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Making the jump
Bridging the gap between the Certificate Level Accounting and the Professional Level Financial Accounting and Reporting modules isn’t as tough as it sounds, says Andrea Cook
Financial Accounting and Reporting (FAR) is a challenging exam and many students find the jump from Accounting a difficult one, not least because the syllabus is so large, containing nearly 30 International Financial Reporting Standards (IFRSs). In addition, the exam requires students to demonstrate a multitude of skills, such as explaining a particular financial reporting treatment and preparing financial statements and disclosure notes for individual companies, as well as groups of companies.
So what can you do to make the jump less challenging? Firstly, you should ensure that any gaps in your knowledge from Accounting are addressed before you start studying for FAR. You will find FAR very challenging if you do not have the foundations necessary to build on.
Pull out your ICAEW Accounting question bank and have another go at some of the questions. Although you won’t see objective test questions in FAR, topics such as property, plant and equipment; inventories; irrecoverable receivables; and tax and errors are all commonly tested. In addition, practising the long-form questions in your Accounting question bank will put you in good stead.
A strong understanding of double entry bookkeeping is also essential to understanding the new concepts introduced in FAR. Furthermore, it is a common requirement for students to be asked to provide the necessary journal entries for a transaction.
While students benefit from the use of a permitted text – the IFRS book – which offers template financial statements and financial reporting rules, FAR is a time-pressured exam and students who repeatedly refer to this book typically tend to struggle with time management. So it may help you to sign up to the Bookkeeping and Accounts Preparation Programme, to help supplement your knowledge and bridge the gap between the two papers. The online programme enables you to apply the theoretical rules learnt at Accounting to a real business scenario, which embeds your understanding of the fundamental accounting principles – important for performing well in FAR. For more information or to sign up visit icaew.com/bookkeeping
In addition, in the FAR exam you are guaranteed a question that asks for the preparation of one or more financial statements. In some cases you may be expected to prepare financial statements from scratch; in others you may be asked to revise a draft set of financial statements. Therefore, it is essential you are confident with principles underlying their preparation. To help build this confidence, the final task in the Bookkeeping Programme is the preparation of a complete set of financial statements. While preparing these financial statements, you’ll be presented with a number of regularly tested issues such as property disposals, tax under-provisions and inventory adjustments. It also introduces a selection of new topics in addition to those seen in Accounting, including property revaluations and the Statement of Comprehensive Income.
Revaluations are one of the more complex areas of property, plant and equipment in the FAR syllabus and the programme includes a tutorial guiding you through the basic principles of accounting for a revaluation. Familiarising yourself with this topic and the statement of comprehensive income in advance of studying for FAR will put you in a strong position when embarking on studying for this Professional Level exam.
For more help with your exams, visit icaew.com/examresources.
• Andrea Cook is manager of ACA development and special projects at ICAEW
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