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The ACCA March ‘P ‘paper tips
20 February 2018
The ACCA March ‘P ‘paper tips - BPP’s experts say…
• Recent exams have tested content from the examiner’s technical articles (such as June 2015 on corporate social responsibility (CSR) strategy and strategic CSR).
• Expect to see the use of stakeholder, ethical and other CSR theories applied to scenarios, as well as the use of risk, control and governance syllabus content, especially relating to board directors, remuneration and reporting. Focus on areas such as bribery and corruption, environmental risk and poor ethical stance.
• Use the extra 15 minutes you have been given (the reading time) to plan the compulsory scenario first.
A 50mark compulsory case study including preparation of a group statement of financial position, statement of profit of loss and other comprehensive income or statement of cash flows which may include discontinued activities, disposals and/or acquisitions or a foreign subsidiary. This will include other accounting complications such as group adjustments, financial instruments, pensions, share-based payment and impairments.
There will also be discursive requirements on a linked accounting adjustment and social/ethical/moral aspects of corporate reporting.
Q2 & Q3: One multi-part question covering a range of topics or a theme such as fair value measurement, revenue recognition, deferred tax, foreign currency transactions, financial instruments, pensions, share-based payment, non-current assets, borrowing costs, nature of business combinations, the effects of accounting treatments on earnings per share or ratios; the other an industry-based question testing a range of standards such as accounting policies and the framework, leases, grants, IFRS for SMEs, reorganisations, provisions, events after the reporting period and related parties.
Q4: A discussion question looing at current developments in corporate reporting and problems with existing standards. We are talking foreign exchange, measurement & revision of the conceptual framework, classification in P or L vs OCI, improvements to disclosures, capital reporting, leasing, application of the definition of control and significant influence (equity accounting), integrated reporting, performance measurement, regulatory issues over adoption and consistent application of IFRSs and implementation issues.
Section A continues to consume time in reading and absorbing - three pages of text and numbers are becoming the norm.
Section B questions are more likely to examine discrete subject areas. Questions can be drawn from all areas of the syllabus, and the limited extent of the choice (2 from 3) reinforces the importance of covering all areas of the syllabus.
Expect the trend of calculations being examined in the optional section B to continue. So make time to revisit the numerical areas of the syllabus to refresh knowledge would be wise.
Questions are normally based on core syllabus areas such as project appraisal (domestic or overseas) and business valuations. Both areas are likely to include cost of capital calculations. Risk management many also feature in a number of different ways – value at risk, real options, hedging, risk mapping.
• Risk management (currency or interest rate).
• Business re-organisation and financial reconstruction (often examined together).
Recent Q1 exams have often required a significant level of data analysis using numerical techniques, eg KPIs, EVA.
Performance management frameworks (building blocks, performance pyramid or the balanced scorecard) are also commonly tested in Q1.
Commonly tested areas include quality management, information reporting (CSFs and KPIs), the application of strategic models (PEST, Porter’s 5 forces, the Value Chain), HR frameworks (reward & appraisal systems), risk management, and environmental management accounting.
Recent articles include complex business structures, big data, integrated reporting and performance management models (BCG and 5 forces).
Topics we would expect to see are:
• Groups of companies involving overseas aspects and loses.
• Unincorporated business particularly loss relief or involving a partnership, basis period rules should also be expected.
• Capital gains tax vs IHT, including availability of reliefs.
• Overseas aspects of income tax, CGT, IHT or corporation tax.
• Personal Service Company.
• Share schemes.
• Company purchase of own shares.
• Enterprise investment schemes/Seed EIS/venture capital trusts.
• VAT – partial exemption or land and buildings or transfer of a going concern or overseas transactions.
• Transfer of trade versus sale of subsidiary.
• Disincorporation relief.
• Pensions contributions.
• Patent box, research and development expenditure.
Typically Q1 will test planning, risk assessment, evidence gathering and practice management issues using a scenario where audit client details are presented, often including financial statements extracts.
Topics covered in Q2 are more uncertain to predict – possibly a non-audit engagement such as prospective financial information (PFI) or due diligence, or a question testing specific parts of the syllabus, such as audit completion or consolidated groups.
Section B typically tests the following syllabus areas: audit evidence and financial reporting issues, practice management including ethics, and quality control and reporting including completion and communication.
Recent exams have tested fresh content from the examiner’s technical articles – key audit matters were examined in December 2016, while INT candidates were tested on the audit of public sector performance information in December 2015.
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