Students will be pleased to hear that there are no major changes planned for the APM syllabus moving forward.
The examiner explained that section A of the exam is now more restricted in what it will examine. It will take its subject matter purely from parts A, C and D. Section B will have one question mainly focused on part E of the syllabus, and one question that can come from any other part.
There has been a slight change in writing style too, and subheadings have been introduced in the scenarios to make information more accessible. The examiner, however, has issued a warning here. He is concerned that students will concentrate on the subheading and avoid reading the rest of scenario. Don’t do that – candidates need to read all the scenario, requirements and appendices before answering the question.
The examiner stressed that ‘knowledge’ will usually only score 20-30% of the marks that you need to pass this paper. Yet without knowledge the question will not be understood. It’s all about the application of that knowledge, in the context of the scenario. You have to engage with the material and provide real evaluation.
Students must be wary of talking about something in terms of good or bad. Providing a proper argument or evidence is how you score marks.
So, what are the areas where students do well? Here the examiner talked about performance reporting systems (notably improved in last few diets), EVA, quality systems, especially JIT, the balanced scorecard and information systems.
However, the exam team is still seeing lots of problems with candidates not bringing forward their assumed knowledge. And the one area that is causing the examiner most concern is the return on capital employed. Too many students don’t know its definition and cannot calculate it. In particular, they don’t know which profit to use in the calculation.
Another problem area is risk and uncertainty in decision making.
Candidates must learn the whole of the model, not just the components. Other specific areas where there have been weaknesses are operational gearing, and fixed and variable costs. This should be a bread-and-butter subject for the management accountant, he said. Some other areas to look at are activity based management, transfer pricing, and value for money analysis. All these are areas you need to work on.
The standard of basic maths is also surprisingly poor, he said. Rounding is a prime example here – 12.6 rounds to 12. “Don’t be sloppy with these points,” he stressed.
Finally, the examiner stresses that question practice is essential. This will help you get to a pass in APM.
The AFM examiner said that, in every exam syllabus, areas B (advanced investment appraisal) and E (treasury and advanced risk management) will be tested. That could be section A or B of the exam, or both. You should also expect two syllabus areas to be tested in Q1. He also stressed the importance bringing forward your knowledge from FM and other ACCA exams.
The examiner felt that candidates relying on a short or revision only course to pass here would probably find they hadn’t learnt enough to pass this test.
Students often perceive there is a time management problem with this paper. But the examiner says that if you take an organised and systematic approach then there is definitely enough time to finish the paper. So it’s you!
It was revealed that students are struggling more with interest rate hedging than with foreign exchange hedging, and ACCA wants students to adjust their revision time accordingly.
Finally, the examiner says you must have a strategy for study, and that means sustained study. Not having a strategy will affect your chances of passing this paper, he said.
The ATX examiner wants candidates to think more in the exam, and focus their efforts on answering the question. Thinking students are dear to his heart, and he wants you to follow his mantra of “think more and write less”.
He stressed: “Candidates need to consider the scenario given before they start writing their answer and not simply state general tax rules. Each client has their particular set of circumstances, which the tax rules must be applied to.
Once again, candidates would benefit from taking some thinking time to consider the scenario before they put pen to paper.” Candidates then need to “think, think, think”, he said. That means slowing down and ensure you understand what you have been asked to do. Make notes of your initial thoughts and plan your answer properly.
In the exam room the requirements are everything, he explained, and PQs must keep referring to them when answering the question. You need to ask yourself: “Is what you are about to write or calculate required.” When it comes to managing time you need to be time aware throughout the exam, he said. That means allocating time evenly, according to the mark allocation. Don’t write your way to the answer, either.
Candidates who do not know enough will not pass the exam, he said, knowing that he was stating the obvious. Area for improvements include knowledge from TX, sole traders, CGT and IHT reliefs, and PQs need to practise explaining the rules in writing.
Additions to tax rates and allowances provided in the exam
• Adjusted net income amount at which personal allowance reduced to zero.
• Standard penalties for errors.
• Deemed domicile changes for personal taxes (IT, CGT and IHT).
• Changes to corporate loss relief.
• Income tax implications of lump sum payments.
• Changes to SSE conditions.
Syllabus points removed
• Details of what constitutes remittance.
• Overseas aspects of income from employment including travelling and subsistence expenses.
• Tax treatment of overseas travelling expenses for self-employed individuals.
• The accrued income scheme.
• Married couples age allowance.
• Child benefit tax charge.
• The conditions a company must meet in order to qualify as an EIS/SEIS/VCT company.
• The CGT implications of conditional contracts.
• Payments by instalments for CGT.
• Immediate post death interest trust.
• Associated operations.
• Knowledge that instalment payments may carry interest and the criteria to be met for instalment payments to be interest bearing.
• Responsibility of senior accounting officers in relation to accounting systems.
• Profits attributable to patents.
• Calculation of indexation factors.
• The relief for trading losses incurred by an overseas subsidiary.
• Disincorporation relief.
• Stamp taxes for residential property.
• The system by which stamp taxes are administered.
AAA students struggle with evaluating risks of material misstatements, according to a poll of tutors at the Global Learning Providers Conference.
Over half of tutors (56%) said this was the area their students find ‘most difficult’. This surprised the examiner, who thought they would say auditor reports! That subject did, however, come in second on 33%. Just 11% of lecturers said students struggle with quality control, and none (zero) said ethics was a problem area.
The examiner said if students want to do well in the exam then they need to fully develop their answer points. Candidates also need to allocate time between questions according to mark allocation.
The examiner is really worried about the auditor’s report is just not well understood. Better knowledge of ISA requirements and IFRS/basic accounting are other areas that students need to get a grip of.
Syllabus update 2018/19
• Syllabus reorganised in previous year and data analytics included as a current issue (a light touch).
• No significant additions.
• Amended a few verbs in specific learning outcomes, eg design audit procedures, evaluate business risk, audit risks of material misstatement.
• Verbs amended to better reflect expected depth of understanding and application needed in AAA.
Syllabus update 2019/20
• No significant additions or deletions in 2019/20.
• One new learning outcome in syllabus area E: ‘Evaluate as part of the final review the matters (eg materiality, risk, relevant accounting standards) and evidence to confirm if sufficient and appropriate evidence has been obtained.’
• Additional point of clarification on quality control and ethics: “The auditor’s assessment of effective quality control procedures and consideration of ethical issues are fundamental to all stages of the audit and therefore these concepts could be examined in any section of the exam.”
• From September 2019 all exam questions will be set at 1 July 20X5.