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ACCA P2: taming the beast
Clare Finch explains how you can pass the P2 Corporate Reporting paper
Corporate Reporting is surely considered to be the core ACCA paper. It is, after all, the paper where we get asked for things like balance sheets (statement of financial position) and cash flow statements (statement of cash flows). It is a paper about accounting! So why did 66% of entrants – who are after all very near to being qualified accountants – manage to fail the equivalent paper in September 2015? Why do students describe it as ‘the beast’ And what do you need to do to pass it in December 2015?
“Too much revision time is spent on the topic of consolidation”
It is true that there will be a compulsory consolidation on the paper. In section A we are guaranteed either a statement of financial position (balance sheet), an income statement (profit and loss account), a combined statement of financial position and income statement, or indeed a statement of cash flows (cash flow statement). There is a ‘but’. In the section A question, although the requirement is to ‘prepare the consolidated x’ (for 35 marks), just over half of the marks are usually for the mechanics of consolidation. The other marks are for knowing the accounting standards!
“Students try to pass without learning their accounting standards”
When putting your final revision plan together, a big mistake is to focus only on consolidation and cash flow – you need to learn your accounting standards. On top of the section A issue, section B of this exam is actually full of requirements like ‘discuss’, ‘advice’ and ‘explain’. You will have to write stuff about accounting and accounting standards (for around 50% of the marks).
Key to a pass at P2 is knowledge of your accounting standards. It is essential you know the basics of them all. First, go for breadth – there are key ‘need to learn’ parts.
However, for December 2015, there are some ‘three-star’ accounting standards – ones you really need in-depth knowledge of:
• IAS 24 Related Party Transactions.
• IAS 38 Intangible Assets.
• IFRS 15 Revenue from Contracts with Customers.
• IAS 19 Employee Benefits.
• IFRS2 Share Based Payment.
• IAS 36 Impairment of Assets.
• IAS 12 Income Tax.
• IAS 32 Financial Instruments: Disclosure and Presentation.
• IFRS 9 Financial Instruments.
• IAS 21 The Effect of Changes in Foreign Exchange Rates.
Remember, each of the section B ‘mixed transactional’ questions can involve up to six different transactions.
“Too much time is spent making notes and not enough on question practice”
It is now time to stop reading through files, highlighting and making notes. It is essential to practise with past questions. Hopefully, you have been working past questions throughout tuition. On exam day you will get an answer booklet – blank pieces of paper, the questions and a ticking clock. You must practise – try to answer the questions on blank pieces of paper. After you have given it your best shot, and not before your time is up (1.8 minutes per available mark), then review your answer. If you have found a weakness go back to your file, review the topic and try another question.
Only with question practise will you be successful. Imagine you were training for a marathon. Would you study books about the route and read explanations of how to run a marathon? No, you would put your trainers on and get out there and actually practise! Well, now is that time – you need to put on your trainers and start to practise, practise, practise.
“And then there’s the current issue…”
Question 4, for 25 marks, can only be prepared for by looking forward, not back at previous papers. So even if you have done all the past questions you will usually not be prepared for the current issue. Think about things that are very current.
You must read, digest, learn and understand the recent articles. If you don’t, ask your tutor to explain and simplify, then read it again. Key articles from students’ newsletters for December sitters are Revenue revisited part 1 and Revenue revisited part 2.
Remember, the syllabus just says ‘current issues’, so it could be anything really – it will be a choice question though. Ideally, you will always be able to choose the other two – if you know your accounting standards that is!
• Clare Finch teaches at HTFT Partnership, where she is a partner. She is the author of ‘A Student’s Guide to IFRS’
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