What do our experts think is coming up this June? Here’s what they think
ACCA JUNE EXAM TIPS
What should you expect to see in the exam paper this June? Here’s some sound advice from BPP’s top team
As all of the syllabus areas can be tested in sections A&B the best advice is to study all areas of the syllabus. Sorry about that – but you knew that already!
Areas expected to be tested by the examiner in section C include (but are not limited to): budgetary systems, planning and operational variances, mix and yield variances and evaluation of the company performance (either as a whole, or on a divisional basis). Given that this is a performance management paper you would be advised to be prepared to evaluate some performance.
Candidates are told to expect the unexpected, and since the introduction of MCQs this advice is even more critical because more topics can be tested.
The exam will be approximately 40% calculation and 60% discussion, meaning it is not sufficient to be able to perform all the calculations to get a pass here.
Expect a couple of the OTs in section A to be devoted to the administration of income tax and corporation tax. That means you have to be comfortable with the following:
*Due dates for payment of income tax (payments on account).
*Due dates for the payment of corporation tax (instalments for large companies).
*Filing dates for the income tax and corporation tax returns.
*Penalties and interest for late payments and returns.
Also likely to be tested in section A are the following:
*VAT rules on registration, impairment loss (bad debt) relief, and the SME schemes relating to cash accounting, annual accounting and flat-rate schemes.
*Inheritance tax due on lifetime transfers both in the donor’s life and on death.
*Statutory residence tests for individuals.
*Identification of groups of companies for corporation tax loss reliefs and gains.
*Trading loss reliefs for both companies and sole traders.
In section B the exam questions will be similar to those of section A – only longer! This means you need a slightly different exam skill-set here. Section C will have much more open requirements. Your answers will need to show not just sound technical knowledge but also the application of that knowledge. The examiner has also asked for more logical presentation, so markers can follow your thought progress.
Spend at least 50% of your revision time on answering section C questions in the practice and revision kits.
Learn your income tax and corporation tax pro formas. Any calculations which require no more than 2/3 entries into your calculator can be included on the face of your proforma (eg, time apportioning a salary). Calculations which are more complex (eg, company car benefits) need separate workings, which are properly referred (W1, W2, etc) and have a heading.
We know the two longest questions will focus on income tax and corporation tax. These are likely to include:
*Relief for pension contributions.
*Adjustments to profit to arrive at trading income for both companies and sole traders – in past sittings we have seen a number of questions whereby you have to correct errors in computations included in the scenario.
*Capital allowance computations.
Section A’s OTs will test a wide range of topics, including several on consolidation and interpretation of financial statements. Expect a few questions on non-core areas (inflation, specialised entities).
In section B each scenario could be a mix of topic areas or focused on one topic and will usually consist of 2/3 calculations and 2/3 narratives. Questions are not dependent on each other and can be answered in any order.
Section C consists of two 20 mark questions, one covering interpretations and the other preparation of financial statements. One Q is likely to be in the context of a single company and one in the context of a group – so you could have a single company interpretation and a groups preparation or visa versa.
Accounts preparation Qs may include extracts or stand alone calculations or full statements of profit or loss and other comprehensive income and/or statement of financial position. Both Qs will cover the accounting for items from other areas of the syllabus.
They may also include a short separate part, eg with a statement of changes in equity, statement of cash flows extract, earnings per share calculation or linked written topic.
A consolidated Q would include one subsidiary and often an associate, with adjustments, eg fair values, deferred/contingent consideration, PUP on inventories/PPE, intragroup trading and balances, goods/cash in transit.
A single entity question could be preparation from a trail balance or restatement of given financial statements, with the usual adjustments for depreciation, revaluation and current/deferred tax (including deferred tax on revaluation) plus a mixture of adjustments on other syllabus areas, eg leases, substance over form issues, financial instruments (charge in fair value or amortised cost), share issues, government grants, inventory valuation, revenue recognition or construction contracts.
Section A – each mini-case question will test single topic areas of the syllabus and so will test syllabus area A, B, C D or E. You should particularly expect questions in section A to focus on syllabus areas A and E.
For Section B Q16 to Q18 expected areas to include:
*Audit risk (identification and explanation of audit risk form a scenario and explanation of the auditor’s response to each risk).
*Internal controls (identification and explanation of deficiencies in internal control and the recommendation of suitable internal controls or description of tests of controls).
*Audit procedures (both substantive procedures and tests of control).
Try to use a tabular format in your solutions where relevant as the examining team has said students who do this score better.
In section A OTs will often be knowledge based (testing your knowledge of key technical terms) and will balance out the questions in section B and C. So expect a good number of these Qs to test your understanding of financial management and objectives (ratio analysis, the concept of shareholder wealth), as well as the economic environment and financial institutions topics (financial intermediation, fiscal and monetary policies). the efficient market hypothesis is also likely to be tested.
Areas to expect in section B are working capital management (operating cycle, the impact of a change in credit period, or accepting a factor’s offer)_, business or security valuations (methods of valuation), and financial risk management (currency risk, or interest rate risk).
The two Qs in section C will focus mainly on syllabus sections C, D and E. That’s working capital management, investment appraisal(think NPV with inflation and tax here), and business finance; either an evaluation of financing options (interest coverage and gearing ratios are likely), or cost of capital and analysis are most likely. Whichever of these topics does not feature in section C is likely to appear in section B.
Welcome to your first 4 hour closed exam. SBL aims to build on the knowledge that you gained at the Applied Knowledge and Applied Skills level, but also has its own distinct syllabus content.
The exam will focus on one main organisation, and all the question requirements will relate to this organisation. You may, however, have to take on a variety of roles, which may require you to adopt an internal or external perspective when answering the question.
All of the questions are compulsory and will consist of 80 technical marks and 20 professional skills marks.
ACCA acknowledges that the SBL exam is demanding, and time management is a key part of any exam success strategy. You are recommended to spend 40 minutes reading, planning and interpreting the requirement and the information/exhibits provided. That leaves 200 minutes to build up your 50% pass mark.
One area students often fall down on is producing lots and lots of unnecessary calculations. By planning the numerical analysis that you intend to perform will ensure you aren’t producing numbers just for the sake of it!
You should start by reading the examiner’s approach article on the ACCA website. While you are there read any other exam technique and technical articles.
In section A the first Q will be based on group accounting and may include complications such as a foreign subsidiary, discontinued activities, disposals and/or acquisitions. Be ware that this Q may test consolidation statements of cash flows as was the case in December 2018.
The second Q will cover the reporting and ethical implications in a given scenario. Make sure you consider ant threats to the fundamental principles of ACCA’s Code of Ethics and Conduct in your answer.
Section B will always include a question or part-question involving the analysis or appraisal of information from the perspective of a stakeholder. In the December 2018 exam this involved explaining the nature of tax accounting in the financial statements to an investor. Even if this sounds daunting, make sure you have a go at answering the Q.
Current issues could be examined in either section A or section B. the Conceptual Framework and associated exposure draft have featured a lot in both the September 2018 and December 2018 exams – be prepared for this to be the case in June 2019 as well.
From last September every exam has had questions, which focused on section B of the syllabus (advanced investment appraisal) and E (treasury and advanced risk management techniques). These areas are therefore a high priory for your revision phase.
Section A questions are often based on core areas such as project appraisal (domestic or overseas), business valuations and business/financial reorganisations. These areas often include cost of capital calculations. Risk management may also feature in a number of different ways, eg value at risk, real options, hedging or risk mapping.
For section B the tips are:
*Risk management (currency or interest rate).
*Dividend policy and general financing issues.
Q1 focuses on a range of issues from syllabus area A (strategic planning and control), C (performance measurement systems and design) and D (strategic performance management).
In recent exams Q1 has often required linking a business’s mission to its performance objectives using the concept of CSFs and KPIs. You may well also have to critique and recommend improvements to performance reports and the balanced scorecard could well be tested in this context. The assessment of performance is also likely to be tested and this could easily include benchmarking as a theme.
Financial performance measures (ROCE/RI/EVA, etc) are also likely to be commonly examined in Q1, but don’t neglect non-financial issues from syllabus section D, such as quality management and reward systems.
One of section B questions will come from syllabus section E (performance evaluation and corporate failure). In section B commonly tested areas include quality management, information reporting (bid data and lean information), the application of strategic models (PEST, Porter’s 5 forces, the value chain), HR frameworks (reward & appraisal systems), risk management and environmental management accounting.
One of the section A questions will focus on personal tax issues and the other will focus on corporate tax issues. In Q1 there will be 4 professional skills marks and in section A there will be 5 marks available on ethics.
Topics/scenarios you would expect to see are:
*Personal income tax scenarios, which could involve investing in a pension, investing in EIS, SEIS or VCTs, share schemes, employment income possibly with termination payments, a personal service company, property income or takeover.
*Unincorporated business, particularly including loss reliefs, partnerships or basis period rules.
*A question focussing on overseas issues. This could be income tax, CGT, IHT or a corporate scenario.
*CGT v IHT, including availability of reliefs.
*Corporate scenarios – likely to focus in more depth on intangibles, research and development issues, corporate groups or consortia.
*Special corporate scenarios such as liquidation purchase of own shares, close or investment companies.
*A business transformation scenario question such as selling a sole trader business, incorporation, or, in corporate context the sale of shares v the sale of trade and assets.
*Other common types of question/calculations:
- reviewing a pre-prepared computation to spot, explain and correct errors.
- calculations such as “tax saved through an action”, “after tax proceeds”, “the value of a post-tax inheritance”, “net spendable income” or the “net of tax cost of something”.
When it comes to VAT expect to see marks available for partial exemption, land and buildings, transfer of going concern, capital goods scheme, overseas VAT, and registration/group registration.
There will also likely be a couple of marks for stamp duty points and finally don’t forget the basic administration points – when do we need to pay tax, when do we file a return and that if either of those are late.
The most recent AAA exams have not contained any real surprises, say the experts, although you should note the presentation of the embedded email and the supporting exhibits in the case study.
Section A’s case study is set at the planning stage of the audit for a single company, a group of companies, or potentially several audit clients. Expect the detailed information to include extracts of financial information, strategic, operational and other relevant information for a client business, as well as extracts from audit working papers, which could include the results of analytical procedures.
Candidates will have to address a range of requirements from syllabus sections A, B, C and D. This will, be a real world situation where you will need to address a range of issues simultaneously in relation to planning, risk assessment evidence gathering and ethical and professional considerations.
In section B one Q will always predominately come from syllabus section E and so you must always be ready to answer a question relating to completion, review and reporting. Think here about the assessment of going concern, the impact of subsequent events, evaluating identified misstatements and any corresponding effects on the auditor’s report. Candidates may also be asked to critique an auditor’s report or a report which is to be provided to management or those charged with governance.
The other section B Q can be drawn from any other syllabus area – A, B, C, D and F. Syllabus section G on current issues is unlikely to form the basis of any question on its own, but instead will be incorporated into the case study or either of the section B questions.