How about the features of risk management derivatives?

June saw an improved performance in section A, but this improvement was offset by a weaker performance in the section B questions.
The examiner revealed some students seem to be having difficulty choosing the right optional question. “There was evidence on some scripts of optional questions being started and then abandoned in favour of a different optional question.” For the examiner this clearly indicated a lack of planning.
The section B questions are challenging, he said, but if you answer the question set, don’t spend time providing irrelevant material. Generic answers will only get you half or one mark, an addition mark will be available for application.

Are you conscious of time, asks the examiner in the P2 June Examiner Report. He is worried too many candidates are adopting a superficial approach to learning. He thinks this leads to lots of people whose simply goal is to simply pass an exam, when they should be preparing themselves for a career in accounting. That’s easy for him to say. He believes that looking at the exam scripts it appears too many candidates are focusing on the bare fundamentals. Some sitters also appear to have a preconception that corporate reporting is a subject that does not require deep understanding. That makes him particularly unhappy.

The first think you need to recognize with the P3 syllabus is its broad nature. You are unlikely yo cover it all in a short taught course. Lecturers then need to signpost the remaining content to ensure candidates are fully prepared come the day of the exam.
The examiner doesn’t want you to copy out the scenario content, without explaining it in the context of the question requirements. It is candidates who add value to the information provided in the scenario who will earn the highest marks.
Candidates also need to recognize that there isn’t a theoretical model for every occasion, so avoid apply one just for the sake of it.

The P4 June exam had a 34% pass rate. The examiner here believes only sustained study over a long period of time will ensure success in this paper. Candidates will also perform badly in this paper if they spend too much time carrying out relatively simple calculation tasks – you have been warned. There are also some of you who can’t perform basic arithmetic calculations – like compounding when calculating inflation.
Also, remember business reports and proposals are expected to be succinct, professionally written and easy to read with clear headings and conclusions. The examiner stressed that a candidate who does not demonstrate this approach will fail to earn the professional marks that are available in Q1.

The P5 examiner said June’s candidates lack of knowledge was particularly evident in Q1(i), flexing a budget, Q1 (ii) preparing a rolling budget, and Q1 (iv) ‘what gets measured get done’. He stressed the examining team was really concerned with candidates inability to flex the budget. Candidates just did not identify that volumes had changes in the data given nor did they appear to understand the consultant’s criticism. Many candidates still don’t seem to have grasped the need to ‘roll’ the budget forward by a quarter, so that there remains four quarters budgeted into the future. The examiner might need to re-read his comments too, as he said: “Good candidates distinguish themselves by beings aware…”

Candidate who did not perform well in June did not spend enough time carefully reading the question and thinking before they started writing. It may be helpful to tick off the tasks in section A questions as you address them. The examiner doesn’t want general explanations or long introductions either – just get on with answering the question.

The P7 examiner said the June session performance was again ‘disappointing’. P7 also had a 32% pass rate. She said: “I remains evident that many candidates did not prepare in sufficient depth and were unable to think laterally and apply the knowledge that they have learned.”
For her too many of you are also focusing on the minutiae of a point and still produce a list of everything you know about a topic!
Another real worry is the clear lack of both auditing and financial reporting knowledge. She says candidates need to re-learn the basics of auditing – independence, ethics, robust third party evidence, audit risk and understanding the proper use of audit opinions.

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