ACCA Exam Tips September 2015 (skill papers)

Transcription

1 ACCA Exam Tips September 2015 (skill papers)

2 TABLE OF CONTENTS Disclaimer...3 F5 Performance Management...4 F6 Taxation...7 F7 Financial Reporting...13 F8 Audit and Assurance F9 Financial Management...24

3 Disclaimer The exam tips set out below are not intended as a guaranteed or definitive list of the topics that will be contained in the forthcoming examination paper and should not be construed as such. What follows is presented as an additional resource for students preparation, based on knowledge and past experience of ACCA examinations. Becker Professional Education accepts no liability where final examination papers differ from these suggestions.

4 F5 Performance Management By Nick Ryan The best tip I can give is to have a good knowledge of the whole syllabus. The examiner s reports frequently state that the biggest problem is lack of knowledge. Since multiple choice questions were introduced in December 2014, the examiner has been able to test all parts of the syllabus within one exam. The exam now consists of a Section A, containing 20 MCQs worth two marks each, and Section B containing three 10 mark questions and two 15 mark questions. The Section A questions will be drawn from all parts of the syllabus. The Section B ten mark questions can also be drawn from any part of the syllabus. The 15 mark questions in Section B can be drawn from any part of the syllabus except for Section A, which deals with specialist management accounting techniques. Ensure you work through the specimen paper and the December 2014 and June 2015 exam papers to familiarise yourself with the style of the exam. Be aware that exams set before December 2014 were not the format as this, although the questions are still useful for revision purposes.

5 Exam Technique Allocate your time. You should spend 72 minutes on Section A, 18 minutes on each ten mark Section B question and 27 minutes for each 15 mark Section B question. Plan your answers to the section B questions briefly Don t ignore or avoid discussion sections in Section B. Show clearly any workings. A good approach is to provide your main answer first, with workings underneath. - Nick Ryan The examiner s reports frequently state that the biggest problem is lack of knowledge. Students are highly recommended to make use of ACCA past examination papers, but be aware that these do not reflect the new format of the exam. Pay close attention to articles published in Student Accountant and read the Examiner s review of the last examination session at

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7 F6 (UK) Taxation This exam is the second occasion in which the provisions of the Finance Act 2014 are examinable. All the FA 2014 changes are summarised in a technical article published by ACCA. This article, and others, together with examinable documents and the tax rates and allowances are published at exam-support-resources/fundamentals-exams-study-resources/f6.html. Although the syllabus itself is not significantly changed (albeit updated and restructured), the examination format is now very different from the June 2015 sitting onwards.

8 Exam Format Section A of the exam comprises 15 multiple choice questions of 2 marks each. Section B of the exam comprises four 10 mark questions and two 15 mark questions. The two 15 mark questions will focus on income tax (syllabus area B) and corporation tax (syllabus area E). The section A questions and the other questions in section B can cover any areas of the syllabus. The single most important tip is to ensure you have fully worked the specimen exam to familiarise yourself with the new style of questions.

9 Exam Tips Under this new exam structure the examiner has the ability, and intention, of examining topics across the whole breadth of the syllabus. Accordingly, you would do well to revise all areas rather than trying to target restricted syllabus content. The single most important tip is to ensure you have fully worked the specimen exam to familiarise yourself with the new style of questions. MCQs will cover a broad range of subject areas and you should try to practice as many as possible. Remember that the distractors (i.e. the incorrect answers) will be plausible or common mistakes, so take care over your answers. Especially make sure you carefully read and answer the question requirement (e.g. chargeable gain is before deduction of annual exempt amount, taxable gain is after). the distractors (i.e. the incorrect answers) will be plausible or common mistakes, so take care over your answers.

10 Exam Tips cont. For the 15 mark corporation tax question note recent exams have been more in the nature of repairing rather than simply preparing a tax computation. Remember that marks will be available for explicitly showing items referred to in the scenario which do not require adjustment. A more traditional type question could possibly involve a group situation with tax planning for loss reliefs and chargeable gains. For the 15 mark income tax question you can expect to deal with multiple income sources employment (and benefits) and/or self-employment, as well as investment income. Specific areas which could come up may include the cash basis (and related expense claims), and perhaps property income. Marks will be available for explicitly showing items referred to in the scenario which do not require adjustment

11 Exam Tips cont. The remaining four 10 mark questions will be used to examine any syllabus area, particularly covering VAT, capital gains tax, inheritance tax, NIC and compliance issues. An IHT question is likely to be fairly straightforward and may well resemble the specimen exam (i.e. calculating IHT on death, with preceding lifetime gifts, maybe with a transfer of a spouse s unused nil rate band). Some elementary planning matters could also be requested. The June 2015 exam had little or no questions on the areas of property, partnerships, pensions, and commencement/cessation rules, all of which are examined regularly and should therefore be thoroughly revised for this sitting. Wild card tips on other areas which may come up include in no particular order PAYE compliance and RTI reporting, VAT special schemes, ethical issues concerning the relationships between advisers/clients/hmrc, pension allowances, child benefit income tax charge, principal private residence exemption. The June 2015 exam had little or no questions on the areas of property, partnerships, pensions, and commencement/ cessation rules, all of which are examined regularly and should therefore be thoroughly revised for this sitting.

12 Exam Technique Divide your time in proportion to the marks on offer. Try to stick to this time allocation. Remember, a question not attempted scores no marks. Attempt all questions. Although all questions are compulsory, candidates should answer the questions in the order that best suits their knowledge, but generally it would be inadvisable to make a major question the last one to be attempted. Presentation matters! In particular: Apply the computational formats that you have been taught. Use workings to avoid complex calculations in your main answer, and cross-reference them to the face of your answer. Good presentation helps to avoid mistakes and it makes it easier for the marker to follow. Remember, a question not attempted scores no marks In addition to noting the guidance set out above, students should make use of ACCA Specimen and June 2015 papers, and read the examiner s review of the last examination session available at:

13 F7 Financial Reporting By Phil Bradbury You should be aware that in December 2014 the new format of the F7 was tested for the first time, so any statements made must bear in mind that there is only the specimen exam and two real exams that give guidance.

14 Exam Tips The exam will be split into two sections; Section A will be 20 x 2 mark multiple choice questions; Section B will include one x 30 mark question and two x 15 mark questions. The 30 mark question will require the preparation of financial statements, these could be for either a single entity or a group. Section A and the rest of section B could be on any area of the syllabus. All questions are compulsory. As at July 2015 there are no new article included in the technical article section of ACCA website. Two new examinable documents are examinable for the first time in September 2015, they are IFRS 15 Revenue from Contracts with Customers and the completed version of IFRS 9 Financial Instruments. If you are re-sitting this exam then ensure you are comfortable with the new standards, make sure you have read the study system sections that include information on these standards. An article was published in October 2011 relating to the Conceptual Framework. This again is an area that is regularly examined and so not too much of an indicator. The issue was covered in December 2013 exam but it is a topic that features on a regular basis and so could also find its way into, in one form or another, into the December exam. Please ensure that you do visit the F7 specific area of the website and read the various articles included. It should be noted that these articles have not been written by the examiner but they should all be helpful in increasing your knowledge base. Since 2010 the pass rates showed a marked improvement, indicating students were taking account of the examiner s comments,

15 Exam Tips cont. The December 2013 pass rate fell sharply with indications that students were falling back into bad habits. The December 2014 pass rate, the first exam under the new exam structure, showed a fall when compared to the June 2014 pass rate, do not think that because 40% of the exam is now in MCQ format that it is going to be easier to pass the exam, it will not be easier. exam Historically, one of the main reasons students fail the exam is their inability to write and discuss accounting issues, many students focus on the numerical parts of the With the new style format of multiple-choice questions it is likely that most of the syllabus will be examined, although not to any great depth. The specimen exam MCQs could be broken down into the following: 4 x Consolidation 3 x Interpretation 2 x Framework 2 x IAS 17 2 x General 1 each of IASs 8, 10, 23, 33, 36, 38 and 41 The December 2014 exam followed a similar pattern, with 10 of the questions being of a numerical form and 10 being theory based, the specimen exam split was biased more towards theory questions. The June 2015 exam followed a similar pattern.

16 Exam Tips cont. Section B of the specimen exam consisted of the following three questions: Q1 = 15 mark interpretation Q2 = 15 consolidation Q3 = 30 mark final accounts preparation, the question tested the following issues; IASs 12, 16, 18 and 37 and also a financial instrument issue. Historically, one of the main reasons students fail the exam is their inability to write and discuss accounting issues, many students focus on the numerical parts of the exam. Under the new exam structure there is less written elements to the exam but it is not something that can be ignored, you must be able to talk about the subject of accounting. You must answer every part of every question, if for example question 1 is split into three parts each worth 5 marks and you do not attempt the third part, then you will get zero marks; if you attempt the question you may get one mark which may be the one mark that takes you from 49% to 50% and a pass. Moving to 40% of the marks being for MCQs it will probably take some of the focus away from the discussion of accounting issues, but please remember that F7 is a stepping stone to P2 and at P2 there is a need to be able to discuss accounting issues. So although your main aim will be to pass F7, please remember that everything from F7 will be relevant to your later P2 studies. although your main aim will be to pass F7, please remember that everything from F7 will be relevant to your later P2 studies.

17 Exam Tips cont. Common areas that feature on a regular basis in the exam are as follows Consolidation issues Revenue recognition Substance vs form Convertible instruments (IFRS 9) Accounting for taxation, as part of final accounts question Accounting for assets, particularly IAS 16 Provisions and Contingencies

18 Exam Technique Don t forget the following advice while in the exam: Answer all questions, including the written elements of questions. It is very difficult to pass the exam by learning the numbers. Ensure you answer all 20 MCQ questions, if you do not know the answer then have a guess; there is no negative marking. Cross reference your workings, they are an integral part of your answer. Make sure you get the sign the right way round with any cash flows, the examiner sometimes only awards the marks if the sign is correct. Answer the question set, not the one you wished had been set, focus on the requirements especially relating to the written part of the answers. Look at the marks available for each part of the question, do not write pages of answers for a 3 mark part; similarly if the question has allocated 6 marks then make sure you adequately answer that part, a line is not enough to get you 6 marks. For a 30 mark question you should be spending no more than 54 minutes on it. Answer the question set, not the one you wished had been set, focus on the requirements especially relating to the written part of the answers. In addition to noting the guidance set out above, students should make use of ACCA Specimen and June 2015 papers, and read the examiner s review of the last examination session available at:

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20 F8 Audit and Assurance By Keith Rye History shows that the well prepared candidate stands by far the highest probability of passing examinations.

21 Exam Tips Be well prepared - Being well prepared means, at the very least: Working through all of the sessions within your study system (on the basis that a good study system covers the whole syllabus and not just a best guess 70%). Working through all past examination questions and completing all monitoring/ progress tests and mock examinations under full examination conditions. Reading all of the examining team s articles from at least the last 12 months they do not write for fun. Read them all, not just the ones published prior to the current exam. Careful study of the examiner s reports on past examinations. These contain excellent advice of what students should NOT be doing. Ignoring Exam Tips that are just a list of somebody s favourite topics (the examiners strongly advise candidates to ignore exam tips ). Regularly visiting The examiner a purely theoretical study approach is unlikely to bring success. The examiner does not leave an audit trail for you to follow to identify what will be in the next examination. Just because a subject was examined in the previous examination does not mean that it will not be revisited in the next examination. Ensure you regularly visit the ACCA student website for all F8 articles, e.g. the article on examination approach is essential reading. Reading this article and the examiner s reports makes it clear that examination questions will be practical and a purely theoretical study approach is unlikely to bring success. Past exams have also shown a tendency for the examiner to ask some off the wall elements within the questions out of the box

22 Examination Format Ensure you have worked through the December 2014 Specimen Exam and actual December 2014/June 2015 exams on the ACCA website that reflect the examination structure changes made in December The format (Section A 12 MCQ format and Section B 4x10 mark plus 2x20 standard format questions) may not be that exciting, BUT do not wait until the real exam to see what the paper looks like. This format does allow the examiner to examine a wide range of topics. It is recommended that the reading and planning time (RAPT) be concentrated on Section B, preferably Question 5 and/or 6 (as these are the 20 mark questions). When allowed to use the answer booklet, continue with the questions being planned and then the rest of the Section B questions. DO NOT read and plan Section B then do Section A (MCQs) then go back to Section B as all of the planning thought about in the 15 minutes RAPT will have been forgotten. Ensure that sufficient time (approximately 35 minutes) is left at the end of the three hours examination writing time to do the MCQs in Section A. Do the easy MCQs first, i.e. the ones you immediately know the answer to. Never leave any MCQ not attempted. If you do not know the answer or cannot deduce (eliminate those parts that are clearly incorrect) make an intelligent guess. If that is not possible (you have stopped thinking) then the answer where there are four options is D and for three options C (in F1 it is A, F2 it is B, F3 it is C through to F9 where it is A). If two options, toss a coin. Better a guess than leaving blank. Final Notes Note that judging from past examiner s reports, audit risk and auditor s reports are becoming bee in the bonnet subjects. Despite writing articles on these areas and reporting how badly they are done in the real examination, candidates continue to make the same mistakes. BUT do not just rely on these subjects, rely on the fact that any subject could be in your examination!

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24 F9 Financial Management By Mike Ashworth Do not leave difficult items until later as you may forget about them, you also risk choosing your response after the invigilator has told you to stop writing.

25 Exam Tips The examiner identifies eight key areas of the syllabus: Role of the financial management function Impact of the economic environment on financial management Working capital management Investment appraisal Alternative sources of business finance Cost of Capital Business and asset valuations Foreign exchange and interest rate risk management The exam format changed from December 2014 although the syllabus and the examiner have not changed. Section A consists of 20 MCQ s from across the entire syllabus. Section B will contain three 10-mark questions and two 15-mark questions. The 10-mark questions can test investment appraisal, sources of finance, cost of capital and working capital management. Candidates are provided with a formulae sheet and tables of discount and annuity factors. Candidates should bring a scientific calculator to the examination. Ensure you carefully work through the specimen exam and the December 2014 exam to familiarise yourself exam style and format. (Found both on the ACCA website and in your Revision Question Bank). For the June 2015 exam the ACCA only published the section B questions. Note that exam papers up to June 2014 are still on the ACCA website but in the previous exam format. It is therefore recommended that you use your Revision Question Bank where all questions are in the current format. The examiner has written three articles in Student Accountant magazine Capital Asset Pricing Model (parts 1-3). A member of his examining team wrote the recent article myopic Management Other Key Articles include Equivalent annual costs and benefits (April 2015) Business valuation (February 2012) Advanced investment appraisal (October 2010) and Foreign exchange risk and its management (July 2010) and Introduction to Islamic finance (March 2011) These articles are available from the ACCA website.

26 Exam Technique The exam format changed from December 2014 although the syllabus and the examiner have not changed. Section A consists of 20 MCQ s from across the entire syllabus. Section B will contain three 10-mark questions and two 15-mark questions. The 10-mark questions can test investment appraisal, sources of finance, cost of capital and working capital management. Candidates are provided with a formulae sheet and tables of discount and annuity factors. Candidates should bring a scientific calculator to the examination. Ensure you carefully work through the specimen exam and the December 2014 exam to familiarise yourself exam style and format. (Found both on the ACCA website and in your Revision Question Bank). For the June 2015 exam the ACCA only published the section B questions. Note that exam papers up to June 2014 are still on the ACCA website but in the previous exam format. It is therefore recommended that you use your Revision Question Bank where all questions are in the current format. The examiner has written three articles in Student Accountant magazine Capital Asset Pricing Model (parts 1-3). A member of his examining team wrote the recent article myopic Management Other Key Articles include Equivalent annual costs and benefits (April 2015) Business valuation (February 2012) Advanced investment appraisal (October 2010) and Foreign exchange risk and its management (July 2010) and Introduction to Islamic finance (March 2011) These articles are available from the ACCA website.

27 Exam Technique (section B) IRR WACC Bond Valuation Dividend Policy Attempt all parts of all questions In section A: Do not leave difficult items until later as you may forget about them, you also risk choosing your response after the invigilator has told you to stop writing. If a particular item is taking too long to solve then make a reasoned guess there is no negative marking for wrong answers. In section B: Show your workings and write your assumptions If asked to comment upon your calculations do not be afraid to do so even if you think your calculations do not be afraid to do so even if you think your calculations contain errors. If you could not perform the required calculation then write an assumed result and comment upon that. Structure your comments using sub-headings and bullet points (but write a full sentence after each bullet). Give real life examples where appropriate

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